On January 20, 2025, President-elect Donald J. Trump’s administration will come into power. The McDermott antitrust and competition team has analyzed the first Trump term, compared it to the Biden administration’s actions, and reviewed statements from those involved in the upcoming Trump administration. While it appears that the new administration will be good for business, especially for companies planning to expand through mergers and acquisitions, this client alert takes a closer look at what is likely to change and what is likely to stay the same in antitrust enforcement throughout the next four years.
During a recent webinar, Jon Dubrow, Greg Heltzer, Lisa Rumin, and Ryan Tisch provided a comprehensive introduction to the new Hart-Scott-Rodino (HSR) rules and their impact on the US premerger notification filing process. The program concluded with a Q&A moderated by Reese Poncia and featuring Ty Carson, a former Federal Trade Commission Premerger Notification Office lawyer, who shared his insider’s perspective from six years with the agency.
On October 10, 2024, the Federal Trade Commission issued new final rules governing the US premerger notification filing process. These rules – the first major overhaul to the Hart-Scott-Rodino (HSR) filing form in the nearly 50-year history of the HSR Act – will fundamentally alter the premerger notification process. While the rules omit some of the more extreme aspects proposed in the 2023 draft rules, they impose substantially more burdens on filing parties than the current filing regime. The changes will have wide-ranging implications for all parties required to notify transactions under the HSR Act.
In a spectacular turn, on September 3, 2024, the Court of Justice of the European Union annulled the European Commission’s decision to review the acquisition of Grail by Illumina. The Commission had previously asserted its authority to examine the merger under Article 22 of the EU Merger Regulation, despite the transaction not meeting the EU or national turnover thresholds for review.
This ruling is significant because it challenges the Commission’s ability to review transactions that do not meet the relevant EU or national thresholds but are referred by EU Member States. This could impact how future mergers are reviewed within the EU, as the Commission is likely to find alternative ways to review transactions that do not meet the relevant EU or national thresholds.
While they have long taken a back seat to federal merger reviews, US states are becoming increasingly involved in merger reviews, including potentially requiring premerger notifications on a broad scale. On July 24, 2024, the Uniform Law Commission adopted its Uniform Antitrust Pre-Merger Notification Act (Model Act) as model legislation for states to use to implement premerger filing regimes.
The Act functions as a template for states to adopt their own premerger notification legislation and provides uniform suggested guidance to states that are considering their own premerger notification regimes.
The Model Act requires parallel filing of the Hart-Scott-Rodino (HSR) form in a state when:
The filing person has its principal place of business in the state; or
The person “directly or indirectly had annual net sales in [the] state . . . of at least 20 percent” of the threshold mandated under the HSR Act. §3(a)(1)-(2). Under the current HSR thresholds, that means sales of approximately $24 million in a state would satisfy the state-level filing requirement.
The Model Act also provides for automatic confidential treatment of materials submitted to the state.
Additionally, the attorneys general may communicate with the federal agencies about filing materials.
This can avoid the current practice of having to negotiate individual confidentiality agreements with any state interested in reviewing a transaction.
The Model Act does not impose any waiting or suspension period for notified transactions.
This continues a trend of government agencies obtaining more notice of M&A transactions. At the end of last year, Congress inserted Section 857 into the National Defense Authorization Act, which requires parties to provide their HSR materials to the US Department of Defense (DoD) for any proposed merger or acquisition that will require DoD review.
BACKGROUND
State attorneys general have broad investigatory and enforcement powers with respect to transactions implicating local competition concerns. States generally have the authority to issue investigative subpoenas, compelling production of documents and information to parties who merely sell products in a state without any further physical connection to the state.
Typically, states focus their efforts on transactions that have a particular impact on the state’s consumers or an industry important to the state’s economy.
For example, transactions involving hospitals or retail locations are traditionally more likely to draw the attention of a state’s attorney general than transactions involving national markets or consumer goods.
However, state enforcers have increasingly initiated their own efforts to challenge transactions.
This trend is illustrated by the Colorado attorney general’s lawsuit that seeks to block the Kroger-Albertsons merger.
Colorado is seeking a nationwide injunction and not merely an injunction on the acquisition in the state, raising a novel question with potentially significant impact on antitrust enforcement by the states.
US agencies are increasingly scrutinizing consummated mergers from years past, including Live Nation’s purchase of Ticketmaster and Meta’s acquisitions of Instagram and WhatsApp.
Reports indicate that, over the past three years, companies have abandoned 37 deals in the face of Federal Trade Commission pressure.
Merger activity in oil and gas markets remains high, and although agencies are scrutinizing these deals, they engaged in minimal enforcement activity this quarter.
EUROPEAN UNION
Court of Justice of the European Union Advocate General Nicholas Emiliou issued his opinion in the Illumina/Grail case, concluding that Article 22 of the EU Merger Regulation is not the European solution for dealing with “killer acquisitions.”
The European Commission (EC) issued a competition policy brief on non-price competition in EU merger control, noting that it is increasingly evaluating non-price competition parameters alongside traditional price effects for its merger reviews.
The EC suspects Kingspan to have intentionally, or negligently, provided incorrect, incomplete and misleading information while it investigated the company’s planned acquisition of Trimo in 2021.
UNITED KINGDOM
The Digital Markets, Competition and Consumers Act will grant the Competition & Markets Authority with powers to enforce the new digital markets competition regime and will apply to firms that are designated as having strategic market status.
