Clean Team Agreements and Gun-Jumping in Competitor Deals

In a deal between competitors, the NDA is not enough. The parties have to keep competing until they are allowed to close, and they have to avoid sharing more competitively sensitive information than diligence and integration planning require. Two bodies of law drive the work: the Hart-Scott-Rodino Act, 15 U.S.C. § 18a, and Section 1 of the Sherman Act, which reaches agreements that restrain trade, including certain information exchanges and pre-close coordination. Texas has a parallel statute in the Texas Free Enterprise and Antitrust Act, Tex. Bus. & Com. Code § 15.05(a), which is construed in harmony with federal precedent under § 15.04. This article covers the rules, a sample clean team agreement with notes, and the interim covenant drafting that keeps a buyer on the right side of the line.

The HSR waiting period and what gun-jumping means

If a transaction is reportable, the parties may not close, and the buyer may not acquire beneficial ownership of the target, until the waiting period expires or is terminated. The standard waiting period is 30 days after both parties file (15 days for a cash tender offer or certain bankruptcy sales), and a second request extends it until 30 days after substantial compliance. For 2026, the size-of-transaction threshold is $133.9 million, effective February 17, 2026.

The filing itself changed and then changed back. The expanded HSR form that took effect in February 2025 was vacated by the Eastern District of Texas on February 12, 2026 in Chamber of Commerce of the United States v. FTC, and the government's Fifth Circuit appeal has been held in abeyance while the agencies consider new rulemaking. Parties should confirm the current form requirements before filing rather than assuming either version.

Three state laws add a layer. Washington and Colorado adopted the Uniform Antitrust Pre-Merger Notification Act effective July 27, 2025 and August 6, 2025, and California adopted it in February 2026 with an effective date of January 1, 2027. Those laws generally require filers with a sufficient connection to the state to send a copy of the HSR filing to the state attorney general. Texas has not adopted it.

Gun-jumping is acting as if the deal has closed before it has: running the target's pricing, approving its customer contracts, directing its hiring, or otherwise taking operational control. It is a procedural violation of Section 7A, and the agencies do not have to prove any effect on prices. The maximum civil penalty is $53,088 per day of violation; the FTC announced in September 2026 that it will continue to apply the 2025 penalty levels during 2026. Coordination between competitors before closing can also violate Sherman Act Section 1 whether or not the deal is reportable.

A recent example is United States v. XCL Resources Holdings, LLC (D.D.C.), filed in January 2025 at the FTC's request, in which the buyers and the seller of an oil producer agreed to pay a combined $5.684 million civil penalty. The complaint alleged that the interim covenants gave the buyers approval rights over the seller's ordinary course drilling, spending, hiring, and customer contracts, that the seller paused new drilling at the buyers' direction, and that the parties shared customer contract and pricing information and coordinated customer supply.

What information can be shared, and with whom

Most diligence information can be shared in a competitor deal if it is genuinely needed to evaluate the transaction and is handled at the right level of aggregation and access. The categories that need protection are current and future pricing, customer-specific terms and discounts, cost and margin data detailed enough to reverse-engineer pricing, bid and pipeline data, unannounced product plans, and employee compensation for overlapping roles.

Practitioners used to rely on the safety zone in the agencies' 1996 health care policy statements: data at least three months old, from at least five sources, with no source over 25% of any statistic, managed by a third party. The Department of Justice withdrew those statements in February 2023 and the FTC followed on July 14, 2023. There is no longer a stated safe harbor. The old factors are still a sensible starting point for aggregation, but the analysis is now case by case.

An aggregation example shows the technique. A seller has 400 customers and the buyer competes for 120 of them. Instead of a customer-by-customer price file, the clean team receives average net price by product line and by customer size band, each band containing at least five customers, with no single customer more than 25% of a band's revenue, using data at least three months old. Outside counsel and the buyer's economist see the customer-level file for the antitrust analysis. The buyer's sales leadership sees neither.

Three access tiers

Well-run processes use three tiers.

1. A general diligence room for information that is confidential but not competitively sensitive, available to the buyer's deal team under the NDA.

2. A clean team of buyer personnel who do not have direct responsibility for pricing, marketing, sales, or competitive planning in the overlapping business, and who may see more detailed sensitive data in order to model synergies and value. Corporate development staff, finance personnel without commercial responsibility, recently retired employees, and outside consultants are common choices.

3. An outside counsel-only tier, sometimes extended to retained economists, for the most sensitive materials, including customer-level pricing and documents used in the antitrust analysis itself.

A sample clean team agreement

I prefer a short signed clean team agreement, or a detailed NDA schedule, to an email chain. The core provisions:

"Section 1. Competitively Sensitive Information. 'Competitively Sensitive Information' means non-public information of a Party relating to the Overlap Business concerning (a) current or future prices, pricing strategy, discounts, rebates, or other terms offered to any customer or supplier; (b) customer-specific or supplier-specific volumes, margins, or contract terms; (c) bids, bid strategy, or pipeline; (d) costs at a level of detail that would permit derivation of pricing; (e) unannounced products or capacity plans; and (f) compensation of employees in overlapping roles. A Party may designate information as 'Clean Team Only' or 'Outside Counsel Only' when it makes the information available."

