Merging companies should review the Federal Trade Commission's (FTC's) latest revisions to the threshold levels that trigger the premerger filing and waiting period requirements under the Hart-Scott-Rodino (HSR) Act. The revisions increased:

The new dollar threshold levels became effective on February 27, 2012. The amount of HSR filing fees remains unchanged.

For an overview of the HSR Act, see Practice Note, Hart-Scott-Rodino Act: Overview.

For an explanation of how to determine whether a transaction is reportable under the HSR Act, see Practice Note, Determining Hart-Scott-Rodino Applicability.

Companies should expect continued aggressive antitrust enforcement by the government in light of President Obama's recent nomination of William J. Baer to serve as Assistant Attorney General (AAG) in charge of the Department of Justice's (DOJ's) Antitrust Division.

Baer previously held enforcer roles at the FTC, including Director of the FTC's Bureau of Competition in the 1990s. His record at the FTC includes successfully challenging the proposed merger between Staples and Office Depot and investigating Intel Corp. for abuses of dominance in the microprocessor market. Baer is currently the head of the antitrust group at Arnold & Porter LLP.

If Baer's nomination is confirmed by the Senate, he will replace Sharis A. Pozen, who will step down from that role at the end of April.

The European Commission's recent rejection of the proposed merger between Deutsche Boerse and NYSE Euronext, despite the DOJ's prior approval of the transaction, highlights the need for merging companies with cross-border operations to adopt a flexible approach when crafting merger remedies on a country-by-country basis.

In their settlement with the DOJ, the parties had agreed to various antitrust remedies, including rendering Deutsche Boerse's minority interest in a competitor passive until they could divest that interest. However, about one month later, the European Commission rejected concessions offered by the parties and blocked the deal from proceeding. The parties have since abandoned the deal.

Several countries, including Brazil, India and China, have adopted or strengthened their competition and merger control laws and have become more enforcement-minded. As a result, merging parties will increasingly need to negotiate with, and offer disparate concessions to, US and foreign antitrust authorities to get their deal approved.

A recent enforcement action demonstrates for US companies operating internationally the US government's expanding jurisdictional reach and increasingly aggressive enforcement of violations under the Foreign Corrupt Practices Act (FCPA).

On January 17, 2012, the DOJ filed a deferred prosecution agreement with Marubeni Corporation, a Japanese company, requiring it to pay $54.6 million for aiding and abetting and conspiring with US companies to violate the FCPA. The conspiracy involved bribing Nigerian officials in exchange for natural gas facility construction contracts. Although some of Marubeni's alleged conduct took place in the US, the DOJ's aiding and abetting charge was based solely on the extraterritorial conduct of one of Marubeni's co-conspirators. Marubeni is the fourth non-US company to face charges and enter into a deferred prosecution agreement with the DOJ in this matter.

This enforcement action reinforces the importance of maintaining a strong compliance program. US companies doing business through foreign agents may be held accountable under the FCPA for the actions of their foreign agents, even if they have no actual knowledge of the agents' corrupt activity.

US companies doing business with foreign companies, especially in countries where enforcement of anti-corruption laws is not emphasized, should:

For more on recent FCPA enforcement, see Litigation & ADR: Conscious Avoidance under the FCPA.

For more information on complying with the FCPA, see Practice Note, The Foreign Corrupt Practices Act: Overview and Foreign Corrupt Practices Act Compliance Checklist.

Public companies should prepare to respond to stockholder proposals during the 2012 proxy season seeking greater transparency of political contribution activities and requesting rotation of independent auditors.

Given the current election year and in the wake of the US Supreme Court's decision in Citizens United v. Federal Election Commission, companies in various industries have received proposals for disclosure of political and trade organization contributions and contribution policies. Companies that receive this type of proposal should consider:

In addition, companies should expect to see more auditor rotation stockholder proposals, prompted in part by an August 2011 Public Company Accounting Oversight Board concept release. However, companies have had continuing success this proxy season obtaining SEC no-action relief for excluding these proposals on the grounds that they relate to "ordinary business" matters. Therefore, companies should familiarize themselves with recent no-action letters to assist in their proponent outreach efforts or, failing that, to obtain their own no-action relief.

For more information on recent calls for greater oversight and corporate disclosure of political spending and lobbying activities, see Article, Corporate Political Spending.

