In previous posts, we’ve been looking at the topic of mergers and the merger review process. As we’ve noted, the aim of merger review is to determine whether there are any competitive concerns with a merger agreement. The Federal Trade Commission’s aim is to ensure a merger will not unfairly impact consumers and violate antitrust laws.
Every year, the Federal Trade Commission and the Department of Justice review thousands of merger proposals, but the vast majority of them involve no significant competitive issues. Those which do can often be resolved by altering some aspects of the agreement.
In some cases involving direct competitors, it can be possible to alter the merger proposal to address any competitive concerns raised by the reviewing agency. An example of this would be a company selling off a line of business it shares with its direct competitor but keeping the other pieces of the merger intact. This sort of solution could work well with companies that compete in the same industry but have other lines of business beyond their shared competition. As we’ve noted, the cases which present the greatest difficulties are those involving proposed mergers between direct competitors offering the same good or service.
It is important for businesses involved in merger negotiations and the review process to work with an experienced attorney to ensure wise decisions are made in talks with the reviewing agency. While it may seem like a good idea to move forward with certain changes to a merger proposal in order to address the reviewing agency’s concerns about competition, making changes to the agreement can impact the success of the merger in the long term.
A lot of planning, coordination and strategizing goes into executing a successful merger. Businesses preparing for a possible merger should be armed with the advice, guidance and advocacy of experienced legal counsel.