Clause For Concern: The Risk Of Pre-Closing Covenants In Notifiable Merger Transactions

In early 2025, the U.S. Federal Trade Commission ("FTC") imposed a record-breaking fine of USD5.684 million on three oil companies for engaging in 'gun-jumping' – a term used to describe unlawful pre-merger coordination or integration between the parties to a transaction. The message to merging parties is clear: gun-jumping is not only a procedural misstep, it is also a serious legal violation from a competition law perspective, with significant financial, legal, and reputational costs

The aforementioned fine serves as a reminder that the period between considering or negotiating a deal and obtaining the relevant competition law clearances requires that parties conduct themselves in accordance with the strict letter of the law so as not to trigger any gun jumping violations (which can take the form either of implementing a transaction prior to receiving approval from the competition authorities, or implementing a notifiable transaction without having notified it to