The number of significant investigations involving vertical issues declined from five in 2018 to three in 2019. All three of these 2019 significant investigations – Fresenius/NxStage, UnitedHealth/DaVita Medical, and Staples/Essendent – concluded in the first half of the year and were handled by the FTC. The drop off in the second half of the year could be attributable to heightened scrutiny of vertical deals.
During the nine years tracked by DAMITT, significant U.S. investigations with vertical aspects have lasted 2.2 months longer on average than those without vertical aspects. In 2019, this difference swelled to nearly four months (15.3 months vs. 11.4 months). This disparity could be driven by the fact that vertical issues can be more complicated for the agencies to analyze, typically requiring more complex economic modeling and more datasets. The introduction of the new vertical guidelines is not expected to substantially impact this trend.
U.S. Significant Investigations Involving Technology Products and Services
In 2019, mergers involving technology products and services – ranging from airline booking platforms to hardware encryption modules, genetic sequencing systems, and more – attracted considerable attention from the U.S. agencies. The DOJ and FTC completed five significant investigations in this technology space in 2019, more than double the average per year from 2016-2018. Of these five significant investigations, the agencies filed complaints in federal court to block two, settled two with divestitures, and took credit for the abandonment of one other deal prior to the filing of a complaint. Overall, significant investigations of technology-related products accounted for nearly 20 percent of all significant investigations in 2019 – the highest proportion in any year since 2011.
Although this heightened interest in technology issues coincides with the FTC’s formation of a dedicated Technology Task Force in February 2019, four of these five significant investigations were completed by the DOJ. Given the FTC’s increased allocation of resources and allowing time for the task force to more closely examine U.S. technology markets, however, more FTC significant investigations could follow in 2020. In particular, the FTC’s task force is expected to focus on digital technologies, including “online advertising, social networking, mobile operating systems, and platform businesses.” DAMITT will continue to monitor the increased spotlight on the technology sector to assess the impact of the increased attention.