For guidance on dealing with stockholder proposals generally, see Practice Note, How to Handle Shareholder Proposals.

Recently issued final regulations under ERISA impose rules that are designed to ensure that employers sponsoring pension and 401(k) plans receive information from service providers about the administrative and investment costs associated with providing these plans to their employees.

Issued by the Department of Labor (DOL), the regulations require service providers to certain retirement plans subject to ERISA to disclose fee information starting in July 2012. Proposed regulations issued in July 2010 set out requirements that these service contracts must meet. The final regulations impose several additional fee disclosure requirements.

Service providers to ERISA retirement plans with contracts in place on July 1, 2012, must make the required disclosures reasonably in advance of July 1, 2012. These regulations also effectively extend the effective date of the participant-level fee disclosure regulations under ERISA Section 404(a) until August 30, 2012.

If the disclosure requirements under the regulations are not satisfied:

For more information on the final regulations, see Practice Note, Service Provider Disclosure Requirements for Pension Plans.

The Internal Revenue Service (IRS) recently issued proposed regulations and rulings that would ease restrictions and allow retirement plans to offer annuity and other lifetime income options to participants and beneficiaries.

Employers generally have been hesitant to offer annuities in their defined contribution plans due to regulatory barriers, which increased costs and were administratively burdensome. The first set of proposed regulations would make it more practical for defined contribution retirement plans and Individual Retirement Accounts (IRAs) to provide longevity annuities. A longevity annuity is a retirement income stream that is scheduled to commence at an age in the future and continues as long as the individual lives. The new guidance enables employer plans and IRAs to more easily offer as a distribution option a portion of a benefit paid as a longevity annuity with the remainder to be paid in a single lump sum cash payment. However, longevity annuities would be subject to numerous requirements, including reporting and disclosure requirements for the issuer.

The second set of proposed regulations would streamline the calculation of optional forms of benefits in defined benefit pension plans that are paid partly in the form of an annuity and partly in a lump sum. This would make it simpler for defined benefit pension plans to offer combinations of lump sum cash payments and annuities.

In addition, the IRS issued two revenue rulings that clarify how annuities can be offered in defined contribution plans. Together, the proposed regulations and rulings should reduce regulatory barriers and increase employer interest in offering annuities. This will help protect retirees from the risk of outliving their savings. Comments on the proposed regulations must be submitted by May 3, 2012.

For more information on qualified retirement plans, see Practice Note, Requirements for Qualified Retirement Plans.

Swap dealers and major swap participants (MSPs) should review the final rules recently adopted by the Commodity Futures Trading Commission (CFTC) under the Dodd-Frank Act addressing the CFTC registration process and business conduct standards applicable in dealings with swap counterparties.

The final rules on registration (Registration Rules) establish the process swap dealers and MSPs must follow to register with the CFTC. The Registration Rules include provisional registration procedures pending the effectiveness of final CFTC rules defining the terms "swap dealer" and "major swap participant." During this provisional period, registration is permitted but is not mandatory. The Registration Rules also mandate that swap dealers and MSPs become and remain members of a registered futures association, such as the National Futures Association (NFA). Entities that believe they are swap dealers or MSPs should begin preparing now to apply for registration.

The final rules on business conduct standards (Business Conduct Rules) impose "external" business conduct standards and requirements on swap dealers and MSPs in their dealings with swap counterparties. The Business Conduct Rules are intended to ensure compliance with Title VII of the Dodd-Frank Act and related regulations, including by establishing due diligence and disclosure obligations for swap dealers and MSPs when entering into swaps with non-swap dealers or non-MSPs and certain special entities (as defined in the Business Conduct Rules). Swap dealers and MSPs should review their swap transaction documents to determine whether these requirements can be addressed through the inclusion of representations made by the transacting parties.

The Registration Rules will become effective on March 19, 2012. The Business Conduct Rules will become effective 60 days after their publication in the Federal Register.

For more information on the registration rules, see Legal Update, Final Rules on Registration of Swap Dealers and Major Swap Participants.

For more information on the business conduct rules, see Legal Update, Final Rules on Business Conduct for Swap Dealers and Major Swap Participants.

Companies planning to apply for a business method patent should review a recent Federal Circuit decision addressing subject matter eligibility for business method patent claims.

