Antitrust certification statements: Overview, definition, and example
What are antitrust certification statements?
Antitrust certification statements are declarations made by parties involved in a transaction, such as a merger, acquisition, or joint venture, affirming that the transaction does not violate antitrust laws. These statements are typically required by regulatory authorities, such as the Federal Trade Commission (FTC) or the Department of Justice (DOJ) in the United States, to ensure that the transaction does not unfairly reduce competition in the market, create monopolies, or harm consumers. The certification involves confirming that the parties have not engaged in illegal activities such as price-fixing, market allocation, or other anti-competitive practices as defined by antitrust laws.
Why are antitrust certification statements important?
Antitrust certification statements are important because they help ensure that business transactions do not disrupt fair competition in the market. By requiring these statements, regulators can assess whether the transaction might lead to anti-competitive effects, such as monopolistic behavior, reduced market choice, or inflated prices for consumers. The certification also serves as a legal safeguard for the parties involved, ensuring they are in compliance with relevant competition laws and protecting them from potential legal penalties or the cancellation of the transaction. For companies, providing a truthful antitrust certification is essential to maintaining regulatory approval and completing the deal.
Understanding antitrust certification statements through an example
Imagine two companies, Company A and Company B, are planning to merge. As part of the merger process, both companies are required to submit an antitrust certification statement to the relevant competition authorities. In this statement, the companies affirm that the merger will not harm market competition, and they have not engaged in any anti-competitive activities, such as colluding with competitors to fix prices or divide markets. By submitting this certification, the companies are assuring regulators that the merger complies with antitrust laws, which allows the authorities to review and approve the transaction.
In another example, a business is entering into a joint venture with a competitor. As part of the approval process, the company must submit an antitrust certification statement, confirming that the joint venture does not involve any activities that would restrict competition, such as exclusive agreements that would prevent other companies from entering the market.
An example of antitrust certification statement clause
Here’s how an antitrust certification statement might appear in a merger or acquisition agreement:
“The Parties hereby certify that, to the best of their knowledge, the proposed transaction does not violate any applicable antitrust laws, including but not limited to the Sherman Act, the Clayton Act, or the Federal Trade Commission Act. The Parties further certify that they have not entered into any agreements or practices that would restrict competition in the market or harm consumer choice, and the transaction will not result in the creation of a monopoly.”
Conclusion
Antitrust certification statements are a critical part of regulatory compliance in business transactions, particularly mergers, acquisitions, and joint ventures. By submitting these statements, companies assure regulators that their transactions do not harm competition or violate antitrust laws. These statements help safeguard the integrity of the marketplace, ensure fair competition, and prevent monopolistic practices. Ensuring that antitrust certification is accurate and submitted in a timely manner is crucial for the successful completion of regulated transactions.
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.