Series 79 practice questionhardHart-Scott-Rodino Act
Two companies plan to merge in a transaction valued at $500 million. During HSR review, the DOJ determines the merger would substantially lessen competition. Which of the following remedies might the DOJ seek?
- ACriminal prosecution of the companies' CEOs
- BImposing a five-year moratorium on all future acquisitions by both companies
- CRevoking the companies' SEC registration statements
- DRequiring divestiture of overlapping business units as a condition for approval✓ Correct answer
Explanation
Why D — Requiring divestiture of overlapping business units as a condition for approval
When the DOJ identifies antitrust concerns with a proposed merger, it may negotiate a consent decree requiring divestitures of overlapping business units or other behavioral remedies as a condition for approval. If the parties cannot agree on acceptable remedies, the DOJ may file suit in federal court to block the transaction under Section 7 of the Clayton Act. Divestitures are the most common structural remedy because they directly address the competitive overlap by preserving an independent competitor in the market.
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Related M&A, Tender Offers & Restructuring questions
- A fairness opinion in the context of an M&A transaction is typically provided by:
- During the HSR review process, the FTC issues a 'second request' to the merging parties. What does this mean?
- Which of the following valuation methodologies would most likely be used in preparing a fairness opinion?
- After an HSR filing is made, what is the initial waiting period before the parties may consummate the transaction?