In Dealertrack, Inc. v. Huber, the Federal Circuit held, among other things, that claims covering a computer-related method for processing car loan credit applications were abstract ideas and therefore not patent eligible. Specifically, the court found that the claims:

The court further noted that adding a "computer aided" limitation to the preamble did not make the claims patent eligible.

This decision conflicts with the Federal Circuit's earlier decision in Ultramercial, LLC v. Hulu, LLC. In Ultramercial, a different Federal Circuit panel held that a claimed computer-related business method was patent-eligible subject matter.

The Federal Circuit or the US Supreme Court may provide further clarification on this subject given the inconsistent rulings. Until then, the Dealertrack decision suggests that a patent applicant for a business method patent involving a computer should consider including meaningful computer-related claim limitations. Under Dealertrack, a patent owner may be able to avoid a finding that the method is unpatentable as an abstract idea if the claims include limitations that recite, for example:

However, applicants should bear in mind that extensive limitations may unduly narrow the patent.

For information on patents generally, see Practice Note, Patent: Overview.

A recent FTC settlement serves as a reminder to companies that collect information online to ensure that their privacy disclosures clearly and accurately reflect their actual practices for collecting, handling and disclosing that information, and that they take reasonable steps to protect users' personal information.

On January 5, 2012, the FTC announced a proposed agreement with Upromise, Inc. to settle charges of deceptive trade practices based on the company's collection of consumer information through a personalization feature on a web-browser toolbar. The FTC alleged in its complaint that Upromise engaged in deceptive practices by:

The proposed settlement, among other things:

For more information on US privacy and data security law, see Practice Note, US Privacy and Data Security Law: Overview.

For a model website privacy policy, with explanatory notes and drafting tips, see Standard Document, Website Privacy Policy.

Both unionized and non-unionized employers should revisit their arbitration agreements with employees in light of a recent National Labor Relations Board (NLRB) decision regarding the lawfulness of class and collective action waivers.

In D.R. Horton, Inc., the NLRB held that an employer violated the National Labor Relations Act (NLRA) when it required covered employees to sign, as a condition of employment, an arbitration agreement that precluded them from filing joint, class or collective actions asserting employment-related claims.

As a result of this decision, employers should:

For more information on the enforceability of class and collective action waivers, see Legal Update, Arbitration Provision with Class and Collective Action Waiver Enforced Despite D.R. Horton.

Both unionized and non-unionized employers should review their social media policies and be cautious when disciplining employees for social media postings, following a recent report by the NLRB's General Counsel.

The report, issued on January 24, 2012, offers guidance to employers on the lawfulness of social media policies under the NLRA. Although the report looks at fact-specific cases and the context is critical in evaluating social media policies, generally employers should:

For more information on social media policies for employees, search Practice Note, Social Media Risks and Rewards. For a model employee policy for the appropriate use of social media, see Standard Document, Social Media Policy (US).

A recent decision by the Second Circuit warns corporate executives and investors that they cannot escape liability under the FCPA by turning a blind eye to their agents' illegal conduct abroad.

In US v. Kozeny, the Second Circuit upheld the conviction of Frederic Bourke for FCPA violations, relying on evidence that Bourke had "consciously avoided" confirming his suspicions that his business associate, Viktor Kozeny, had promised millions of dollars to Azerbaijani officials if they moved forward with the privatization of Azerbaijan's state-owned oil company.

The Second Circuit found evidence to support Bourke's conviction on conscious avoidance grounds, including Bourke's:

To reduce the risk that regulators will find that a company has consciously avoided general and specific indicators of corruption, companies engaged in foreign business should:

For more information on the anti-bribery provisions of the FCPA, see Practice Note, The Foreign Corrupt Practices Act: Overview.

A recent ruling by the Third Circuit underscores the federal courts' policy of favoring arbitration and their willingness to uphold arbitration agreements, even when the parties' designated arbitrator is unavailable.

In Khan v. Dell Inc., the Third Circuit reversed a decision by the US District Court for the District of New Jersey and concluded that a court may compel arbitration before a substitute arbitrator when the selected arbitrator is unavailable and the parties' intent to arbitrate before a specific arbitrator was ambiguous.

