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Merger challenges rose 27 per cent during the past fiscal year compared to a year earlier, with US antitrust officials focusing their scrutiny particularly on transactions whose value tops $1bn, according to a report released on Thursday from Cornerstone Research.
For fiscal year 2015, US government agencies challenged 42 mergers, compared to 33 a year ago, the report showed. That rise tracked a steady increase in the number of deals submitted for antitrust approval, which grew to 1,754 during the past fiscal year, the second-highest level in 10 years, according to the report.
Despite the bump in total challenges, that number in relation to the number submitted is consistent with the 2.2 per cent historical average seen from 2006-2014.
“Enforcement activity remained relatively consistent with the overall level of previous years,” said Cagatay Koç, a principal of Cornerstone Research and the report’s co-author. Industries that were a particular focus for enforcement efforts included the retail trade, pharmaceuticals, manufacturing and health services sectors, according to the report.
Where there was a “significant jump”, Mr Koç added, was in the number of deals valued at more than $1bn that were the subject of so-called “second requests” – when reviewing officials from either the US Federal Trade Commission or Justice Department request more information from the companies following a customary preliminary review – which accounted for 66 per cent of all second requests during FY 2015.
“This is the only time their share of second requests was over 50 per cent in the last 10 fiscal years,” Mr Koç said.
Most of the challenges submitted during FY 2015 were resolved by consent orders or decrees – 60 per cent. In 33 per cent of cases, the transaction was abandoned or restructured, and 7 per cent of those went to court.
The report shows how antitrust officials have scrambled to keep pace with the steady rise of mergers that have been rolled out over the past few years. The biggest future unknown, of course, will be what tack the nascent Trump administration will take on antitrust enforcement – whether it decides to keep up with the brisk pace set by the preceding Barack Obama’s administration, or if it has a warmer welcome for prospective mega-deals.
Read the full report here.
Charts courtesy of Cornerstone Research.