Competition agencies have a closer look at big ticket M&A

As the global economy cont inues to evolve amidst increasing digitalization and shifting cross-border economic engagement, the framework governing M&A transactions is undergoing significant transformations.

- SAMIR R GANDHI, SHIVAM JHA

In recent years, M&A transactions have faced heightened regulatory scrutiny, including a reinforced grip on merger control, foreign subsidies regulations and foreign investment control. While the geopolitical climate seems to signal an increased focus on national security and economic protectionism, a vigorous merger review process holds its own weight due to its multifaceted impact on each country’s economy.

With more than half of the countries in the world having active merger control regimes in 2024, the importance of screening M&A is very clear. Regulatory bodies are updating their merger guidelines to reflect contemporary economic realities, and there appears to be an increased focus on catching “killer acquisitions” (i.e., acquiring innovative targets solely to terminate its innovation projects and preempt future competition), peeking deeper into the operations and competitive strategies of companies during merger review. Are deals going to face greater antitrust headwinds going forward?

Recent changes to the merger filing requirements in the USA echo the global shift towards a more comprehensive merger review process In the USA, the HartScott-Rodino (HSR) Antitrust Improvements Act saw its premerger notification rules overhauled in 2024, with these changes set to take effect in early 2025. The new HSR form (which agencies have relied on for more than 45 years to screen M&A) has undergone a significant makeover, including fresh and enhanced reporting obligations around competitive overlaps, ownership structures (including details of entities between the ultimate parent entity and the direct acquirer), minority investments, foreign subsidies, and internal documents (analyzing competition aspects) submitted to the CEO and board members.