Are Mergers Back on the Menu? Separating the Signal from the Noise
Trump 2 merger enforcement has been unpredictable. Recent FTC & DOJ statements and actions signal that merger process & substance are back to "normal." Will the market believe them?
Welcome back to Competition on the Merits. Last week we checked in on the status of the recent Revival of the Robinson-Patman Act after the FTC dismissed one half of its RPA caseload. This week we turn to a topic that I think is the most discussed in antitrust circles as of late: mergers and acquisitions. If forced to describe the regulatory environment surrounding mergers and acquisitions in the second Trump Administration it would probably be “uncertainty.”
It has been difficult for practitioners and casual observers to figure out exactly where Trump 2.0 stands on antitrust scrutiny of mergers and acquisitions. Some commentators were perplexed by early signs that seemed to signal solidarity with the Biden Administration’s approach to mergers. But recent signaling from the Administration about its commitment to rational antitrust review of mergers and acquisitions and, in particular, a stable merger review process, has many asking whether mergers are back on the menu?
What signals, you ask? Good question, how about:
A series of speeches from FTC Commissioners and Antitrust Division officials laying out substantive and procedural commitments when it comes to merger review, process, and settlements
Signs of the return of early termination for proposed transactions that do not raise antitrust issues – consistent with Chairman Ferguson’s promise that the FTC would “get out of the way” of such deals
A handful of recent settlements including structural remedies for deals, abandon some onerous features of Biden administration merger settlements (e.g. prior notice or prior approval provisions).
Some have reacted to these developments – perhaps as intended – suggesting that There have been more questions than answers on that front:
How seriously should the market take those recent signals that merger review will return to a stable and predictable equilibrium?
Are these recent signals a real commitment to a sensible and stable approach to antitrust enforcement of mergers and acquisitions or short-lived responses?
What will the agency approach look like in practice?
What kinds of mergers are likely to attract FTC and DOJ scrutiny?
How do I navigate the Trump FTC and DOJ to get a deal done?
In today’s Competition on the Merits we separate the signal from the noise in the recent talk about mergers and acquisitions and ask whether a predictable, rational, and stable approach to M&A activity is back.
To understand where the uncertainty comes from let’s take a trip back to November 2024. But before the time travel – as always, please upgrade to paid, subscribe, and send to your friends.
What the M&A Market Anticipated Back in November 2024
President Trump’s election victory was marked with significant optimism that the market for mergers and acquisitions would return for many reasons, including but not limited to, the end of a Biden administration approach to mergers that was actively hostile. Biden administration antitrust officials had put plenty of effort into chilling deal activity from announcing an ideological commitment to the proposition that mergers were inherently suspect, to – consistent with that view – imposing an onerous new “tax” on all merger activity, to using sub rosa procedural shenanigans to slow and deter mergers generally. I wrote about exactly this phenomenon when grading the Biden administration’s merger enforcement regime:
The Khan FTC has been on a mission to make it harder to merge using HSR and other tools. Notice that I did not say the Khan FTC (and Kanter DOJ) have been using HSR and other process tools to target anticompetitive deals. That would be a feature, not a bug. But when one has expressed the worldview that all mergers and acquisitions are a social bad, it is not surprising that we see procedural, sub rosa attempts to kill deals whether or not they raise any competition concerns.
You may similarly recall Kamala Harris supporters like Mark Cuban and Reid Hoffman campaigning against a second term for then Chair Khan, on the basis that the Biden administration approach to mergers did not make much sense for the modern economy. Not to mention folks like Andreesen & Horowitz offering support to President Trump on the grounds that he offered the best hope for “Little Tech,” because the prior Administration’s regulatory agencies had been using “brute force investigations, prosecutions, intimidation, and threats to hobble new industries,” and “punitively blocking startups from being acquired by the same big companies the government is preferencing in so many other ways.”
The Biden Admin merger enforcement regime made regulatory uncertainty its number one priority. It certainly behaved as such. Want specifics? Sure:
Issuing “close at your own risk” letters to transacting parties after the agencies had reviewed deals and chosen not to challenge
Prior notice and prior approval provisions in merger settlements
Litigating novel theories of harm in merger cases
Using procedural shenanigans to extend merger reviews long enough to deter transacting parties to close deals or even from proposing them in the first place
Ending early termination of transactions that raised no antitrust issues whatsoever
Issuing merger guidelines that declared the agency view that most transaction could violate Section 7 of the Clayton Act and citing obsolete and dubious propositions from 1960s case law
That is where we were.
