Merger review is only supposed to focus on the result
that the combination of two or more companies will produce:
will the deal negatively impact choice for consumers and will
it have an effect on the number of players in a market?
Following on from the previous point, competition rules are
also supposed to be indifferent to nationality and sector (or
most sectors at least if you set aside defence for example).
Are they really though?
A number of countries globally have very active foreign
direct investment programmes – for instance, Asian and
Middle Eastern buyers flush with cash have been snapping up EU
assets for the past few years. Two of the UK's most prized
assets, Hinckley Point and Land Rover, were acquired by Chinese
and Indian investors respectively.
This may be good for business but it's getting regulators a
The UK is currently reviewing legislation that would place
more emphasis on national security considerations when
regulators examine M&A proposals involving a foreign party.
The 2002 Enterprise Act allows the Secretary of State for
Business to review combinations with this specific angle in
mind though there is no general rule allowing regulators to do
Over the years, macroeconomic conditions have slowly
permeated the merger review process: the sale of some of the UK
economy's crown jewels (Cadbury to Kraft and AstraZeneca to
Pfizer) have attracted both intense media and government
scrutiny though the deals themselves didn't have any inherent
competition issues attached to them.
In the US, the Trump administration has on a general level
helped foster a business-friendly environment. But the
Committee on Foreign Investment in the United States (Cfius)
has been in the limelight recently for its broad definition of
national security. While it was never meant to take this
criteria into account – at least explicitly –
it has creeped up in its reviews, and is now believed to relate
to issues such effect on the US economy and on US critical
infrastructure. Germany's Foreign Trade Act and the Foreign
Investment Review Board in Australia are going in the same
direction in their respective jurisdictions.
This trend towards a more protections antitrust stance could
prove challenging for foreign buyers. They will need to jump
through more hurdles, provide more guarantees and clarity
surrounding their intentions, and generally be more forthcoming
with regulators in giving up information. It's increasingly
going to be an uphill battle to get deals done and dusted.
Enjoy the issue,