Stay current on the latest developments from agencies including the CFPB, Federal Reserve, FDIC, and OCC to advise clients on real-life regulatory situations.
The time it takes antitrust regulators to review tie-ups is “largely” in the hands of the merging parties, the Federal Trade Commission’s top antitrust official told Bloomberg BNA.
Tad Lipsky, the FTC’s acting competition bureau chief, was responding to statements from the business community that merger reviews are too often being held up by the government’s slow process.
Antitrust attorneys are counseling merging parties to expect lengthy reviews from federal agencies, which is raising alarms in the business community. At the same time, both the FTC and the Justice Department will lose staff if President Donald Trump’s fiscal 2018 budget request goes through, meaning more work on increasingly complicated mergers with fewer people.
The process is particularly slow for complex mega-mergers. A deal between paint makers Sherwin-Williams Co.’s and Valspar Corp. was cleared by the FTC in late May, more than a year after it was proposed. And, the Justice Department’s antitrust division has yet to reach a decision on a deal between DuPont Co. and the Dow Chemical Co. that was announced in December 2015. That merger has already cleared the European Union, India, Brazil, and Australia, with conditions.
But Lipsky said much of the merger review process is actually being driven by the companies, starting with the filing of a pre-merger notification under the Hart-Scott-Rodino (HSR) Act.
“Often the receipt of an HSR filing occurs weeks after” a deal is announced, Lipsky said in an e-mail. “The parties may delay filing to speak to us in advance. They may pull and refile as well.”
The situation is being closely monitored by the U.S. Chamber of Commerce.
“What the FTC says isn’t untrue, but it doesn’t change the fact that it becomes increasingly difficult for an agency to explain why it takes more than a year to review a transaction that under U.S. law is presumed to be legal,” Sean Heather, director of antitrust policy at the U.S. Chamber of Commerce, told Bloomberg BNA.
While merging parties do have significant control over timing of filings, Heather said much of their actions are taken in deference to the agency. He said companies may be concerned about the appearance of “rushing” the process, for example.
The vast majority of mergers filed with the government are approved. But some lead to antitrust investigations, which can ultimately result in a settlement or a decision to block the deal. The agencies typically don’t confirm pending investigations unless they have already been disclosed by the merging parties.
Significant merger cases — ones in which a public enforcement action such as a settlement order was taken by the government — lasted an average of 9.9 months in 2016, compared with 7.1 months in 2011, according to an analysis of by Dechert LLP.
“Looking at the universe of significant merger investigations in the U.S., there is no getting around the fact that they take longer than they used to take,” Paul Denis, an antitrust partner at Dechert’s Washington office, told Bloomberg BNA. “It is a critical counseling point that deal makers ignore at their peril.”
Lipsky said the commission is open to suggestions for reducing the burdens of review. However, he said it’s hard to draw conclusions about the problem by looking at a few dozen transactions each year on an aggregated basis.
“The best source of potential improvements in efficiency is not always apparent,” he said.
Lipsky didn’t cast the blame entirely on the merging parties. For example, he acknowledged that, beginning in the 1980s, the FTC and many other antitrust agencies adopted an economics approach that generally results in more data and more complex analysis than in prior eras.
He acknowledged that need for transaction approval in foreign jurisdictions — possibly dozens in some cases — may also pose coordination or management challenges that affect timing.
“This reality places special responsibility on the world’s antitrust agencies to find innovative ways to ensure that multiple reviews do not stifle pro-competitive or competitively neutral transactions through the sheer weight of the collective regulatory burden that has become typical for significant transactions worldwide,” Lipsky added.
Makan Delrahim, who is waiting for Senate confirmation to head the Justice Department’s antitrust division, has made similar comments. He told senators at his confirmation hearing that he wanted to assign a deputy to helping coordinate international antitrust reviews. Acting FTC Chairman Maureen Ohlhausen has also said she wants to streamline the review process within her agency.
To contact the reporter on this story: Alexei Alexis in Washington at email@example.com
To contact the editor responsible for this story: Fawn Johnson at firstname.lastname@example.org
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)