Business mergers can be complex transactions and require careful planning to execute successfully. Planning for a merger must encompass every aspect of the companies’ operations, and there must effective communication, as well as a commitment unifying the business’ cultures and flexibility in adjusting to any changes that occur.
Planning for a merger encompasses not only financial and operational matters, but also legal considerations. One of the issues that can come up in some merger proposals is competitive concerns. Federal regulators in some cases will find cause for concern with proposed mergers due to the effect on the market and the impact on consumers.
The Federal Trade Commission, along with the Department of Justice, is responsible for addressing any competitive concerns that arise with proposed mergers. Merger proposals between businesses that are in direct competition with one another, and especially between businesses which together take up a large share of the market in their field, are of particular concern when it comes to antitrust issues.
As part of the merger review process, the FTC or the DOJ–whichever agency handles the review–documentation and information is requested from the businesses involved in the proposed merger. If necessary, changes are made to ensure there is no violation of antitrust laws. In cases where it isn’t possible to avoid competitive concerns with a merger, or when the businesses are not willing to negotiate a modification of the agreement, the proposal is blocked entirely.
In our next post, we’ll look at a couple recently proposed mergers and some of the issues federal regulators will likely be working through in these cases, and the role an experienced attorney can play in the process.