"Section 2. Clean Team Members. Clean Team Only information may be disclosed only to Clean Team Members, meaning individuals listed on Schedule A who (a) do not have, and for twelve months after the earlier of Closing or termination of the Transaction Agreement will not be assigned, direct responsibility for pricing, sales, marketing, or competitive strategy for the Overlap Business, and (b) have signed the acknowledgment in Schedule B. Additions to Schedule A require written consent of the disclosing Party's antitrust counsel, not to be unreasonably withheld."

"Section 3. Outputs. Clean Team Members may share conclusions with other personnel only in a form reviewed by the receiving Party's antitrust counsel that is aggregated, historical, or otherwise does not disclose Competitively Sensitive Information."

"Section 4. No Control; Continued Competition. Until Closing, each Party will continue to operate independently, set its own prices, and compete. Nothing in this Agreement or the Transaction Agreement permits either Party to direct the other's ordinary course business."

"Section 5. Termination. If the Transaction Agreement terminates, each Party will promptly return or destroy Competitively Sensitive Information of the other Party, except that outside counsel may retain one archival copy for legal or regulatory purposes, and the restrictions in Sections 1 through 3 survive for two years."

What each piece does:

1. The definition is concrete and tied to the Overlap Business. A circular definition ("information that is competitively sensitive") gives the clean team nothing to apply. Limiting it to the overlap keeps the protocol from swallowing the whole data room.

2. The designation right puts the decision about tiering on the party that knows its own data.

3. The twelve-month reassignment bar in Section 2 is the provision that gives the protocol credibility. A clean team member who moves into a pricing role the week after a failed deal carries the information with them. Twelve months is common; six months is a fallback for small organizations where the pool of eligible people is thin.

4. Requiring the other side's counsel to approve additions creates friction on purpose. The usual compromise is consent "not to be unreasonably withheld" with a two-business-day deemed approval.

5. The outputs clause is where most leaks happen. A synergy model that lists projected price changes by customer is itself competitively sensitive.

6. Section 4 states the rule that interim covenants have to respect.

7. Survival for two years after a failed deal is a common negotiated period. Customer-level pricing goes stale; a two-year bar protects the period in which it would still be useful.

Interim covenants that do not hand over control

The merger agreement's ordinary course covenant is where gun-jumping risk usually lives. The buyer legitimately wants to protect the value it is paying for. It cannot use consent rights to run the business.

Sample interim covenant language:

"From signing until Closing, the Company will operate in the ordinary course of business consistent with past practice and will not, without Buyer's prior written consent (not to be unreasonably withheld, conditioned, or delayed), (a) enter into any customer contract with annual revenue above $2,500,000 or a term longer than three years, (b) incur capital expenditures in excess of 110% of the capital budget on Schedule 6.1, or (c) hire any employee with annual base compensation above $250,000. Nothing in this Agreement gives Buyer the right to control or direct the Company's operations before Closing, including its pricing, bidding, or customer terms."

What each piece does:

1. Dollar thresholds tied to the target's size limit consent rights to material, value-affecting decisions. If the threshold is so low that the buyer approves routine contracts, the covenant itself creates the control the law forbids. In XCL, the complaint focused on consent rights that reached ordinary course activity with no ordinary course carve-out.

2. The capex test uses a percentage of an agreed budget. On a $10,000,000 budget, 110% lets the company spend up to $11,000,000 without asking, which leaves room for normal variance.

3. The last sentence is a statement of intent, not a shield. What the parties do during the waiting period matters more than the words, so the deal team needs to know that a consent request is a legal event, routed through counsel, and decided on value-protection grounds.

Where deals land: sellers in competitor deals push for higher thresholds and a list of decisions that never need consent, such as pricing and bidding. Buyers accept the pricing carve-out in nearly every well-advised deal because it costs little and protects both sides.

Integration planning versus implementation

Planning is allowed. Implementing is not, until the waiting period has expired and the deal closes. A buyer may design the combined sales organization, build the systems migration plan, and prepare day-one communications. It may not assign customers, align prices, tell target employees how to respond to a bid, or announce changes to suppliers before closing. Integration teams working with clean team data should be inside the protocol, and their work product should be reviewed before it reaches business leaders.

A diligence and negotiation checklist for competitor deals

1. Decide early whether the deal is HSR reportable and whether any state mini-HSR applies, and calendar the waiting period. Do not treat early termination as a date certain.

2. Map product, customer, and geographic overlap before the data room opens, so the protocol is built for the actual Overlap Business.

3. Sign the clean team agreement before competitively sensitive files are uploaded, not after a sales lead has downloaded them.

4. Build the three access tiers into data room permissions and keep an access log.

5. Set interim covenant thresholds by reference to the target's size and carve out pricing and bidding.

6. Route every consent request under the interim covenants through counsel.

7. If the deal ends, execute the return, destruction, and reassignment provisions rather than leaving them on the page.

How I can help

I draft and negotiate NDAs, clean team protocols, and the related deal documents for private equity and M&A matters, including strategic buyer processes. Antitrust notification strategy and agency advocacy, when a deal needs them, are coordinated with antitrust counsel. Related NDA points are covered in key NDA terms in M&A deal processes.

Next step

Want to run your scenario by me? Email info@robertsandwillie.com or call (469) 910-4017. Sending a message does not create an attorney-client relationship.

This article is for general information and is not legal advice. Statutes, rules, and enforcement actions are summarized for general discussion, and their application depends on the facts and the agreements in each transaction. Attorney Advertising. Roberts & Willie, PLLC, Dallas, Texas; Trenton Roberts, responsible attorney.