Merging companies negotiating antitrust risk-shifting provisions in their merger agreements should consider committing to the remedies used in prior antitrust settlements of mergers in the same industry or those dealing with similar issues. In two recent transactions the acquirers committed to accept settlement conditions that the federal antitrust agencies required in similar deals.

In Comcast Corporation’s acquisition of Time Warner Cable, Inc., Comcast agreed to accept conditions consistent with those imposed by the agencies in prior cable mergers that:

Additionally, Comcast can terminate the deal if the government requests a burdensome condition, defined as any divestiture or undertaking other than those that Comcast has explicitly agreed to.

In Smith & Nephew plc’s acquisition of ArthroCare Corporation, Smith & Nephew agreed to enter into certain transitional agreements that the agencies customarily require in consent decrees settling antitrust concerns involving licensing intellectual property.

Committing to remedial obligations that the agencies have used in similar deals allows the merging parties to:

This is particularly the case for companies that have been involved in prior settlement negotiations with the agencies for mergers within the same industry.

To track and analyze the latest developments in antitrust risk-shifting provisions, see What’s Market, Antitrust Risk-shifting Database.

Government contractors in a dispute with the federal government should be aware of a recent Federal Circuit decision clarifying the scope of the government’s duty of good faith and fair dealing. The court held that contractors are not required to show that the government violated specific contract provisions to establish that it breached this implied duty.

In Metcalf Construction Co. v. United States, the Federal Circuit limited its earlier Precision Pine decision by rejecting a standard requiring contractors to show affirmative bad faith by the government through the specific targeting of its actions at the contractor. The Metcalf decision reaffirmed that the duty of good faith requires the federal government to:

Government contractors should be aware that despite the stricter standard in Metcalf, a contract’s specific provisions continue to serve as the basis for analyzing the federal government’s obligations under the duty of good faith. Prime contractors should also remember that the same standard could apply to them when dealing with their subcontractors.

For more information on the Metcalf decision, see Legal Update, Federal Circuit Clarifies Scope of the Implied Duty of Good Faith in Government Contracts.

Non-reporting companies that provide services to SEC reporting companies must revisit their internal compliance policies and procedures given a recent US Supreme Court ruling extending the whistleblower protections under the Sarbanes-Oxley Act (SOX) to certain non-reporting company employees.

In Lawson v. FMR LLC, the Supreme Court held that the whistleblower and anti-retaliation provisions of SOX extend to the employees of a private contractor or private subcontractor to a public company. As a result, employees of a private company who claim they were retaliated against for reporting potential fraud at a public company client of their employer can bring claims against their employer for violations of SOX Section 806.

Non-reporting companies that provide services to reporting company clients should review their compliance policies and procedures and consider adopting additional policies and procedures that reflect whistleblower best practices already implemented by public companies. Specifically, these companies should consider:

As a best practice, reporting companies should consider reviewing whether their non-reporting contractors and subcontractors have anti-retaliation policies and whistleblower hotlines. Among other things, this may help a reporting company avoid any negative publicity that could arise from retaining a contractor later found to have lacked appropriate whistleblower protections.

For more on this case from an employment law perspective, see Labor & Employment: SOX Whistleblower Coverage.

For a sample code of ethics and business conduct, see Standard Document, Code of Ethics and Business Conduct for a Public Company.

Employers with fewer than 100 employees have important transition relief available under final regulations (which are part of a series of final rules) implementing health care reform’s employer mandate.

The employer mandate generally applies to large employers, defined as employers who employed on average at least 50 full-time employees, including full-time equivalent employees, on business days during the prior year. Under the transition relief, for employers with fewer than 100 employees, employer mandate penalties will not apply for any month during 2015 or the portion of a 2015 plan year that falls in 2016. The final regulations also make several clarifications, including to rules addressing an employer’s first year as a large employer subject to the employer mandate.

In a related development, the IRS has issued final regulations implementing information reporting rules for large employers and insurers, along with related employee statements. These rules, which require employers with at least 50 full-time employees to inform the IRS about the health coverage they offer to employees, are necessary to administering the employer mandate. The final rules provide for:

The information reporting rules also require employers to provide statements to employees for use in determining whether an employee may claim a premium tax credit under health care reform.

For more information on the employer mandate and related requirements, see Practice Note, Employer Mandate under Health Care Reform: Overview.

The SEC issued an interim final rule (IFR) extension delaying the application of certain US securities laws to security-based swaps (SBS) for three additional years, until February 11, 2017. The delay allows SBS to continue to trade as they did prior to the enactment of Title VII of the Dodd-Frank Act, provided that the SBS:

Certain rules remain in effect under the IFR extension, including:

The expiration of the IFR and the corresponding application of the US securities laws to SBS will primarily impact uncleared SBS, as most cleared SBS have been granted a permanent exemption from the US securities laws.

