Unpacking the Latest Regulatory Trends in U.S. Second Requests

Unpacking the Latest Regulatory Trends in U.S. Second Requests

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November 1, 2023

TransPerfect Legal held its third annual Antitrust Clearance & Merger Enforcement Conference on October 24, 2023, in New York City. At the conference, antitrust experts from across the country participated in six thought-provoking panel sessions throughout the day. The session “Trends from the Regulators” delved into the evolving landscape of antitrust clearance and merger enforcement, and shed light on the noteworthy developments in this critical area. This blog post summarizes the session’s highlights and unpacks the latest regulatory trends to watch out for.

Regulators are Taking a Harder Stance on Mergers: Regulators are unequivocally taking a harder stance on mergers due to the following reasons:

  • Concerns of excessive consolidation: Regulators are growing increasingly wary of the concentration of power in the hands of a few mega-corporations. The fear of market dominance and reduced competition has driven this concern.
  • Consumer and Labor/Employee Welfare: This stance extends beyond the traditional definition of competition. Regulators are now also looking closely at the potential harm to consumers, as well as the impacts of the proposed transaction on the labor market and employees. This includes scrutinizing non-compete agreements and the reduction in employee numbers following the merger.
  • Willingness to Litigate: When regulators believe mergers could harm competition, they’re more willing to take cases to court, underscoring their commitment to maintaining a competitive marketplace. Litigation is expected to double by 2026 related to merger enforcement.

Regulatory Action: During the session, the expert panelists highlighted several actions recently undertaken by the regulators. These actions are reshaping the antitrust and merger enforcement landscape, including:

  • Draft HSR Filing Requirements: The Hart-Scott-Rodino (HSR) filing requirements are being updated with an expanded scope. This entails the need for more comprehensive documentation when filing for antitrust clearance, leading to significant eDiscovery efforts and labor reports.
  • Draft Merger Guidelines: extensive revisions to the merger guidelines have been proposed and have gone through the public comment period. While the final wording and actual impact remains to be seen, it is clear that the revised merger guidelines will introduce a qualitatively different merger review analysis.
  • Information Sharing: Collaboration is on the rise, not only between the DOJ and FTC but also with other government agencies, such as the Department of Labor. This integrated approach seeks to holistically address the implications of mergers on various facts of the economy under a “whole of government” paradigm.

Results of Regulators to Date: It’s noteworthy that the number of merger approvals has increased since 2021. Interestingly, there has been a decline in HSR filings in 2023. However, this is likely influenced by external factors, like interest rates and the broader economic climate.

Looking Forward: As we look ahead, a few key considerations emerge:

  • Strategic bidding: Given the higher scrutiny proposed transactions are expected to receive, sellers may start making decisions about bidders based on the requirement to file an HSR, adding an additional layer of complexity to the M&A landscape.
  • Cost and Time Implications: It’s prudent to counsel companies that transactions might cost more and take longer to clear regulators if the draft HSR modifications are adopted. Being prepared for this possibility is essential.

The regulatory trends in antitrust and merger enforcement are evolving at a rapid pace. Regulators are taking a harder stance, emphasizing the importance of healthy competition, and addressing broader societal concerns. Staying informed and adapting to these changes will be paramount for businesses navigating the merger landscape.

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By Dave Angarola, Regional Director, Sales & Consulting