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The Role of Trustees in EC Competition Law

COMPETITION. The Role of Trustees in EC Competition Law. David Davies. ADVISORY. Overview. Implementation Team required Key initial actions Possible problem areas Key learning points. Implementation – the team may include . . . The Steering Group. Head of Legal. Senior business

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The Role of Trustees in EC Competition Law

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  1. COMPETITION The Role of Trustees in EC Competition Law David Davies ADVISORY

  2. Overview • Implementation • Team required • Key initial actions • Possible problem areas • Key learning points

  3. Implementation – the team may include . . . The Steering Group Head of Legal Senior business executive Key shared services personnel Board External competition lawyers Director M&A Group IT personnel Divestment Business A Divestment Business B Hold Separate Manager Hold Separate Manager Senior Management (businesses retained) Other operational executives Other operational executives IT IT Legal Legal

  4. Implementation – overview of first two periods - Monitoring Trustee’s monthly reporting - Parties’ divestment reporting Kick off meetings Trustee briefings and site visits Hold separate / viability / carve-out proposals Implement hold separate / viability / carve-out actions Divestment process

  5. Implementation – initial divestiture actions • Consider appointing investment advisers • Preparing Information Memorandum, bidding instructions, data room, etc • Identifying / contacting prospective purchasers • Planning / starting ‘carve-out’ activity – eg allocation of personnel, asset splitting, et • Agreeing reporting responsibilities

  6. Implementation – initial viability issues • The performance of the Divestment Business against agreed strategy and business plan • Key customer, supplier and other contracts • R&D and capital expenditure programmes • Key shared services • Retention / incentivisation of Key Personnel • Regulatory compliance

  7. Implementation - hold separate / ring-fencing • Appointing / briefing Hold Separate Manager(s) • Sending employee briefings / notifications • Reviewing reporting lines, roles and responsibilities • Content / circulation of management info’ • Identifying and reviewing services provided to the Divestment Business • Preparing and signing confidentiality agreements • Reviewing physical separation / access controls

  8. Implementation - IT hold separate / ring-fencing • Identifying relevant IT personnel and infrastructure • Briefing Trustee’s team on IT infrastructure • Determining list of authorised users • Limiting access to Divestment Business data • Agreeing appropriate access controls and / or signing confidentiality agreements

  9. Possible problem areas - divestiture • No suitable purchaser • Extensions of time limits • Insufficient information to demonstrate compliance with the Purchaser Requirements

  10. Possible problem areas - other • Differences between EC and FTC requirements • Disputes - extent of Trustee’s powers • Partial relaxation of commitments needed

  11. JV dissolution scenario A B Merger 49% 51% & Lead Operator European JVs C

  12. Implementing hold separate arrangements Merger integration activity A B C 49% 51% & Lead Operator European JVs

  13. Maintaining viability Merger integration activity A B C 49% 51% & Lead Operator European JVs

  14. Enabling merger integration Merger integration activity A B C Filtered data 49% 51% & Lead Operator European JVs

  15. Dissolution and merger integration completed A Merged B&C Corp A JV business fully integrated JV business fully integrated

  16. Key learning points . . . • Prior to making commitments, consider the practicalities of implementing them • Early nomination of Trustee and planning • Identification and briefing of team members • Open and constructive dialogue with Trustee to plan and implement the commitments • Strong ongoing project management • ‘No surprises’ approach with the Commission

  17. Questions

  18. Contact details David Davies Head of Competition KPMG Forensic 20 Farringdon Street London EC4A 4PP Email: davidfa.davies@kpmg.co.uk Tel: +44 (0) 20 7311 3804 Fax: +44 (0) 20 7311 3630

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