Feds hit with “tidal wave” of merger filings
Merger filings are surging, which will delay regulatory reviews this year, the Federal Trade Commission advised companies Tuesday.
Filings have already exceeded 2,000 through July, up from 815 during the same period last year and 1,136 in 2019, according to federal data. Businesses can complete their proposed mergers before the FTC finishes its reviews, but regulators can still retroactively challenge the transactions if they violate antitrust laws, the FTC warned.
“The FTC has been hit by a tidal wave of merger filings that is straining the agency’s capacity to rigorously investigate deals ahead of the statutory deadlines,” Holly Vedova, acting director of the Bureau of Competition, wrote in a blog post. “For deals that we cannot fully investigate within the requisite timelines, we have begun to send standard form letters alerting companies that the FTC’s investigation remains open and reminding companies that the agency may subsequently determine that the deal was unlawful. Companies that choose to proceed with transactions that have not been fully investigated are doing so at their own risk.”
Healthcare companies may potentially have to wait longer for regulatory approval, which would increase transaction-related expenses. Hart-Scott-Rodino Act filings are required for deals exceeding $92 million, which includes most healthcare-related mergers.
The FTC typically has 30 days to determine whether the agency wants more information about a transaction. If authorities request additional information, the deal is put on hold until the parties comply. Federal regulators can then file a complaint to challenge the proposed merger. The FTC can still challenge a deal regardless of whether it was initially investigated, the agency noted.
The FTC may send warning letters to let the merging entities know that the investigation remains open even after the review timeline expires.
“Any inaction by the commission before the expiration of the waiting period should not be construed as a determination regarding the lawfulness of the transaction,” a sample warning letter reads.
President Joe Biden’s administration has vowed to crack down on proposed mergers that would stunt competition. Federal authorities and policymakers also aim to make lopsided markets more competitive by increasing the FTC’s and the Justice Department’s budgets, adjusting the standards for permissible mergers and bolstering retrospective merger analyses, among other provisions.