So it is no surprise that President Trump’s November victory was met with significant optimism that these burdensome regulatory constraints on mergers and acquisition activity would be eased. Of course – nobody expected the Trump Administration to abandon merger enforcement altogether, but expectations were that non-problematic deals would no longer see procedural delays. And on top of that, expectations were that the intellectual approach to merger enforcement would abandon the Biden administration presumption that mergers were inherently problematic.
We say headlines like this:
Or this:
The expectation was, whether fairly or not, that from an M&A perspective the good times would roll. And countless Big Law firm practitioner notes predicting a new, more lenient, approach to merger enforcement. Or at least one that took the Biden administration’s thumb off the scale when weighing the pros and cons of challenging (or using procedural delays to effectively block) deals. Dear readers – the good times, did not in fact, roll.
Of course, much of the explanation for dampening deal making activity lies elsewhere – ahem, geopolitical instability and trade policies – but regulatory uncertainty certainly contributes to the slow environment in early 2025. So I want to focus there for the moment. We can start by comparing what we have observed so far from the agencies relative to expectations and, importantly, translate some of the more recent deal-friendly signals that have emerged from the agencies.
Early 2025: Expectations Meet Reality and Some Mixed Messages
Any objective observer would be quick to point out that things have been a bit of a roller coaster when it comes to merger review. Early signs were confusing for those who (perhaps naively) expected a 180 degree turn from the Biden Administration or held out hopes for a return to Reagan-era merger enforcement. But it is safe to say that the first half of 2025 has been full of mixed messages for close observers of the antitrust agencies when it comes to identifying precisely where the Trump Administration would come out on merger enforcement and policy.
On the one hand, there have been plenty of good signs:
First, both Chairman Ferguson and Assistant Attorney General Slater have said the right things about bringing back regulatory certainty and predictability to merger review, eliminating procedural shenanigans, and allowing divestitures and settlements where they completely solve competition problems arising from proposed mergers. Chairman Ferguson made stopping “Lina Khan’s war on mergers” one of his agenda priorities while “running” for the FTC head spot and has repeatedly emphasized “getting out of the way” of problematic deals while asserting the FTC’s right to litigate for anticompetitive and unlawful transactions. AAG Slater has done her part to recognize the problem in merger review delay and identify speeding up merger review as a priority. Speeches and testimony are not everything. But they are something.
Second, early terminations are back. With full credit to former FTC economist Jay Ezrielev for posting these data a few weeks back – the FTC has returned to early termination and the numbers continue to increase, slowly but surely, to previous levels. That is an absolutely positive step even if early terminations are slow to return from their slumber.
On the other hand, there are some signs that are harder to interpret as consistent with a more rational and predictable approach to merger review.
First, of course, was the refusal to abandon the Lina Khan Merger Tax, i.e. the new and more cumbersome HSR premerger filing forms. I’ve written at length about this topic. It is difficult to believe the new HSR forms could have survived any serious cost-benefit analysis. And they impose significant costs and compliance burdens on small firms and on transactions that do not raise competition issues. While both the FTC and DOJ have indicated that shortening the time for merger review is a significant priority, neither appears interested in dropping Biden/ Khan HSR form, which is probably the lowest hanging fruit in terms of reducing the regulatory burden around merger review. A puzzling choice given the Trump Administration’s emphasis on lowering the regulatory burden and, in particular, eliminating anticompetitive regulations.
Second, the much discussed decision to keep the Khan 2023 Merger Guidelines. To air out my own predictions that have landed flat – I certainly believed that the Trump FTC/ DOJ would at a minimum revoke the Khan 2023 Merger Guidelines (with or without a replacement) and reinstall the Trump Vertical Merger Guidelines. That has not happened and it does not appear that it will.