The district court had denied Dell's motion to compel arbitration, finding that the language in the parties' arbitration provision, which stated that any dispute "SHALL BE RESOLVED EXCLUSIVELY AND FINALLY BY BINDING ARBITRATION ADMINISTERED BY THE NATIONAL ARBITRATION FORUM (NAF)," indicated their intent to arbitrate any dispute exclusively before the NAF. The NAF, however, was unable to conduct the arbitration since entering into a consent judgment that bars it from arbitrating any consumer disputes.

The Third Circuit overturned the district court decision and held that courts have the statutory authority under Section 5 of the Federal Arbitration Act (FAA) to appoint a substitute arbitrator if the selection of an arbitrator is not integral to the arbitration provision. The selection of a specific arbitrator is not considered integral if there is ambiguity as to the parties' intent to arbitrate disputes only before the chosen arbitrator. In its decision, the Third Circuit found the language in the arbitration provision to be ambiguous.

This decision is beneficial to companies that wish to arbitrate disputes that may arise under an agreement containing an arbitration provision. However, to avoid litigation concerning the arbitration provision itself, counsel may wish to include language specifying that the arbitration must proceed before a substitute arbitrator under Section 5 of the FAA, if necessary.

Companies negotiating new lease space or amending their existing leases should not forget the importance of negotiating a landlord lien waiver and access agreement. Negotiating these agreements during lease negotiations is easier for a tenant, rather than having to initiate negotiations with the landlord after the lease term (or extended term) begins.

Companies seeking to finance their businesses should expect lenders to request lien waivers and access agreements from the companies' landlords, especially for loans to companies with valuable inventory or equipment being offered as part of the collateral package.

In a landlord lien waiver, the landlord agrees to waive or subordinate its lien rights and remedies against the tenant's personal property. An access agreement allows the lender to access the premises and seize the secured property without delay or the need for the landlord's prior consent. While these agreements seemingly only benefit lenders, if properly negotiated, they can benefit all parties involved.

Tenants can benefit from landlord lien waivers and access agreements because they allow a tenant to obtain financing and ensure the continuing operations of its business.

Landlords can benefit from landlord lien waivers and access agreements because:

The IRS and Treasury Department recently issued proposed treasury regulations (Proposed Regulations) which significantly modify prior Foreign Account Tax Compliance Act (FATCA) guidance.

FATCA imposes a new 30% US withholding tax on withholdable payments made to certain foreign financial institutions (FFIs) and non-financial foreign entities (NFFEs) that do not meet specific information reporting requirements. The IRS previously issued FATCA guidance in a series of three notices. The Proposed Regulations incorporate guidance from the notices, but also make significant changes. In particular, the Proposed Regulations:

Except for foreign passthru payments, the Proposed Regulations do not change the date to begin FATCA withholding. Generally, FATCA withholding begins on:

The Proposed Regulations are not effective until finalized. Comments are being accepted until April 30, 2012 and a hearing is scheduled for May 15, 2012.

For more information on the proposed regulations, see Legal Update, IRS Issues Proposed Regulations on FATCA.

The IRS recently issued temporary and proposed regulations that extend and expand IRC Section 871(m), which addresses the US taxation of cross-border dividend equivalent payments.

IRC Section 871(m) requires a US withholding tax on cross-border dividend equivalent payments made to a non-US person if the payments are contingent upon, or determined by reference to, the payment of a dividend from US sources and the payments are either:

IRC Section 871(m) applies to cross-border dividend equivalent payments on a limited set of specified notional principal contracts (focusing on equity swaps on US equities) until March 18, 2012. As originally enacted, IRC Section 871(m) applies to cross-border dividend equivalent payments made after March 18, 2012 on all notional principal contracts, unless the Secretary of the Treasury determines that a contract is not of a type having the potential for tax avoidance. However, the temporary regulations extend the more limited statutory definition of specified notional principal contract in IRC Section 871(m) through the end of 2012.

If finalized, the proposed regulations provide an expanded definition of specified notional principal contract for cross-border dividend equivalent payments made on or after January 1, 2013, which potentially captures a much broader array of cross-border equity-linked transactions on US equities (including futures, forwards, options, structured notes and convertible bonds that meet one of the seven tests in the proposed regulations). A hearing on the proposed regulations is scheduled for April 27, 2012.

For more information on the new regulations, see Legal Update, IRS Issues Regulations on Dividend Equivalent Payments.