July 13, 2021

Antitrust: President’s Executive Order Puts the Squeeze on M&A

On Friday, President Biden signed an “Executive Order on Promoting Competition in the American Economy.” The order represents a sweeping, “all government” effort to promote competition. It seeks to accomplish that objective by making it easier for workers to change jobs by banning or limiting the use of non-competes and unnecessary licensing requirements, by limiting the ability of employers to share information that might help suppress wages, and by reducing consolidation in multiple industries.

When it comes to reducing consolidation, the executive order & accompanying fact sheet make it clear that the President wants antitrust regulators to turn up the heat on enforcement & on merger reviews across a variety of industries. The executive order calls on the DOJ & FTC “to review the horizontal and vertical merger guidelines and consider whether to revise those guidelines” in order to address concerns about consolidation, but that’s not the only aspect of the order that could impact M&A. According to these excerpts from the fact sheet, the order:

– Calls on the leading antitrust agencies, the Department of Justice (DOJ) and Federal Trade Commission (FTC), to enforce the antitrust laws vigorously and recognizes that the law allows them to challenge prior bad mergers that past Administrations did not previously challenge.

– Underscores that hospital mergers can be harmful to patients and encourages the Justice Department and FTC to review and revise their merger guidelines to ensure patients are not harmed by such mergers.

– Announces an Administration policy of greater scrutiny of [technology] mergers, especially by dominant internet platforms, with particular attention to the acquisition of nascent competitors, serial mergers, the accumulation of data, competition by “free” products, and the effect on user privacy.

– Encourages DOJ and the agencies responsible for banking (the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency) to update guidelines on banking mergers to provide more robust scrutiny of mergers.

Wow. The President not only wants antitrust regulators to crack down on three giant sectors of deal economy – healthcare, tech & bank mergers – but he’s giving them a forceful reminder that they have the ability to challenge “bad” mergers that past Administrations let through.  Like Bette Davis said in “All About Eve,” “fasten your seatbelts, it’s gonna be a bumpy night.”  We’re posting memos in our “Antitrust” Practice Area.

FTC Chair Lina Khan isn’t wasting any time responding to the executive order’s directives. On Friday, she issued a joint statement with the head of the DOJ’s Antitrust Division in which the two pledged to “jointly launch a review of our merger guidelines with the goal of updating them to reflect a rigorous analytical approach consistent with applicable law.” She followed that up on Monday with an announcement that the agency will vote next week on whether to rescind its 1995 policy statement on pre-approval & prior notice remedies in merger cases.

John Jenkins