OUTLOOK FOR MERGER CONTROL
R&C: What do you consider to be the key developments in merger control over the last 12-18 months? How would you characterise the associated compliance challenges for acquirers?
Lepièce: The beginning of the coronavirus (COVID-19) pandemic only slightly impacted merger filings. Following procedural adjustments, merger filings once again became business as usual. In March 2021, following its evaluation of European Union (EU) merger control rules, the European Commission (EC) adopted a communication providing guidance on the application of the referral mechanism from member states to the EC set out in article 22 of the EU Merger Regulation. It clarifies that such referral is also applicable in the case of a concentration that falls outside the referring member state’s national merger control thresholds. This extension of competence raises significant legal uncertainty, especially for businesses active in emerging markets. Finally, following Brexit, the EC is no longer competent to assess mergers in the UK and the one-stop-shop is thus no longer applicable. Both systems now run in parallel, which opens the door to increased merger control filings in the UK and divergent approaches across jurisdictions, although international cooperation between competition authorities seems to have improved.
Breed: The merger control landscape has undergone a seismic change in several jurisdictions over the past 18 months. In the US, new leadership at the Federal Trade Commission (FTC) has suspended early termination of the Hart-Scott-Rodino (HSR) Act waiting period, started sending ‘warning letters’ to parties whose HSR waiting period has expired reminding them that the FTC could still sue to undo their transaction, changed the rules regarding key provisions of consent agreements such as the ‘prior approval’ requirement, and rescinded the 2020 Vertical Merger Guidelines, which its sister agency, the Department of Justice Antitrust Division, continues to follow. In the EU, new guidelines for the article 22 procedure has created situations in which transactions that were not reportable in the member states or at the EC level have been referred to the EC for review by member states. In the UK, the Competition Market and Markets Authority (CMA) continues to pursue aggressive enforcement actions, particularly in the tech sector. All of these developments have created uncertainty for merging parties and have raised the cost – in both time and money – of the merger control process.
Jan-Mar 2022 Issue
Baker Botts
CMS Belgium
Hogan Lovells US LLP