Antitrust regulators have been breathing fire about M&A in the past few years, but when it comes to their attempt to enforce their views, it appears that some courts think they’re blowing smoke. The FTC had its attempt to derail the Illumina/Grail transaction rejected by one of its own ALJs, and just a few weeks later, a D.C. federal judge denied the DOJ’s attempt to enjoin the UnitedHealth/Change deal. To cap off a very bad month for the regulators, last week, another federal judge rejected the DOJ’s efforts to enjoin U.S. Sugar’s proposed acquisition of Imperial Sugar.
The DOJ’s defeat in the UnitedHealth case – and the judge’s sympathetic views toward the defendant’s proposed divestitures and other conduct-based remedies – has some commenters wondering whether the DOJ might rethink its “no settlements” policy. Here’s an excerpt from Williams Mullen’s memo on the decision:
Whether the Antitrust Division will appeal the ruling remains to be seen. Perhaps more importantly, it also remains to be seen whether this defeat will cause the Antitrust Division to rethink its announced disinclination to settle merger challenges with proposed divestitures and other conduct remedies, instead proceed to trial seeking to derail the mergers in their entirety. The answer to this question – will the result in the UnitedHealth/Change case change Antitrust Division policy on how it handles merger challenges – could have significant implications for any parties contemplating mergers going forward.
Of course, antitrust regulators have had some notable successes with their hard-line approach, including, among others, Nvidia’s decision to abandon its proposed $40 billion acquisition of Arm earlier this year. My guess is that they’re unlikely to be deterred by recent losses – the DOJ has already announced that it plans to appeal the U.S. Sugar decision & is considering an appeal of the UnitedHealth decision. Right now, it seems more likely that, to paraphrase General Grant, antitrust regulators “propose to fight it out on this line” if it takes the next several years.
– John Jenkins