The length of significant U.S. investigations continues to rise. For H1 2019, the average duration from the announcement of the deal to the conclusion of the investigation was 12.1 months, up from 10.2 months in H1 2018. For the RTM ended Q2 2019, the average was 11.4 months, up from 9.9 months in the RTM ended Q2 2018.
At nearly 19 months, UnitedHealth’s acquisition of DaVita Medical Group provoked the longest significant U.S. merger investigation concluded in H1 2019 and the eighth-longest since 2011.
Significant U.S. investigations with vertical aspects concluding in H1 2019 averaged about 15.3 months, compared to 10.8 months for the remainder of deals concluding in H1 2019. These H1 2019 results align with DAMITT’s prior finding that significant U.S. investigations with vertical aspects tend to last longer on average than those without vertical aspects.
Citing DAMITT findings, both the U.S. DOJ and FTC announced planned reforms to the merger review process in late 2018. To date, DOJ has made strides with its reforms in shortening the review process, as more than 80 percent of DOJ’s H1 2019 significant investigations lasted fewer than ten months. In marked contrast, however, 75 percent of the FTC’s significant investigations concluded during H1 2019 lasted more than 16 months and only one lasted fewer than ten months. DAMITT will continue to observe whether this clear difference in duration between the two federal agencies continues to hold in future months.
While prior DAMITT analyses found that antitrust merger litigation added an additional five to seven months to the merger process, no merger litigations have completed during H1 2019. The only significant U.S. investigation resulting in a complaint during H1 2019 (Quad Graphics/LSC Communications) was filed by DOJ on June 26, 2019 and a trial on the legality of the merger was scheduled to begin on November 14, 2019 —which is 148 days later.
In comparison, antitrust merger cases commenced between 2015 and 2018 started on average about 107 days after the complaint was filed. Although Quad and LSC have since abandoned their transaction, the scheduled litigation was atypical in that if the merger had been deemed unlawful by the court, the judge had ordered the parties to establish a separate case schedule for a hearing on any remedy proposed by the merging companies. If followed by other courts, this bifurcation would make it even more difficult for companies proposing a merger remedy to hold their deals together through a lengthy investigation, lengthy litigation on the legality of the merger, and additional litigation over any proposed remedy.