Previously, we briefly mentioned the place of the federal merger review process in business merger planning. As we noted last time, the primary concern with any large merger is the potential negative effects the proposal could have on competition. In some cases, federal authorities will require that the proposal is adjusted to address any concerns with competition.
Two recent examples of merger proposals with competitive concerns are the proposed merger between competing daily fantasy sports sites FanDuel and DraftKings, as well as the proposed merger of the Dallas-based Waste Control Specialists and its main competitor, EnergySolutions.
In the latter case, a federal judge has already ruled in favor of the federal government that merging the companies would violate antitrust laws, primarily by combining the only two low-level commercial radioactive waste disposal facilities for a total of 36 states. The other proposed merger, between FanDuel and DraftKings, may still go through, but the Federal Trade Commission recently made the decision to oppose the merger based on competitive concerns.
Instances where the federal government completely opposes a proposed merger are relatively rare. In many cases, there will be no competitive concerns or any potential issues can be adequately worked out between the reviewing agency and the companies. Businesses need to have good information, sound planning and solid advice to determine whether any changes can be made to eliminate competitive concerns without harming the benefits sought by the merger.
In any proposed merger, it is critical to work with experienced legal counsel to ensure everything is done according to applicable law and that any legal liabilities stemming from the merger are addressed and minimized. This is particularly true when the Federal Trade Commission gets involved and requires changes to the merger agreement to address competitive concerns.
Dallas News, “Why Feds put a stop to the sale of Dallas-based Waste Control Specialists,” Jeff Mosier, June 21, 2017.
ESPN, “FTC says it will file suit to block FanDuel, DraftKings merger,” Darren Rovell, June 19, 2017.