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Antitrust authorities are stepping up M&A scrutiny
A new report shows antitrust authorities around the globe are cracking down on merger and acquisition deals, a trend that is likely to be reflected in Australia.
Jess Feyder
Global law firm Allen & Overy has released its new Global trends in merger control enforcement report, which found that antitrust authorities around the world are stepping up their scrutiny of M&A and adopting increasingly aggressive enforcement tactics.
The report found that despite the reduced volume and value of M&A across the globe in 2022, authorities still stepped-up intervention.
It found that the total number of frustrated deals sits at 32, up from 30 in both 2021 and 2020. Thirteen transactions were blocked, and a further 19 were abandoned due to antitrust concerns.
Another key finding showed the life sciences, energy and industrial/manufacturing sector deals saw the greatest intervention, while the US and UK authorities paid close attention to private equity deals.
Digital and tech deals were high on the enforcement agenda, with authorities moving forward with new digital rules that will give them greater powers of review.
A total of €113.8 million fines were imposed in 70 decisions across the jurisdictions surveyed.
Procedural merger control infringements were the subject of aggressive enforcement by antitrust authorities, with a 7 per cent increase in fines imposed from 2021.
Australian lawyers, partner Peter McDonald and counsel Lisa Emanuel commented on the implications of the findings.
Mr McDonald said: “Antitrust authorities across the globe have stepped up their scrutiny of M&A, and as foreign direct investment screening by governments/regulators imposes additional obstacles for deal makers, it seems likely that we’ll see a sustained increase in intervention in the coming years.
“On the merger control side, at least, we can expect to see a continuation of increased collaboration between authorities as they seek to enhance their powers of intervention.”
Ms Emanuel added: “Like US, UK and German antitrust authorities, the ACCC is likely to encourage ‘clean slate’ remedies when reviewing problematic transactions — that is, pushing for divestiture over behavioural commitments.
“Regulators around the world are becoming increasingly sceptical of the effectiveness of behavioural remedies, which involve long-term monitoring and can risk regulatory avoidance over time.”
“Globally, behavioural-only remedies packages have dropped by 40 per cent in the past four years — Australian companies should be wary that these commitments are increasingly unlikely to lead to clearances without structural divestments.”
There were several other notable insights in the report, including that nearly 60 per cent of Competition and Markets Authority (CMA) reviews in 2022 resulted in a prohibition, remedies, or the deal being abandoned.
Of the deals prohibited by the CMA, 75 per cent were completed transactions, meaning the acquirer was effectively forced to dispose of the business it acquired.
It also found that antitrust intervention in energy transactions (10 per cent) was nearly double the proportion of global M&A in the sector (6 per cent).