In a significant development for French merger control, on May 2, 2024, the French Competition Authority (FCA) applied the jurisprudence laid down in the recent Towercast case to an alleged anticompetitive agreement matter in the meat-cutting sector.
In its Towercast ruling (C-449/21), the Court of Justice of the European Union (CJEU) held that a merger which is not notifiable (i.e., being below the European and national merger control thresholds) and which has not been subject to a referral under Article 22 of the Merger Regulation 139/2004 of 2004 may be challenged a posteriori by the European Commission or a national competition authority if an abuse of dominant position resulting from the merger but detachable from it can be established.
Less than a week after the Towercast ruling, the Belgian Competition Authority applied the principles set out by the CJEU by opening an ex officio investigation into the acquisition of the edpnet group by Proximus, ordering interim measures in June 2023 to ensure the continuity of edpnet’s activities and its operational and commercial independence from Proximus, ultimately leading to the sale of edpnet’s activities post-closing in November 2023. The president of the FCA, Benoît Cœuré, said that this instrument could “now be used, bearing in mind that its conditions of use are restrictive”. This has now been confirmed by the FCA’s May 2 decision, on which Cœuré said was an “important clarification for merger control”, particularly regarding Article 101 TFEU.
Increased scrutiny of the healthcare industry from antitrust agencies such as the Federal Trade Commission and US Department of Justice emphasize the necessity of compliance measures to mitigate antitrust risk that can negatively impact the closing of transactions. This article explores the critical role of clean team agreements (CTAs) in managing antitrust risks during the due diligence process of healthcare transactions. The paper provides a comprehensive analysis of how CTAs can be structured to securely handle competitively sensitive information, ensuring that such documents are only accessed by designated personnel under strict guidelines. Through a variety of hypothetical scenarios, the article demonstrates the application of CTAs in situations involving direct competitors, labor competition, and different geographic markets. These examples underscore the importance of tailoring CTAs to the specific competitive dynamics and regulatory environments of each transaction, ensuring both legal compliance and transactional efficiency in the healthcare sector.
The US Department of Justice’s (DOJ) announcement of the formation of a new healthcare task force signals an even stronger emphasis on addressing competition issues in the healthcare industry. Large, multisided platforms involved in multiple sectors (e.g., insurance companies acquiring physician practices and/or essential healthcare IT and data services) are a key target for enforcement.
WHAT HAPPENED:
On May 9, 2024, the DOJ announced the formation of the Antitrust Division’s Task Force on Health Care Monopolies and Collusion (HCMC). The HCMC will be tasked with guiding and developing policy advocacy and conducting investigations – and ultimately civil and criminal enforcement actions –in healthcare markets.
US Assistant Attorney General Jonathan Kanter stated that the HCMC “will identify and root out monopolies and collusive practices that increase costs, decrease quality and create single points of failure in the health care industry.” The press release specifically identified the following non-exhaustive set of issues that will be priority areas for the HCMC: payer-provider consolidation, serial acquisitions, labor, quality of care, medical billing, healthcare IT services, and the access to and misuse of healthcare data.
In announcing the formation of the task force at a Washington Post Live event, Kanter highlighted the changing nature of the healthcare marketplace. In what he coined the “platformization of healthcare,” patients and consumers now interact with “multisided giants, intermediaries that have a coordinated stack of businesses that flow together, including payers, including providers, including PBMs, claims processing, banks” which have become the “gatekeepers of our healthcare system.” According to Kanter, it is crucial that the Antitrust Division adapt its enforcement policies and strategies in healthcare to reflect these new market realities.
The HCMC will be led by Katrina Rouse, an antitrust prosecutor at the DOJ since 2011 who previously served as chief of the Defense, Industrials, and Aerospace Section and a trial attorney in the Healthcare and Consumer Products Section. Rouse will oversee a team of civil and criminal prosecutors, economists, experts in healthcare and technology, data scientists, investigators and policy advisors.
WHAT THIS MEANS:
The antitrust enforcement agencies have used similar task forces in the past to focus resources and accumulate subject matter expertise. For example, the DOJ’s Procurement Collusion Strike Force has been successful at investigating and pursuing government contracting cases.
The launch of the HCMC reflects the antitrust enforcement agencies’ increasing efforts to respond to changing dynamics in the healthcare space and address the potential harmful results of these changes on patients, healthcare workers and communities. In March 2024, the DOJ, Federal Trade Commission (FTC) and US Department of Health and Human Services (HHS) jointly launched a cross-government inquiry into the increasing role of private equity firms in healthcare transactions and whether such firms prioritize maximizing profits at the expense of healthcare quality and affordability.
Of note, the DOJ, rather than the FTC, typically investigates mergers involving health plans and contracting issues among health plans and providers. Therefore, healthcare industry participants, [...]
The Federal Trade Commission (FTC) and US Department of Justice have begun implementing the 2023 Merger Guidelines in their enforcement actions
During a virtual workshop, the FTC highlighted its focus on private equity (PE) acquisitions of healthcare service providers and expressed concerns about PE in healthcare
Artificial intelligence’s antitrust implications continue to draw FTC scrutiny
The European Commission (EC) used its super-simplified procedure in about one-third of all merger decisions in Q1 2024
EC regulators are taking an increasingly vigilant approach to merger control review to ensure market dynamics remain pro-competitive and pro-consumer
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