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Merger Transactions Reported to FTC, DOJ Reach 10-Year High

 Agencies challenged a smaller percentage of transactions in FY 2018.

The number of merger transactions reported to U.S. government agencies continued to grow in fiscal year 2018. The number of reported transactions topped 2,000 for the first time in the past 10 fiscal years, according to a Cornerstone Research report.

Reported Transactions

The report, Trends in Merger Investigations and Enforcement at the U.S. Antitrust Agencies: Fiscal Years 2009-2018, finds that the Federal Trade Commission and the U.S. Department of Justice reported 2,028 merger transactions in FY 2018, up slightly from the 1,992 transactions in the previous fiscal year. The FY 2018 total was approximately 40% higher than the FY 2009–FY 2017 average of 1,450 reported transactions.

The number of transactions reported to the agencies has increased steadily in the last five years covered in the report. However, this trend could change, as the first half of 2020 is likely to see a slowdown in reported transactions.

Clearances

The number of transactions cleared for further investigation by the agencies also increased in FY 2018 to 286 from 277 in the previous fiscal year. The FY 2009-FY 2017 average is 234.

Second Requests

Despite the increase in the number of clearances, second requests decreased. Only 45 or about 2% of reported transactions in FY 2018 received second requests for additional information—the smallest share in the past 10 fiscal years.

Agency Challenges and Resolutions

The FTC and the DOJ challenged 39 mergers in FY 2018, the same number as in FY 2017. The percentage of challenges to reported transactions in FY 2018, however, was lower than the FY 2009–FY 2017 average. Among challenged mergers in FY 2018, about half resolved in consent orders or decrees, the lowest percentage since FY 2013. One-third of the transactions were abandoned or restructured, and court proceedings were initiated in 15%.

The report analyzes data from the previous 10 annual Hart-Scott-Rodino reports that the FTC and DOJ jointly filed to Congress and covers the period from October 1, 2008, to September 30, 2018. The report also includes a proprietary Enforcement Rate Indicator (ERI), which analyzes the share of second requests in an industry sector relative to its share of transactions.

Key Trends

  • Manufacturing accounted for the largest share of reported transactions (19.3%) and clearances (22.7%), and the second-largest share of second requests (20%). This sector accounts for the largest average share of transactions, clearances, and second requests over the previous nine fiscal years.
  • In FY 2018, 24.4% of clearances received second requests at the DOJ; compared to 12.5% at the FTC. At both agencies, second requests as a percentage of clearances were smaller in FY 2018 than historical averages.
  • Among industry sectors, information, finance, health services, other services, and real estate experienced upticks in second requests as a share of transactions in FY 2018, despite a cross-industry decrease in enforcement between FY 2017 and FY 2018.
  • The majority of second requests involved transactions exceeding $1 billion.

Read  Trends in Merger Investigations and Enforcement at the U.S. Antitrust Agencies: Fiscal Years 2009-2018.

Copyright ©2020 Cornerstone ResearchNational Law Review, Volume X, Number 154

TRENDING LEGAL ANALYSIS


About this Author

Kivanç Kirgiz Litigation and Financial Analysis Cornerstone Research
Vice President

Kivanç Kirgiz has more than fifteen years of experience applying economic and financial analysis to issues arising in business litigation. Dr. Kirgiz has worked on many large-scale antitrust matters involving allegations of collusion, price fixing, bid rigging, monopolization, and exclusionary conduct. He has worked with counsel to develop case strategy and has managed case teams that have analyzed class certification, liability, and damages issues for testifying experts. Dr. Kirgiz has experience in a variety of industries, including healthcare, auto parts, insurance, energy, chemicals,...

202.912.8908
Bob Majure Cornerstone Research
Vice President

Bob Majure has wide-ranging expertise with merger and joint venture analysis, antitrust proceedings, regulatory actions, and appellate filings. He has experience across many industries, including agriculture, energy, health insurance, high tech, industrial equipment, media, professional services, telecommunications, and transportation.

Dr. Majure is the former Director of Economics for the Antitrust Division of the U.S. Department of Justice. In this role, he worked closely with the Deputy Assistant Attorney General for Economic Analysis and other members of the Antitrust Division front office, monitoring merger enforcement and litigation matters, allegations of anticompetitive horizontal conduct, and monopolization. Dr. Majure has received awards for senior executive civil service, culminating in Presidential recognition.

An expert in industrial organization economics, Dr. Majure worked on every merger challenge brought by the Antitrust Division during his nine years as director, including Aetna/Humana, Anthem/Cigna, AT&T/T-Mobile, AT&T/Time Warner, GE/Electrolux, and USAir/American.

He was also instrumental in major merger settlements, notably Anheuser-Busch InBev/SABMiller, Bayer/Monsanto, Comcast/NBCU, CVS/Aetna, and Dow/DuPont.

As part of the DOJ’s non-merger enforcement, Dr. Majure supervised numerous investigations of business practices, as well as several challenges, such as American Express, Apple, and Carolinas Healthcare System.

Dr. Majure’s career at the DOJ spanned nearly twenty-five years and several key roles. In addition to supporting the Antitrust Division’s enforcement and policy activities across all of its areas of interest, he frequently coordinated practices and policies with senior representatives of other domestic and international enforcement agencies, such as the Federal Trade Commission and the Directorate-General for Competition (DG Comp). He was also actively involved in multinational competition policy efforts through the Organisation for Economic Co-operation and Development (OECD) and the International Competition Network (ICN).

Previously, Dr. Majure served as a section chief and as an assistant section chief in the Antitrust Division’s Economic Analysis Group (EAG). In these capacities, he led the economic team supporting the Division’s enforcement and policy activities. He submitted testimony on competitive effects in Union Pacific/Southern Pacific Railroad and on the suitability of remedy in U.S. v. SBC Communications Inc. and AT&T Corp. and U.S. v. Verizon Communications Inc. and MCI Inc. He also served on the committee that drafted the 2010 Horizontal Merger Guidelines.

202.912.8978
Kostis Hatzitaskos VP Antitrust Cornerstone Research
Vice President

Kostis Hatzitaskos coheads Cornerstone Research’s antitrust and competition practice. Citing his econometrics expertise and significant experience analyzing large datasets, Who’s Who Legal has recognized Dr. Hatzitaskos as a future leader in the competition field, describing him as “a great young economist, great communicator, and a pleasure to work with.”

Dr. Hatzitaskos leads merger review teams for merging parties and government agencies in investigations, both in the United States and internationally. He has extensive experience in...

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