© 2005 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights...

© 2005 KPMG LLP, the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International.

The Role of Trustees in EC Competition LawDavid Davies

COMPETITION

ADVISORY

2

Overview

Implementation

Team required

Key initial actions

Possible problem areas

Key learning points

3

Implementation – the team may include . . .

Board

Senior Management(businesses retained)

Key shared services personnel

Group IT personnel

The Steering Group

Head of Legal

Director M&A

Seniorbusinessexecutive

External competition

lawyers

Hold SeparateManager

Divestment Business A

ITLegal

Other operationalexecutives

Divestment Business B

Hold SeparateManager

ITLegal

Other operationalexecutives

4

Implementation – overview of first two periods

Indicative timings for larger merger

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8

Kick off

meetings

Trustee briefings and site visits

Hold separate / viability / carve-out proposals

Implement hold separate / viability / carve-out actions

Divestment process

- Monitoring Trustee’s monthly reporting- Parties’ divestment reporting

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

Merger

C

49% 51% & Lead Operator

European JVs

A B

12

Implementing hold separate arrangements

49% 51% & Lead Operator

European JVs

A B CMerger

integrationactivity

13

B

Maintaining viability

49% 51% & Lead Operator

European JVs

A CMerger

integrationactivity

14

A

Enabling merger integration

49% 51% & Lead Operator

B C

European JVs

Filtered data

Merger integration

activity

15

A

Dissolution and merger integration completed

Corp A

JV businessfully

integrated

JV businessfully

integrated

Merged B&C

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

Questions

18

Contact details

David DaviesHead of CompetitionKPMG Forensic20 Farringdon StreetLondonEC4A 4PP

Email: davidfa.davies@kpmg.co.uk

Tel: +44 (0) 20 7311 3804Fax: +44 (0) 20 7311 3630