Deal makers grapple with the Biden-led White House’s unprecedented challenge to mergers
Why did the US 22 prevent the merger?
Accustomed to legal barriers to mergers, investment bankers and settlement lawyers faced an unprecedented challenge under President Joe Biden.
Biden blocks 22 mergers
The U.S. Department of Justice and the Federal Trade Commission (FTC) have tried to block 22 mergers since Biden took office in January 2021, according to a study by Reuters. That number is more than the antitrust struggles of former President Barack Obama’s first two years in office, and double that of Donald Trump’s first two years.
Joel Grosberg, Antitrust Attorney at international law firm McDermott, Will & Emery, said more mergers are now involved in U.S. antitrust litigation compared to his 25-year career, although comprehensive data from decades ago is not available.
“It’s a combination of the FTC and the Justice Department being willing to sue and companies struggling,” Grosberg said.
Legal battle continues
Regulators managed to stop 15 out of 22 deals. Most of this happened without a court fight, as the companies gave up and dropped their deals. More recently, they have lost four attempts to block the merger in court, but are appealing two of the cases.
These losses did not dampen regulators’ appetite to challenge mergers. Biden-appointed FTC Chairman Lina Khan and US Department of Justice Antitrust Chief Jonathan Kanter are putting pressure, arguing that corporate consolidation has gone too far and is hurting consumers and workers at a time of rising inflation.
They’re getting ready to fight
Bankers and lawyers advise mergers to prepare for long battles with regulators. They push for contracts that involve more time to complete a settlement to account for the possibility of antitrust lawsuits.