Acting in concert: Overview, definition and example
What is acting in concert?
"Acting in concert" refers to when two or more parties work together towards a common goal or purpose, often in the context of business transactions. This can include coordinating actions or decisions, such as acquiring assets, making investments, or influencing the direction of a company. In legal terms, acting in concert usually implies that these parties are collaborating in a way that affects their mutual interests and can have legal implications, especially in regulatory matters like antitrust law or shareholder agreements.
Why is acting in concert important?
Acting in concert is important because it can change the way legal responsibilities or rights are allocated among parties. For example, if companies are acting in concert to acquire a controlling stake in another company, they may be required to disclose their actions to regulators or follow certain legal processes. It’s a critical concept in business transactions, as it helps define when separate parties are considered to be working together and therefore subject to joint obligations or restrictions.
Understanding acting in concert through an example
Imagine two companies, Company A and Company B, who are competitors in the same industry. If both companies decide to merge or coordinate their efforts to buy a third company, their actions would be considered acting in concert. This coordination could have legal implications, such as triggering regulatory oversight from antitrust authorities, who might view the merger as reducing competition in the market.
In another example, a group of investors might decide to pool their resources to purchase a significant stake in a publicly traded company. Even though each investor is acting independently, if they coordinate their efforts in acquiring the shares, they may be deemed to be acting in concert, which could require them to make a public disclosure of their holdings.
Example of an acting in concert clause
Here’s how an acting in concert clause might appear in a contract:
“The parties acknowledge that any coordinated action taken by the undersigned, including but not limited to voting, purchasing, or selling shares of the Company, constitutes acting in concert and will be subject to applicable regulatory requirements, including disclosure obligations.”
Conclusion
Acting in concert is a key concept in business transactions, especially when multiple parties are involved in decisions that affect a company's governance or control. By understanding when and how parties are considered to be acting together, businesses can ensure compliance with relevant laws and avoid legal issues related to coordinated actions.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.