As the world emerges from the COVID-19 pandemic, increased M&A activity is likely until at least the end of 2020. The pandemic has changed the landscape of M&A, antitrust and foreign direct investment reviews globally in many key areas, including with regard to so-called 'killer acquisitions', failing firm arguments, distressed transactions and gun jumping.
The world is living through the most dynamic period in antitrust and competition policy for decades – with pressure for change coming from different directions and likely to generate concrete proposals and political controversy in 2020, plus the global COVID-19 pandemic adding unprecedented complexity and uncertainty. In this context, this article highlights a number of significant trends and developments of which businesses should be aware.
As the United States reacts and adjusts to the developing COVID-19 situation, the two federal antitrust agencies – the Federal Trade Commission and the Department of Justice Antitrust Division – have revised certain rules and procedures relating to their civil merger investigation processes to address these new challenges. Although both agencies have shifted most of their personnel to remote working arrangements, agency staff have demonstrated a willingness to be reasonable and accommodating.
The Department of Justice Antitrust Division and the Federal Trade Commission have announced the release of the 2020 Draft Vertical Merger Guidelines (VMG) for a 30-day comment period. As with any guidelines issued by the agencies, the finalised VMG will be instructive for the agencies' review of vertical mergers and will be persuasive but not binding on the courts should a contested merger enter litigation.
The Federal Trade Commission and the Department of Justice's Antitrust Division recently released the Hart-Scott-Rodino Annual Report for Fiscal Year 2018, covering 1 October 2017 to 30 September 2018. This report is the first opportunity to review data regarding the merger challenges issued exclusively during Trump's administration. The data underscores the importance and benefit of advance planning and strategy to avoid a second request investigation whenever possible.
The assistant attorney general recently suggested that antitrust enforcers should update their analytical framework to account for modern corporate structures, signalling the potential for antitrust violations when officers and directors serve multiple competing companies. The assistant attorney general's speech is a reminder that behaviour that is not explicitly prohibited by the letter of the antitrust statutes may still raise eyebrows.
Second requests can be expensive, time consuming and distracting to clients' employees. One way to ease the burden of a second request is to avoid it altogether. While second requests are inevitable for some transactions, certain strategies can help to lessen the likelihood of one being issued.