A Gun Jumping Assessor aids merging firms that are awaiting clearance from antitrust and competition authorities to understand their obligations in the time period between signing and completion of the merger.
The tool is used to assess the legality of conducting certain tasks before the closing is concluded.
For example, as parties enter into clean team arrangements to limit the exchange of competitively sensitive information to a small group of people, the tool assists in the assessment of the type of information that can be exchanged in order to comply with strict confidentiality obligations.
If desired, a dashboard may be set up to monitor and visualize risky actions identified on part of the buyer and seller until the merger is finalized.
In recent years, authorities have significantly increased the enforcement of procedural infringements regarding merger control rules.
Merging parties that violate standstill obligations by prematurely integrating their businesses or attempting to influence each other’s activities and therefore “jump the gun” face substantial fines.
In 2014, U.S. Department of Justice filed a complaint requiring Flakeboard America Limited, Flakeboard’s parent companies and SierraPine to pay nearly $5 million, including disgorged profits, to resolve the DOJ’s allegations that the parties engaged in illegal premerger coordination (“gun-jumping”), and the settlement imposed gun-jumping penalties of $3.8 million on both firms.
Similarly, the EU Commission fined the company called Marine Harvest for “gun jumping” its acquisition of Norwegian salmon producer Morpol, imposing two separate fines for two different violations, in the total amount of EUR 20 million.
To avoid the violation of these standstill obligations, employees that are for example part of the so-called clean team (which exchanges sensitive competitive information under strict confidentiality obligations) require clear and immediate guidance when deciding which information to share and to what extent.
Staying in line with gun jumping violations
The problem of gun jumping is deepened by the scope of information exchanged and case-by-case specificities, which are difficult to identify with certainty through manual efforts.
As a rule of thumb, parties to a merger should avoid sharing information on customers, prices, costs, product innovation, marketing or strategic plans.
Similarly, the buyer should not attempt to influence the target company’s ordinary course of business decisions; price setting, output determination or new product launches; advertising and marketing programs; and customer relationships.
Automate compliance during mergers
With BRYTER, companies access an application that assists in determining potential gun jumping risks associated with an action or exchange of information that occurs between the signing and closing of a merger. Legal departments and external legal counsels are immediately notified of any identified risks and can act based on this preliminary assessment.
This ensures consistency and full compliance with regulations, at all times, while keeping the company safe of any potential high-impact fines.
The user is guided through an interactive questionnaire that collects information and, based on these inputs, the tool automatically provides initial guidance on how to behave or whom to contact.
The modular logic of our risk management software allows the questionnaire to be adapted to the user’s inputs in a scenario-based manner in order to cover a wide range of possible actions which might amount to the infringement of standstill obligations.
Law firms, which often provide and maintain the application, are automatically looped into the assessment as critical risks are identified or further advice is needed.
Automated & standardized
The Gun Jumping Assessor ensures that all actions are assessed through an automated process. The tool enables merging companies to consistently ensure compliant behavior before the closing of the transaction.
Saves time and reduces costs
The Gun Jumping Assessor presents the user with clear instructions on how to act while saving significant time and reducing legal costs.
Centralized audit trail
Within the Gun Jumping Assessor all relevant inputted data is collected and compiled in a centralized audit trail. This enables companies to prove compliant behavior more easily.
The Gun Jumping Assessor is easily integrated into a company’s existing IT infrastructure. External counsels, who often provide and maintain the tool, are immediately notified of identified risks. The integrated service allows companies to escalate potential risks or receive external support quickly in the instance that no clear assessment can be made.
Every application built on BRYTER is customizable. The Gun Jumping Assessor can be built around the specific circumstances of an industry or transaction and easily extended to include a wide range of country specific standstill obligations.
How it works
Through a customizable and user-friendly questionnaire, all relevant information is collected and processed. Based on these inputs, the Gun Jumping Assessor assesses a wide variety of scenarios to provide the user with a tailored behavioral guidance.
The tool identifies risky actions that may violate applicable standstill obligations before the closing of the transaction. The identification of such actions can be connected to other processes such as email, approvals or alerts to internal and external legal counsels. Reports are generated to streamline the antitrust risk avoidance workflow.
A dashboard enables the company to keep track of all identified gun jumping risks that need to be monitored or acted upon. With a centralized audit trail where data regarding all conducted assessments is stored, companies can prove how every action was assessed before being carried out.