On Sharing And Managing Competitively Sensitive Information In M&A Transactions

Federal agencies that enforce antitrust laws, such as the Antitrust Division of the Department of Justice (DOJ) and the Federal Trade Commission (FTC), require that competitors engaged in a business combination transaction remain and act as competitors until their merger is consummated. These so-called "gun-jumping limitations" have two important components. First, the buyer cannot prematurely direct the affairs of the seller or act as if they are one entity. Second, since the transaction has not — and may never — close, the antitrust authorities are concerned that competitively sensitive information not be freely passed to or within the buyers' organization. Often the seller will have similar motivations not to prematurely hand over commercially sensitive information, particularly to a strategic buyer. The Department of Justice has litigated and obtained fines, sometimes as much as several million dollars, for parties that violate these limitations.