S&C Critical Insights

The Australian-American Partnership to Address Climate Change

In this episode of S&C’s Critical Insights, Connor Schillerstrom from our Sydney office, John Anselmi from our Melbourne office and Sam Saunders from our New York office discuss how Australia and the United States are working together to address climate change.

Connor, John and Sam provide insight on how Australia might benefit from the Australia-United States Climate, Critical Minerals and Clean Energy Transformation Compact, which was formed this year to provide a framework for the countries to work together to reduce the cost of clean energy technologies and lay the foundation for the global clean energy economy.

They also discuss the possible designation of Australia as a “domestic source” for purposes of the U.S. Defense Production Act, which would provide benefits to Australian companies operating under certain contracts with the U.S. government. Finally, they provide an overview of loans and tax credits under the U.S. Inflation Reduction Act that are available for Australian companies with critical minerals and clean energy projects in the United States.

How the DOJ’s and FTC’s Draft Merger Guidelines May Affect M&A

In this episode of S&C’s Critical Insights, Melissa Sawyer, Global Head of S&C’s M&A Group, and Joe Matelis, a partner in S&C’s Antitrust Group, discuss how the draft merger guidelines issued by the Department of Justice and Federal Trade Commission may affect M&A deals.

Joe, who helped develop the 2010 horizontal merger guidelines that would be replaced by the new guidelines, notes that the new guidelines would create more uncertainty about what kinds of mergers the government is going to choose to challenge. Joe expects that the government is most likely to focus on merger activity by so-called dominant firms that have more than a 30 percent market share, even though a much broader set of concerns is raised in the new guidelines. He also expects that going forward courts may not give as much credence to the new guidelines given their break from prevailing tradition, and thus paradoxically the new guidelines may make it harder for the government to prevail in court.

Melissa points out some of the practical ways the draft guidelines might impact M&A deals. Parties would need more advance planning around potential antitrust issues, with hostile and topping bidders in particular needing to create clear plans to obtain timely clearances. She also would expect to see a shift in antitrust risk allocation provisions, including changes in reverse break fees, operating restrictions that apply between signing and closing, and “hell or highwater” clauses.

Supreme Court’s Recent Polansky Decision on the False Claims Act

In this episode of S&C’s Critical Insights, Annie Ostrager and Tracy Richelle High, Co-Heads of S&C’s Labor & Employment Group, discuss the Supreme Court’s June 16 decision in United States ex. rel. Polansky v. Executive Health Resources and implications for qui tam whistleblowers.  

The False Claims Act (FCA) authorizes qui tam actions by private parties, called “relators,” who sue on behalf of the United States. The government may intervene and take over litigating the case during the “seal period”—the window at the outset of the action during which the case is sealed. If the government chooses not to intervene, the relator litigates the action. But the government has a right to intervene later for “good cause.”

In Polansky, the government chose not to intervene during the seal period, but years later, moved to dismiss the case. The relator argued that the government could not do so because it had not intervened during the seal period. The government responded that it could move to dismiss without intervening at all.

The Supreme Court adopted neither position. Instead, it held that the government may move to dismiss over a relator’s objection an FCA action so long as it moved to intervene at some point.

Annie and Tracy note that the qui tam provision of the FCA remains a powerful tool for prosecutors to encourage whistleblowers to come forward.  But a relator’s path to success may seem more uncertain after the Court’s decision.

Recent Developments with SEC’s Whistleblowing Program

In this episode of S&C’s Critical Insights, Annie Ostrager and Tracy Richelle High, Co-Heads of S&C’s Labor & Employment Group, discuss recent developments in the Securities and Exchange Commission’s whistleblowing program. 

The Sarbanes-Oxley Act, as modified by the Dodd-Frank Act, provides protections and incentives for whistleblowers who report potential violations of the securities laws. Dodd-Frank also incentivizes potential informants to come forward by authorizing the SEC to grant awards to whistleblowers.

Annie and Tracy discuss two recent amendments by the SEC to its whistleblower program that appear to reflect the agency’s readiness to grant more and larger awards. One authorizes the SEC to make awards for related, non-SEC actions, even if they may be more directly connected to other agencies. The second gives the SEC discretion to grant a larger award in appropriate circumstances.

They also discuss two cases recently brought by whistleblowers against the SEC in the Third and Fifth Circuits involving the agency’s denials of whistleblower awards. 

Carve-Out Transactions in Europe: Key Considerations and Recent Experiences

In this episode of S&C’s Critical Insights, associates from our London, Paris and Frankfurt offices—Costanza Posarelli, Matt Triggs, Alexis Madec and Stephan Rauch— discuss  key considerations for carve-out transactions for EU and U.K. businesses, and their recent experience assisting S&C clients with these complex transactions. 

