NAVIGATING CROSS-BORDER MERGER REVIEWS

R&C: How would you describe new and emerging challenges affecting cross-border merger reviews? What key developments have impacted the process over the last 12-18 months?

Mommers: Although authorities generally have taken a consistent approach to enforcement in the past, we are starting to see a divergence, which is likely driven by the current policy agendas in certain jurisdictions. Today’s merging parties face different market definitions, theories of harm or acceptable remedy packages across jurisdictions. For example, in Microsoft/Activision, although both the US Federal Trade Commission (FTC) and the UK Competition and Markets Authority (CMA) found that the transaction would harm competition, they based their respective complaints and prohibitions on different theories of harm. In Cargotec/Konecranes, the CMA refused to accept a remedies package that the European Commission (EC) had separately approved, notwithstanding that the significant majority of the merging parties’ activities took place outside the UK.

Giles: An enduring trend over recent years is the increasing number of regimes that need to be navigated – both traditional merger control, competition-based regimes and foreign direct investment (FDI) national security regimes. This has continued over the last 12 to 18 months, especially in terms jurisdictions introducing new FDI and national security regimes, as well as strengthening existing regimes. The UK’s new, much more expansive, National Security and Investment (NSI) Act regime which came into force in 2022 is an example. Authorities are also increasingly finding new ways to look at ‘below threshold’ deals under merger control regimes. This is largely driven by concerns about so-called ‘killer acquisitions’ – large incumbents acquiring small innovative start-ups that have little or no turnover and therefore fall below turnover-based thresholds. These new approaches to jurisdiction increase uncertainty for M&A parties, making it harder to determine whether reviews are needed. While authorities remain concerned about mergers between close competitors there is also much greater focus on other theories of harm, notably concerns related to innovation competition, dynamic counterfactuals and vertical issues.

Jul-Sep 2023 Issue

CMS Cameron McKenna Nabarro Olswang LLP

Freshfields Bruckhaus Deringer US LLP

Hogan Lovells US LLP

Norton Rose Fulbright LLP