Antitrust authorities stay tough in a difficult M&A market

Allen & Overy LLP

Allen & Overy LLP

Antitrust authorities remained highly active in 2020, despite the pandemic reducing overall global M&A, according to our latest annual survey of global merger control enforcement trends across 26 jurisdictions.

Antitrust authorities across the world continued to frustrate transactions at a significant rate in 2020.

A total of 29 deals were either prohibited or abandoned during the year. This represents a 28% decrease in enforcement activity on 2019 due to two main factors:

  • a sharp reduction in M&A activity, particularly in the first half of the year as the pandemic took hold
  • reluctance by some companies to tackle highly strategic, transformational deals of the sort that would normally attract most attention from antitrust authorities

Overall, we do not believe the lower levels of enforcement in 2020 signal a more relaxed approach by antitrust authorities.

UK leads the pack

We saw record levels of activity in several jurisdictions, once again led by the UK where the Competition and Markets Authority (CMA) frustrated nine deals. This was one more than in 2019, with four deals prohibited and five abandoned.

2020 also saw the CMA increase its interventions in the form of remedies. There were eight phase 1 remedy cases and four at phase 2, compared with four and one, respectively, the year before.

All the signs are that the CMA is continuing on this path, at a time when the UK government is considering calls for the CMA’s enforcement powers to be strengthened and its workload is expected to grow as a result of Brexit (and the consequential disapplication of the EU Merger Regulation’s “one-stop-shop” principle).

U.S. hits a new peak

A peak in challenges by the U.S. antitrust agencies resulted in a record 10 deals being abandoned – double the number seen in 2019 – with one prohibition. This reflects an increased appetite by both the Department of Justice (DOJ) and the Federal Trade Commission (FTC) to intervene.

The election of Joe Biden as President will likely increase this appetite further. A number of sectors are expected to be in the spotlight, including consumer-facing, digital and pharmaceutical companies.

Much will depend on key appointments at the FTC and DOJ, and it might be some time before the impact is fully felt.

EU quiet, China steady

By contrast, EU-level data shows a very different picture. Here there were no prohibited deals and just one transaction abandoned. While there are a number of on-going in-depth reviews, our report suggests that many of these appear more suited to remedy solutions rather than prohibition.

Enforcement activity in China was steady in 2020. The average duration of merger reviews fell, despite the disruption caused by the pandemic.

One consistent trend across the world was a move to establish or strengthen foreign investment controls. This was the case in 17 of the 26 jurisdictions we surveyed.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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