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Allocating competition law risk in merger agreements

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Most countries around the world have competition law merger control regimes. This typically means that where a transaction meets the applicable thresholds and is, therefore, subject to mandatory pre-merger notification, the parties legally cannot close before the transaction is reviewed by the regulator. Depending on the extent of the parties’ competitive overlap, the road to clearance may be a long and costly exercise that could ultimately impact the commercial viability of the deal. As such, when negotiating the merger agreement, it is critical for parties to a transaction that is subject to review to consider their tolerance for competition law risk. The article provides an overview of key contractual considerations for the allocation of competition law risks ranging from the potential for remedies to parties’ respective control over the filing and review strategy.