In the current economic climate,  many companies are evaluating whether they are deploying their assets in a way that maximizes value, and financial sponsors are open to more complex opportunities. Carve-out transactions, in either an M&A or a spin-off context, can be a particularly attractive option.

In either context, there are several considerations to keep in mind, including tax aspects and impacts on financing arrangements for the parent company; the need for third-party consents; the relationship between the carved-out business and parent company going forward; and, if the company opts for a spin-off, the choice of listing venue and potential flowback risks.

Supreme Court’s Recent Slack Technologies Decision

In this episode of S&C’s Critical Insights, Jeff Scott and Julia Malkina, Co-Leads of S&C’s Securities Litigation Practice, discuss the Supreme Court’s June 1 decision in Slack Technologies v. Pirani and the potential implications for securities litigation.

Slack Technologies went public through a direct listing, which allows existing shareholders to sell their unregistered securities on the first day of public trading at the same time as the company’s registered shares are sold. Slack claimed that the plaintiff in this case lacked standing to sue because he could not trace the purchase of his Slack shares to the registration statement.

The issue before the Court was whether Section 11 of the Securities Act of 1933 requires plaintiffs to plead and prove that they purchased securities registered under the registration statement they allege is materially false or misleading. In a win for defendants, the Supreme Court unanimously held that the plaintiffs must plead and prove these facts, reversing the U.S. Court of Appeals for the Ninth Circuit.

Jeff and Julia discuss how the ruling reaffirms the longstanding interpretation of Section 11 and note that the Court’s decision could encourage more companies to go public through a direct listing. The ruling might also encourage legislative efforts to improve tracking of the ownership and registration of securities, including through the use of blockchain technology.

U.S. Clean Energy Tax Credits: Where We Are and Where We Are Going

In this episode of S&C’s Critical Insights, Inosi Nyatta, Isaac Wheeler and Sam Saunders discuss the unanswered questions about requirements and qualifications for receiving tax credits for clean energy projects under the Inflation Reduction Act (IRA).

 

The IRA, which was passed in August 2022, is the largest investment in clean energy in U.S. history and  is expected to unleash a new wave of energy transition projects across the United States. It introduced new or enhanced credits for renewable energy, clean electricity investment and production, energy storage, clean hydrogen, electric vehicles, clean technology manufacturing, sustainable fuels and carbon capture.

 

While the IRA has opened up numerous opportunities for energy transition projects,  there are still a number of uncertainties, including final rules on direct pay and transferability, the potential impact of the OECD’s Pillar Two rules and how debt ceiling discussions may impact availability of IRA tax credits.

Pharmaceutical Deal Outlook: U.S. and European Perspectives

In the webinar “Pharmaceutical Deal Outlook: U.S. and European Perspectives,” Frank Aquila, Matt Hurd, Carsten Berrar, Olivier de Vilmorin and Jeremy Kutner discuss the outlook for M&A deals in the sector. The group of partners, who came together from S&C’s New York, Frankfurt, Paris and London offices, focus in particular on outlining how patent law impacts the tenor of mergers and acquisitions, how the regulatory landscape in both the United States and Europe is affecting dealmaking, and the different considerations for acquirers as opposed to sellers.

Implications of EU Court of Justice Judgment in the Fiat Case for Future State Aid Investigations

In this episode of S&C’s Critical Insights, Juan Rodriguez, Co-Head of S&C’s European Competition Group and the Firm’s Antitrust Group, and associate Marielena Doeding discuss the European Court of Justice’s ruling in the Fiat case and its implication for future state aid investigations. This landmark judgment—in which the Court of Justice annulled a General Court judgment and European Commission decision –clarified the parameters under which the Commission may investigate individual tax rulings under state aid rules. Although the judgment reaffirms that the Commission may investigate tax measures for compliance with state aid rules, in doing so, it cannot apply its own version of the arm’s length principle to tax measures; in particular, it cannot apply the arm’s length principle to tax measures in jurisdictions unless – and then only to the extent that – the law of the jurisdiction incorporates that principle. Instead, the Commission must carefully consider national tax rules to assess whether or not a measure confers a selective advantage for state aid purposes.

Sullivan & Cromwell represented Fiat in this litigation. 

The Impact of COVID-19 on Consumer and Retail M&A

In this episode of S&C’s Critical Insights, partners Audra Cohen, Frank Aquila and Melissa Sawyer share important updates for dealmakers in the consumer and retail sector following the COVID-19 pandemic. Frank and Melissa discuss the impact of support legislation on various business models and explore how a continued shift in consumer priorities and product availability might change fundamental aspects of future M&A in these industries.