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U.S. FTC Revises Merger Challenge Rules: Automatic Stay of Administrative Litigation When Agency Loses Preliminary Injunction in Court

David P. Wales, Kathryn M. Fenton, Michael H. Knight, Paula W. Render, and Thomas D. York, Jones Day Client Alert, March 2015

See Paula W. Render's resume See David P. Wales's resume See Kathryn M. Fenton's resume See Michael H. Knight 's resume See Thomas D. York 's resume

One important procedural difference between merger challenges by the U.S. Department of Justice and the Federal Trade Commission is that FTC may challenge a non-consummated merger through both a district court preliminary injunction and administrative litigation (Part 3 adjudication). Recent revisions to the FTC Rules of Practice may reduce the likelihood of administrative litigation in cases where the agency fails to obtain a district court injunction blocking consummation of the transaction.

FTC has modified its Rules of Practice to address what happens to administrative proceedings challenging mergers after the agency tries but fails to obtain a preliminary injunction in U.S. district court. Under the revised Rule 3.26, when FTC seeks a preliminary injunction in the courts and loses, the administrative litigation now will be automatically stayed if requested by the merging parties in the administrative proceeding. This stay will allow FTC to decide, on a case-by-case basis, whether it would be in the public interest to continue pursuing the administrative litigation. In other words, a win by the merging parties in district court now effectively halts an administrative challenge to a merger. This has not been the case since 2009 when the rules last were changed.

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