Antitrust authorities step up their game in M&A scrutiny

By Newsdesk

March 05 2024
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In 2023, the landscape for mergers and acquisitions (M&A) has seen significant challenges due to increased scrutiny from antitrust authorities, as highlighted in the latest Global Trends in Merger Control Enforcement report by A&O.

Antitrust authorities step up their game in M&A scrutiny

The report noted a significant rise in prohibited transactions, with over a 50% increase compared to previous years. This heightened vigilance has been particularly evident in the digital and private equity sectors, where authorities have shown a reluctance to accept remedies for concerns, opting instead to block deals outright.

The data, gathered from 26 jurisdictions, places a spotlight on the U.S., EU, UK, and APAC regions, with Australia facing some of the most rigorous examinations. Here, the Australian Competition and Consumer Commission (ACCC) blocked four deals in 2023, marking the highest number since A&O began its reports. Additionally, the ACCC completed an unprecedented seven phase two reviews.

Lisa Emanuel, a Sydney partner at A&O, expressed concerns about the evolving antitrust environment in Australia. "Dealmakers in Australia are facing an increasingly tough antitrust environment," she said, emphasizing the ongoing and planned major reforms to the Australian merger control regime. Emanuel also pointed out the global trend of authorities extending their reach to review M&A transactions below merger control filing thresholds, adding complexity and uncertainty for those involved in mergers.

Particularly noteworthy is the ACCC’s attention to private equity firms holding minority stakes in competing businesses, flagged as a potential antitrust concern due to their capacity to influence competitive decisions significantly.

Digital and tech sectors also faced headwinds, with 20% of global deals being blocked as authorities extended their enforcement efforts. Despite tech deals accounting for a quarter of all global M&A, antitrust interventions in this sector were comparatively lower yet showed a significant increase from the previous year.

Emanuel also highlighted the Australian regulators' flexibility in cases where sustainability benefits outweigh competition concerns. An example of this is the conditional authorization of the acquisition of Origin Energy by Brookfield and MidOcean, which is seen as a move to expedite the energy transition in the country.

The report reveals interesting trends in foreign investment (FI) screenings, the sectoral focus of antitrust interventions, and the rise in sanctions for procedural merger control infringements, indicating a tough stance on non-compliance.

These findings underline a global shift towards more rigorous antitrust scrutiny in M&A markets, with implications for dealmakers worldwide, particularly in sectors like consumer, life sciences, transport, and energy.

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