Third, the DOJ’s HPE / Juniper merger litigation is an odd data point for predicting trends. Perhaps it is a one off. It straddled the Biden and Trump administration and key inflection points both in terms of the investigation and the decision to file suit took place before AAG Slater was sworn in. So she inherited a lawsuit that appears to be difficult to settle without a behavioral remedy while making clear her own view that the Division is a law enforcer, not a regulator. It is a tough spot. The tough spot is made tougher by the fact that the Complaint is, in my view, not very good. Today is not the time or place for a full treatment of that merger. No single merger challenge decision, win or lose, tells the tale of an administration’s merger enforcement policy. But what is quite interesting about the DOJ’s HPE / Juniper challenge is that the post-merger market shares of the firm would be (depending on which analysis you believe is most accurate) something between 20 and 28 percent of the relevant market. I can think of modern merger challenges where a market definition debate implies that the post-merger shares are very high if the plaintiff wins and very low if the defendant wins (think, e.g. Staples-Office Depot or Whole Foods / Wild Oats – very high shares with a narrow market and very low shares in a broader market). But I cannot think of a modern example with post-merger shares, according to the plaintiff’s own complaint, that are this low. Lina Khan’s FTC did not even bring merger challenges with shares this low. And certainly the agencies have not prevailed in merger challenges without the benefit of the PNB presumption – which attaches only with post-merger shares above 30 percent. (More on this later).
Again, there are only a handful of data points available to infer policy from enforcement practice. And there are pretty good reasons to believe that the HPE/ Juniper complaint does not and should not reflect DOJ practice under AAG Slater (she was not responsible for the complaint and now is in the awkward position of having to bring the case home) and the Trump Administration.
But without more data, it is a point that certainly muddies the waters surrounding the message of challenging clearly anticompetitive deals while getting out of the way of lawful ones.
To sum up: we have very few data points and some real mixed messages concerning what the Trump FTC and DOJ merger policy was going to be moving forward. Some very nice statements from agency leadership that clearly identify the priority of bringing regulatory certainty and speed back to merger review. And some actions, namely the return of early termination, to back up that rhetoric. On the other hand, some major policy decisions with respect to retaining the Khan HSR forms and Merger Guidelines — both BUILT upon the very premise (mergers are inherently suspect and worthy of general deterrence) that the Trump FTC and DOJ wish to reject.
Puzzling indeed. So what is one to think about where things go from here? I can certainly tell you that companies and practitioners were miffed as to how to think about which deals would receive second requests from the Trump agencies, which would be challenged, which might receive early termination, and so forth. That sort of uncertainty is exactly what the optimistic observers had hoped was left behind with the exit of the Biden enforcement regime.
Indeed, Lina Khan fans were quick to point out the similarities between administrations in the early days of President Trump’s term:
Suffice it to say that as of a month or two ago, I do not think the market was convinced that mergers were back on the menu. There is plenty of evidence of that. But you hear it everywhere you go - at least, if you are surrounded by companies and antitrust practitioners for most of the day. To be more precise, if the Trump FTC and DOJ intended to signal a new policy and approach to merger review to firms competing in the marketplace I do not think that signal had broken through the significant noise associated with the prior Administration’s merger policy, geopolitical instability, tariffs, and other developments. That’s my assessment. And your mileage may vary. But this is where, I think, things get interesting.
Do You Hear Me Now? The Trump Administration’s New Round of Signals that Merger Review is Back (And Maybe Mergers)
I mentioned above that within the last month or so we have seen a concerted effort from both agencies to communicate that new signal with more consistency, amplification, and precision than before. The attempt appears to be both deliberate and coordinated. And that is not a criticism. Quite the opposite. Indeed, I suspect the agencies were operating under quite the same conclusion that I had made – that is, they understood well that the “regulatory certainty” signal they had been trying to send was not landing with the intended audience.
So they made the signal louder. Let’s talk about recent developments and how they change things. I want to focus on three recent statements and speeches from the FTC and DOJ – all within the last month.
First, on May 28th the FTC announced its settlement with Synopsis, Inc. in its $35 billion acquisition of Ansys, Inc., subject to a divestiture remedy. A divestiture remedy, you ask!? Yes, indeed. While the Biden FTC and DOJ disfavored settlements – and seemed unable to identify divestiture remedies that would completely solve competition concerns they had identified during their investigations – one might be forgiven for forgetting that merger consents are a major (and positive) output of antitrust agencies. But what is interesting about the Synopsis settlement is not so much the fact of the settlement (though that is interesting) or its content (that is too, more on that later), but the FTC’s statement that went along with it. More specifically, Chairman Ferguson issued a statement on the role that remedies should play in merger review and Clayton Act enforcement, joined by his colleagues Commissioners Holyoak and Meador.
