Login
M&A deals worth billions derailed through antitrust action
The record high in M&A transactions last year was met with forceful regulatory response, with antitrust authorities slamming the breaks on deals valued at more than €60 billion (AUD$93.56 billion).
Felicity Nelson
Allen & Overy’s Global Trends in Merger Control Enforcement Report, released this week, shows that 20 transactions worth more than €60 billion were prohibited or abandoned as a result of antitrust concerns last year.
The report, which analyses merger control activity across 16 jurisdictions, found that a further 92 deals required remedies.
Remedies are solutions to concerns from antitrust enforcement agencies, which can lead to deals being renegotiated and buyers acquiring less than intended.
In A&O’s report, 38 of the deals requiring remedies had those remedies agreed during the initial review period.
The remaining majority (54) were subjected to remedies following in-depth investigations.
The number of mergers referred to an in-depth investigation is still low compared to the overall number of transactions in any given year, and not all in-depth investigations resulted in antitrust intervention, according to the report.
The timeline for these in-depth investigations has increased due to the growing complexity of deals. Investigations generally took between five to eight months, and in some cases longer, according to the report.
A&O noted a significant shift in the types of remedies imposed. Authorities are more open to behavioural commitments relating to the future conduct of the merging parties, such as the licensing of a brand or asset or granting access to a network.
Hybrid remedies that combine both structural divestments and behavioural commitments are also becoming more common. In 2015, 37 per cent of remedies following in-depth investigations involved either standalone behavioural or hybrid remedies.
However, structural remedies are preferred to behavioural remedies in the US, according to Elaine Johnston, the co-head of Allen & Overy’s antitrust practice.
From a sector perspective, telecoms and life sciences mergers accounted for the highest ratio of antitrust intervention compared to the global volume of deals in these sectors.