For more information on the application of US securities laws to SBS, see Practice Note, The Dodd-Frank Act: Application of US Securities Laws to Security-based Swaps.

Following the recently issued final Framework for Improving Critical Infrastructure Cybersecurity (Framework) by the National Institute of Standards and Technology, counsel should confer with executive management, including, where applicable, their organization’s chief information officer or an independent information technology consultant, to:

Although the Framework’s standards are voluntary, they pose the risk that private litigants and regulators will use (or misuse) them as a benchmark of the minimum measures organizations must take to run an acceptable cybersecurity program.

The Framework, which was issued in response to a 2013 presidential executive order, seeks to:

The Framework’s application is broad. Contrary to the common understanding of “critical infrastructure,” it incorporates the US Department of Homeland Security’s 16 critical infrastructure sectors, which include a variety of operations such as sports leagues, hotels, casinos and retailers. Because of its broad application, the Framework may be most useful:

For more information on cybersecurity, see Practice Note, Cyber Attacks: Prevention and Proactive Responses.

The minimum wage for employees of federal contractors and subcontractors is set to increase on January 1, 2015 under a recent presidential Executive Order (Exec. Order 13658, 79 Fed. Reg. 9851 (Feb. 12, 2014)).

The Order applies to certain contracts or contract-like instruments with the federal government that are finalized or renewed on or after January 1, 2015. In addition, the Order:

Employers should review any existing contract or potential contract bids that may be subject to the Order and determine:

Employers should also track DOL regulations to reevaluate potential contract costs and action items under the Order, including:

All employers should have a system in place to review any contracts that may involve work with the federal government, either directly or as a subcontractor, before the contracts are signed to avoid unintentionally becoming a federal contractor subject to regulatory compliance, including the minimum wage.

For more information on this development, see Legal Update, Federal Contractor Minimum Wage to Increase Effective January 1, 2015.

Following the US Supreme Court’s recent decision in Lawson v. FMR LLC, private employers that perform work for public companies should review their policies and practices regarding whistleblower claims.

In Lawson, the Supreme Court held that whistleblower protections under SOX apply to the employees of privately held contractors and subcontractors to public companies. As a result, private company employees who claim they were retaliated against for reporting suspected fraud at a public company client may bring claims against their employer for violations of SOX Section 806.

In light of this ruling, private employers should:

Additionally:

For more on this case from a corporate governance perspective, see Corporate Governance & Securities: Whistleblower Compliance for Private Companies.

For more information on employment-related practices in the SOX context, see Practice Note, Whistleblower Protections under Sarbanes-Oxley and the Dodd-Frank Act.

Parties involved in international commercial disputes, including those involving bilateral investment treaties, should know that US courts will give deference to the arbitrators’ interpretation and application of an agreement’s procedural pre-arbitration conditions.

In BG Group plc v. Republic of Argentina, the US Supreme Court found that an arbitration panel should decide whether it could hear an arbitration brought before it, despite the failure of the party to satisfy a pre-arbitration condition before commencing the proceedings. The petitioner, BG Group, commenced arbitration proceedings pursuant to an investment treaty between the UK and Argentina despite failing to commence litigation in Argentinean courts as required by the arbitration provision in the treaty. During the arbitration, the respondent argued that the arbitrators did not have jurisdiction over the proceedings because the petitioner failed to satisfy this condition. The arbitration panel disagreed, and issued an award in favor of the petitioner.

Applying ordinary contract principles to the treaty, the Supreme Court found that the local litigation requirement in the treaty is not a substantive condition affecting arbitrability. Rather, the requirement is a procedural condition to the arbitration because it determines when the contractual duty to arbitrate arises. Therefore, the local litigation requirement was a matter for arbitrators to interpret and apply.

For more information on the BG Group decision, see Legal Update, Supreme Court: Arbitrators, Not Courts, to Interpret Investment Treaty’s Conditions Precedent to Arbitration Clause.

The IRS and Treasury Department recently released the final substantial set of Treasury regulations necessary to implement the Foreign Account Tax Compliance Act (FATCA).

FATCA withholding on specified payments of US-source income to nonparticipating foreign financial institutions (FFIs) and noncompliant non-financial foreign entities (NFFEs) is set to begin on July 1, 2014. An FFI required to register with the IRS to qualify as a participating or registered deemed-compliant FFI must generally do so by April 25, 2014 to ensure that it avoids FATCA withholding on US-source payments that it receives on or after the July 1 start date.

The FATCA regulations include two sets of final and temporary regulations that:

Key changes and clarifications in the Revised FATCA Regulations include:

Both sets of regulations became effective on March 6, 2014.

For more information on these FATCA rules, see Legal Update, IRS Issues Final Set of FATCA Regulations.