Cheat Sheet: What GCs need to know about government merger enforcement trends
Experts weigh in on trends in antitrust scrutiny, and give tips on avoiding enforcement actions
April 16, 2013 at 08:56 AM
12 minute read
The original version of this story was published on Law.com
The Obama administration has earned a reputation for being tough on big mergers and acquisitions by scuttling deals between companies such as AT&T and T-Mobile, Anheuser Busch InBev and Grupo Modelo, and Nasdaq and the New York Stock Exchange. But is that reputation really deserved? In InsideCounsel's May cover story, experts break down trends in merger enforcement by the antitrust agencies and weigh in on whether the current administration has paid special attention to M&As.
Is the Obama administration especially tough on mergers?
Despite numerous media reports to the contrary, experts say that although merger challenges have risen under the Obama administration, the increase is not particularly dramatic. The number of challenges was unusually low during George W. Bush's presidency: The ratio of enforcement actions to merger filings was 0.75 percent and 0.9 percent in Bush's first and second terms, respectively, according to the Stanford Law Review.
During President Obama's first term, that ratio rose to 1.5 percent—a significant increase over the Bush years, but still less than the 1.8 percent long-term average since the beginning of the Reagan administration.
What is the administration's record on challenging M&As?
Experts say that both the Department of Justice (DOJ) and Federal Trade Commission (FTC) have increased their litigation staffing, giving them more confidence when challenging deals. In 2011 alone, the DOJ successfully blocked big mergers between H&R Block and TaxAct, Nasdaq and the New York Stock Exchange, and AT&T and T-Mobile. And it continued the trend in 2013 by challenging Anheuser-Busch InBev's attempted acquisition of Grupo Modelo, reportedly requiring concessions before the deal could proceed.
The FTC, on the other hand, has been less consistent when it comes to winning M&A challenges, losing three of its cases in 2011 alone. But lately it has seen more success, especially when it comes to the healthcare and pharmaceutical industries. On Feb. 19, for instance, the Supreme Court ruled in favor of the agency in the hospital merger case FTC v. Phoebe Putney Health System Inc.
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