Unpredictable to Hostile: Antitrust in the EU, US and UK
By Sir Jonathan Faull, Partner, Chair of European Public Affairs, Brussels l John Davies, Senior Advisor, London l Terry Calvani, Senior Advisor, Washington D.C
The senior advisors and leaders of Brunswick’s Regulatory and Public Affairs practices in London, Washington, DC, and Brussels discuss the current complex environment for mergers and acquisitions. Change is coming, they say, but the outcome of that change is uncertain. Deals can still be done. But those that raise potential issues need to be carefully prepared.
What is the current antitrust environment like for dealmakers?
John Davies, London: It is the most unpredictable that we’ve seen for 30 or more years, since the advent of European merger regulation – when people did not really know what Europe controlling mergers meant. Europe worked through years of uncertainty to more predictability, and then other non-European countries developed their own merger control laws. Gradually, we worked toward a desire for convergence. But I don’t think the leading authorities any longer feel that convergence is important. Recent examples of divergent outcomes between the UK and Europe – such as the Konecranes-Cargotec merger – are not helping overall predictability.
There has been a significant chilling effect on the willingness of corporates to engage with any kind of regulatory risk. Lina Khan, the head of the US Federal Trade Commission (FTC), has talked about preventing “facially illegal” deals. That term never existed before. So, I think the environment is edging from unpredictable to hostile.
Terry Calvani, DC: That is true in the US. It has been reported that Second Requests (Phase II) are being issued more routinely and in the absence of staff recommendation. The requests themselves are often larger. Parties often receive “close at your own risk” letters indicating that the FTC may challenge the deal after the expiration of the review period and consummation. The leadership has indicated that consent orders may contain “prior approval” clauses that will require affirmative approval of future deals by the agency.
On the convergence point, at the close of the International Competition Network Plenary, Andreas Mundt [president of the German Federal Cartel Office] observed that the US was moving closer to Europe in its merger policies. Whether this evidences more convergence between the US and Europe remains to be seen.
Jonathan Faull, Brussels: There is a strong sense in the US that the previous regime was harmful and there is a need for a major correction. The Americans are reaching out for theories on how to do it. They have said things like, “if we can’t persuade the courts to follow us on this, we will have to propose legislation to change the rules.” In Europe, though, the approach appears to be to test the boundaries of the existing law rather than to seek legislative change.