The FTC remedies statement is worth reading in its entirety. But let me highlight a few portions first without commentary.
And what about the potential benefits of M&A for growth and innovation?
And the FTC repeats Chairman Ferguson’s “challenge or get out of the way” mantra:
The FTC statement recognizes the benefits of mergers while still retaining its commitment to aggressively enforce the antitrust laws against transactions that violate the Clayton Act. It rejects the Biden Administration’s hostility to settlements while rejecting behavioral remedies and calling for the FTC to be exacting in its due diligence on prospective divestiture buyers. Notably, the statement recognizes the relationship between hostility to settlements and firms’ rationally responding by adopting “fix it first” strategies that provide significant risk for the FTC and DOJ when they get to court.
Most of the statement, from a philosophical perspective, espouses standard bedrock principles of antitrust remedies that have been shared by most Republican Commissioners for the past 30 years or so. I hope my friends at the Trump FTC do not take that as a criticism despite their efforts to distinguish what they do from agencies of the past. It is a compliment – as the principles that have evolved around merger consents reflect both well accepted antitrust law as well as basic principles of efficiency and resource allocation. To be clear, the FTC statement makes clear that it believes prior FTC’s (including the one I served on) to have been overly lenient when it comes to merger settlement and divestiture proposals. The Synopsis statement itself indicates the FTC will have more to say on the subject of remedies later — and so we can wait for further word from the FTC before delving more deeply here. But suffice it to say that the Synopsis statement reflects an important signal from the FTC that consents are back where they can completely address competitive concerns, that it rejects ideological hostility to consents, and that it understands the importance of M&A activity to economic growth and innovation.
And from a practical perspective, observant readers might note that the Synopsis settlement, the first FTC structural remedy during the Trump Administration, does NOT include either a prior approval or prior notice provision. The Biden Administration had reinstated that controversial practice over substantial criticism that doing so would deter M&A activity but this data point suggests yet a different return to normal order in merger review.
Less than a week later, the DOJ would join the signaling party – with Deputy Assistant Attorney General Bill Rinner offering up his own speech on behalf of the Division regarding merger review and enforcement. Rinner’s speech is a goldmine. From pointing out that the Division rejects the view that the role of merger enforcement is general deterrence rather than to specifically deter anticompetitive mergers to an overarching emphasis on procedural fairness, Rinner’s speech hits important notes that the market and regulatory observers have been waiting for.
A point I have often made here at Competition on the Merits is that the sins of the Khan merger enforcement regime were not about the cases they won or lost in court but rather the use and abuse of process to deter transactions without regard to their legality or impact on consumers. Those looking solely to the won-loss record to evaluate any merger enforcement regime are, as I have noted, missing an important dimension of performance. Much of the uncertainty surrounding the M&A environment is not just about whether the regulators will choose to challenge a deal in court but even more so about whether the merger review process will be so burdensome, expensive, and unpredictable that deals cannot get done.
Rinner spoke to this directly:
And with recognition of the vast power disparity between the federal government and the transacting parties during merger review:
The Rinner speech goes on to make some specific commitments, e.g. no more “Scarlet” Warning Letters for parties warning that they close deals the DOJ has reviewed “at their own risk,” and no leveraging merger review for concessions having nothing to do with the merger or antitrust law. These are no minor concessions in terms of providing regulatory certainty. Rinner’s speech is a well-crafted piece of writing but also an important one in terms of the DOJ joining the signal that procedural fairness and regulatory certainty are at a premium in the Trump administration’s merger review and enforcement policy.
And to be clear, while DAAG Rinner gave the speech – it speaks remarkably well of AAG Slater than she empowered him to do so. The DOJ needed to be heard from on these points. And no doubt we will also hear from AAG Slater. But Rinner’s speech – while clearly emphasizing the DOJ intends to enforce the law vigorously, litigate where appropriate, and will be skeptical of behavioral remedies – commits to giving up some regulatory discretion. Not all that hold such power do so. Just in case it is useful to them at some point. And the policy concessions in the Rinner speech are Slater’s to concede; and she should earn considerable credit for doing so.
