Antitrust Provisions In Merger Agreements
By definition, all of Anthem`s antitrust arguments and the mountains of evidence it presented failed to convince. As a result, Anthem could not rely on these arguments to demonstrate that another result was justified. Instead, she had to point out a new argument that she was unable to present, or some evidence that she could not obtain because of Cigna`s offence, and then show that this new argument or evidence was so compelling that another result would have been obtained. Anthem couldn`t do it. The anti-competitive problems of the transaction went far beyond local competition overlaps, which could be resolved by a modest divestment, and even if the defence of efficiency was moderately strengthened, it would not be enough to save the agreement either. Anthem could not prove that the violation of Cigna`s best efforts was not an omission. The failure of the Anthem/Cigna merger was stalled on the grounds of cartels and abuse of dominance and also led to litigation: Cigna claimed that the announcement of Anthem`s merger had implicated regulatory and antitrust audits and had deliberately used the merger to harm Cigna, while Cigna claimed that Cigna had “sabotaged” the agreement by highlighting the efforts. According to the complaint, Cigna`s senior managers were dissatisfied with their roles and titles after the closure. The court has yet to decide. Even Cigna could not reasonably claim a breach of Anthem`s appropriate overall undertaking. Cigna therefore turned to another provision – one that imposed special obligations on Anthem as an acquirer.
In many transactions, the seller requires the buyer to take on all of the risk in terms of cartels and abuse of dominance (or as far as reasonable). A common way to do this is to provide what is called “hell or flood,” which would force the purchaser to do everything in its power to obtain authorization for the transaction, including the sale of most of the acquired activity to a third party as necessary. Each party argued that the actions of the other party violating the provisions of the merger agreement with respect to cartels and abuse of dominance. Cigna hit the first shot. Even before D.C e Circuit made its final decision on cartel and abuse of dominance issues, Cigna Anthem sent out a notice that would have announced the merger agreement. He then filed a complaint with the Delaware Chancery Court, which alleged a violation of hell or high water supply, claiming $14.7 billion in “expected” damages and $1.8 billion for non-payment of reverse termination fees. These provisions fall into three categories. The first required both parties to make “reasonable efforts” to meet all the conditions for concluding the merger, including obtaining administrative authorization. Given the delay in FTC approval, it was unlikely that the merger would be completed by the original closing date.
Rent-A-Center decided that it would not unilaterally extend the end date and that Rent-A-Center would terminate the merger contract if Vintage was not renewed. Vintage did not extend the end date on time.