Significant antitrust merger investigations in the United States took an average of 9.6 months in 2015, more than a third longer than the average just two years ago, according to DAMITT, the Dechert Antitrust Merger Investigation Timing Tracker. Federal enforcement activity resulted in 37 significant merger investigations, seven of which generated complaints seeking to block proposed deals and 24 of which were resolved by consent orders. Each of these figures was a record for the five years during which DAMITT has been tracking antitrust merger investigations.
Antitrust merger investigation activity is up, and investigations are taking longer than ever to complete.
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The 9.6 month average duration of significant merger investigations was nearly 25% longer than the 7.7 month average recorded in 2014 and 35% longer than the 7.1 month average that held from 2011-13. The duration of significant merger investigations remained highly variable, ranging from 19.3 months (Applied Materials/Tokyo Electron, eventually abandoned by the parties) to 1.9 months (Mylan/Perrigo, a hostile tender offer that never resulted in an agreed deal but did result in the quickest consent order of the year). The median investigation length (9.9 months) was nearly equal to the mean (9.6 months), reflecting relative balance between longer and shorter investigations. Significantly, only 10 of these 37 investigations were resolved in less than the 7.1 months that used to be average.
Merger investigations are taking longer to complete and companies contemplating antitrust-sensitive transactions in 2016 need to build their deal timing around this reality. Well-advised merger partners will focus pre-announcement efforts on assembling the information likely to be sought by the agencies and developing the advocacy to enable the agencies to come to resolution more quickly.
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More Investigations and More Complaints
When measured by the 37 significant merger investigations in 2015, the federal agencies increased enforcement activity by more than 30%. The seven complaints filed in 2015 were more than double the number of complaints filed in either 2013 or 2014. Four of those complaints were filed by the FTC within the last two months and remain pending. Two earlier FTC complaints produced one win and one loss for the FTC. The sole DOJ complaint in 2015 went to trial but the merging parties terminated their agreement before the conclusion of the trial, stipulating to dismissal without prejudice.
Of the significant merger investigations not resulting in a complaint, 24 led to consent orders, another record high, three were cleared with closing statements, and three others resulted in the merging parties abandoning the transaction in the face of continued hostile investigation. The abandonment of Comcast/TimeWarner Cable and Applied Materials/Tokyo Electron over what was essentially a long weekend wiped out US$54 billion in deal value, perhaps another record.
The willingness and ability of the agencies to litigate merger cases is apparent from the 2015 results. At the same time, the agencies remain willing to resolve investigations with consent orders when the parties are able to address the agencies’ competitive concerns. Early planning to identify, validate and negotiate potential remedies is becoming even more important to successful and timely resolution of antitrust merger investigations.
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Looking Ahead to 2016
All indications are that 2016 will follow in the footsteps of 2015 unless a significant drop off in merger activity lightens the workload at the agencies. There are a number of potentially significant merger investigations in the pipeline that have been ongoing for more than seven months, and the techniques employed to analyze these transactions are more complex than ever. While the Presidential election in November likely will result in a change in enforcement agency leadership, and possibly some change at the margin on enforcement priorities, investigations will continue to be staff driven and to apply analytical approaches similar to those we have seen in the past year. Over time, familiarity with these approaches may shorten antitrust merger investigations but any significant reduction in the duration of investigations seems unlikely to take hold in the next year.