The main objective of creating a “clean team” is to limit access to CSI to a number of pre-identified individuals in both companies, with clear processes in place to ensure that these individuals use the CSI for the limited purpose of assessing the feasibility and closing of the transaction. Members of these own teams may not share CSI with other members of the transaction/operations teams working on the business unless the information is sufficiently aggregated or anonymized not to reduce competitive uncertainty in the meantime. In addition, it would be desirable to appoint a “tutor” in such own teams. “In order to mitigate these risks, it is recommended that the parties form a limited team of individuals when performing due diligence and integration planning, preferably composed of members of senior management, an in-house legal team and external legal counsel (“Own Team”). The other party`s economically sensitive information should only be accessible to those own teams. Cleaning crews should not include employees involved in pricing, marketing, sales, etc. to ensure that these employees are not (consciously or unconsciously) influenced by competitive information (e.B as part of day-to-day business operations. Determination of prices, pricing strategy, sales volume, marketing strategy, terms of consumer contracts, etc.). Given the enormous consequences of shooting benefits on businesses and the potential problems under Article 3(3) of the Competition Act, it is essential to ensure that there is no exchange of sensitive business information between competitors and that there is no unintentional breach of competition law, i.e.
the parties remain in competition until the merger clearance is granted by the competent antitrust authorities in global transactions. Such risks can be easily avoided by deploying a clean team, as described above. Taking into account all aspects, it is required that any exchange of commercial and critical information between the parties to a concentration (in particular if the parties are competitors) be treated with caution by the own team in order to mitigate the anti-competitive spirit. If the formation or appointment of a clean team is not feasible for the parties, they should consider other tools/mechanisms such as the execution of confidentiality agreements. The parties must also assess whether the formation of a clean team outweighs the potential anti-competitive factor. 2015 was a pivotal year for global mergers and acquisitions (M&A). As the statistics (presented by Dealogic) show, the transaction volume reached US$4.9 trillion last year alone, even surpassing the record volume of US$4.6 trillion in 2007. In such a scenario, a key aspect that becomes essential for successful mergers and acquisitions is the careful consideration of several aspects, including potential antitrust (competition) issues affecting different countries such as India, in the planning and execution of global transactions.
Specifically, a key aspect of addressing antitrust concerns in integration planning will be the development of “clean team” agreements. Not only does the Competition Act prohibit anti-competitive agreements and abuse of dominance, but it also mandates the Competition Commission of India (“ICC”) to regulate mergers (mergers and acquisitions) to ensure that there are no negative effects on competition in India. The case highlights the need for transactional parties to ensure strict adherence to own team protocols when negotiating transactions with competitors in order to protect themselves from possible antitrust scrutiny under Article 3(3) of the CA02. In addition, an own team ensures that if for any reason the transaction is not concluded, the CSI will be traded during negotiation and the due diligence (“SD”) process will not be abused by either party to cooperate in an anti-competitive manner. The existence of robust and clean teams can mitigate the risk that CCI considers that the company is focused on executing a transaction prior to its approval. Clean teams: Solving the problem A “clean team” is a group of employees or consultants working for a buyer guided by a series of procedures agreed upon by both the buyer and the seller. Members of a cleaning crew should not be responsible for setting prices, other terms of sale or marketing strategies for competing products. Ideally, an own team could be made up of employees from the buyer`s finance department, external consultants, and/or retired employees of the buyer.
Own team members could also be subject to a certain period of reflection before being involved in competitive pricing or product marketing. The justification for an own team states that a person who makes strategic or market-driven decisions (including, but not limited to, pricing, sales/marketing strategy, or policy development) should not be affected by commercially sensitive information received in their capacity as a representative of a party to a proposed merger, especially if the transaction fails. In order to reinforce this justification in such circumstances, agreeing on a clean team generally requires that such a person be subject to a “cooling-off period” during which they are not allowed to resume their role in the day-to-day management of the business for a period of one to two years, which includes strategic decisions (as noted above). However, a person may sometimes be allowed to return to a new set of responsibilities that prevent them from using economically and competitively sensitive information obtained through the cleaning crew. In addition, it would be necessary for the members of the own teams to be subject to a `period of reflection`. During this period (usually one to two years), these members should not resume their role in the day-to-day operations of the company or assume responsibilities that could allow them to benefit from the ISCs they have received through their participation in these own teams. Published by the Competition Commission of India on 2. The Compliance Manual for Businesses published in May 2017 states that to mitigate risks, it is recommended to form a limited team of people while performing due diligence, including senior management as well as external legal counsel (“Clean Team”). .