This Sidley memo (p. 6) provides insights into the antitrust merger review process during the Covid-19 crisis. We’ve touched on some of the memo’s key takeaways before – including regulatory skepticism toward the “failing firm” defense, heightened concerns about gun jumping & the fact that complex merger reviews are taking more time. However, the memo address several other topic that we haven’t covered. Here’s an excerpt on the potential increased risk of regulatory scrutiny of non-reportable deals:
– Transactions That Are Not Reportable Can Be Subject to Antitrust Scrutiny. A number of major jurisdictions including the U.S., UK and Canada have the ability to investigate and challenge transactions that are not reportable, either before or after they close. In ordinary circumstances the U.S. agencies on average challenge two transactions a year that were not reportable.
During past economic crises, that number has increased, in part because the agencies have greater resource availability due to the decline in filings. Parties to non-reportable strategic transactions that raise antitrust issues should consider the risk of antitrust scrutiny before signing. Buyers should also consider the risk of a post-closing investigation that could result in a divestiture order.
The memo cautions that regulatory authorities are applying the same standards as before, and are on the lookout for companies that may try to exploit the current crisis to complete an anticompetitive transaction.
– John Jenkins