February 1, 2023

Merger Investigations: Expect a Long Slog on Both Sides of the Pond

Dechert recently published its annual  “Dechert Antitrust Merger Investigation Timing Tracker” (DAMITT) report on the timing of significant merger investigations, and its bottom line is that deals subject to significant merger investigations continue to face an elevated risk of being blocked or abandoned in both the US & the EU – even if a relatively small number deals receive that level of scrutiny.  Here are some of the key takeaways:

United States

– 60% of significant investigations concluded with a complaint or abandoned transaction in 2022. This shatters last year’s record of 37%. The 10 complaints filed in 2022 are also a DAMITT record. Those are strong headwinds for dealmakers heading into 2023.

– Only two significant merger investigations concluded in Q4 2022, making the 20 concluded in 2022 the lowest in DAMITT history. DOJ did not conclude any investigations in Q4.

– The overall intervention rate remains low. Just around 0.5% of transactions notified in 2021 had resulted in a concluded investigation as of the end of 2022.

– The average duration of significant investigations ticked up to 11.8 months, just shy of the 11.9-month DAMITT record set in 2019. The Q4 average was 15.4 months but it is based on just two concluded FTC investigations. Still, the risk of a prolonged investigation has grown, especially over the last year.

European Union

– 33% of all significant investigations were blocked by the EC or abandoned by the parties in 2022, with only 25% of deals obtaining clearance after a Phase II investigation.

– The number of significant investigations concluded by the EC is slowly picking up, but the number of Phase I remedy cases remains 30 percent below the 2016-2021 average.

– Intervention rates increased in the EU, with 4.9% of notified transactions resulting in a significant investigation in 2022. They are not yet back to pre-pandemic levels, though.

– The average duration of Phase II investigations concluded in 2022 was 18.4 months, nearly one month shorter than in 2021, while average duration of Phase I remedy cases dropped by two months to 8.3 months. New DAMITT data however show that nearly 30% of Phase I remedy and Phase II cases have lasted more than 10 and 18 months, respectively.

The report concludes that parties to significant deals in the US & EU should prepare for a long slog with antitrust regulators.  In the US, they should plan on at least 12 months for the agencies’ investigation of their proposed deal and another nine to 10 months to litigate an adverse decision.  In the EU, parties should be prepared for an even longer siege – at least 20 months – if their deals proceed to Phase II investigations.

John Jenkins