The third dot to be connected here takes us back to the FTC. Just one day after DAAG Rinner’s speech, Commissioner Holyoak joins the fray with her own speech on structural merger remedies. Holyoak’s speech is consistent with her thoughtful and careful work throughout her time at the Commission. (If reports that Holyoak is not long for the FTC are correct as she considers the US Attorney job in Utah, her contributions to the agency will be sorely missed). She too alludes to a future remedies guidance document and walks the reader through the Synopsis divestiture and the features of divestitures and divestiture buyers that render them more or less likely to satisfy competitive concerns. But to be crystal clear, Holyoak’s speech is certainly imbued with the clear signal to readers that it speaks for a Trump administration policy on merger review and settlement that is new and different:
Taken together, it is difficult to avoid the signal that these three statements and speeches, each given within the same week, send into the world:
Divestitures are back and can resolve investigations when they completely address competition concerns
The Trump FTC and DOJ recognize the importance of procedural fairness in merger review, that it has been absent, and that they intend to bring it back
Ideological hostility to M&A is not a part of the agencies’ approach to evaluating transactions
The agencies remain committed to vigorous and enforcement and litigation where appropriate
The agencies are making efficiency and speed of the investigation and review process a priority
It is hard to read this collection of top agency officials hitting the same notes, at the same time, as anything but a collective chorus signaling its song of regulatory certainty, procedural fairness, and efficiency to an audience that really had not heard it yet.
Is This Signal the Real Deal? Are Mergers Back on the Menu? How Will You Know?
Let me close with the following thought. I do not think there is any doubt that the signal represents a genuine and sincere attempt to announce a desired policy shift for merger review. Early terminations start to put the agency’s money where its mouth is in this regard. As do consents like Synopsis where conventional structural remedies are used to resolve antitrust concerns. Early terminations and consents are two indicators that the policy change is having real impact on the ground and in the merger review process. There are other substantive indicators as well, e.g. the absence of prior approval or notice provisions in settlements, the disappearance of outlandish theories of harm from complaints.
But I want to focus on the indicator that I think is probably the most important when it comes to measuring regulatory uncertainty: duration of investigation. How long does it take?
The good folks at Dechert publish the DAMITT report that is chocked full of important information on merger review trends in the US, EU and other jurisdictions. One important statistic they track and report is the duration of significant investigations. Things got pretty bad during the Biden Administration. And to be sure, they were not that much better during Trump I when it comes to how long it took agencies to get to a decision in significant investigations. Let’s take a look:
What I think the market will be watching most when it comes to assessing the regulatory environment around dealmaking is this number. The duration captures problems associated with procedural fairness as well as a baked-in hostility toward M&A activity. Early termination is worth watching as well – but it captures a different aspect of Chairman Ferguson’s commitment to get the agency “out of the way” when deals are not problematic. Some deals are inherently unproblematic or can be assessed quite easily as not raising any competition issues. Those get early termination.
Duration of significant investigations (Second Requests) is different. Some investigations require at least some level of investigation in order to reach the conclusion that a deal does not raise competitive concerns or that a divestiture resolves those concerns. Delay is a substantial regulatory burden. It can be the most important one for some companies that need to act quickly and acquire assets to innovate and compete in the marketplace. One of the most important deregulatory contributions the Trump FTC and DOJ can make is to reduce the average duration of significant investigations considerably.
One important note is that with the new HSR forms, the agencies receive essentially a much greater quantity and quality of information about the transaction at the time of HSR filing. In some cases, the HSR filing contains almost the same level of information as the agency would receive with a second request. Given the much greater volume and quality of information about the transaction and its effects the FTC and DOJ receive at the time of filing, it should be the case that average duration of investigations falls dramatically. Under the oldHSR rules the agency might spend months collecting the information it now receives with the initial filling. In short, all things equal, these duration numbers should fall significantly even holding constant the agency commitment to moving fast. If the Trump FTC and DOJ mean what they say about getting out of the way of non-problematic deals and operating with procedural fairness, the truth is that we ought to see these numbers fall considerably, perhaps to 2011-2016 levels. That might be difficult with personnel reductions. But for outside observers, market participants, merger buyers and sellers, and practitioners advising each of the above – duration of significant investigation is the metric to watch. And I will be keeping a close eye when Dechert’s 2025 Q2 DAMITT report is released.
*And thanks to the DAMITT team for recognizing my record number of dissents in merger challenges.
For now, I remain cautiously optimistic these signals reflect real policy change. See you next time. As always, subscribe, upgrade to paid and send to your friends. Also, feel free to send along suggestions for future columns, questions, and comments.