A challenging time for mergers

From tougher enforcement across the globe, to increased regulatory oversight – how are different jurisdictions approaching merger control in 2023? Rebecca Farrington, Marc Israel, Tamer Nagy & Strati Sakellariou-Witt, partners at White & Case, provide their thoughts


Regulators across the globe are increasingly adopting a tougher stance on merger enforcement in defence of national and international competition. Already, shifts in competition laws in the UK and Canada, and a re-application of current laws in the US and EU, are enabling regulators to address concerns about concentration in markets, entrenching of dominant positions and removal of dynamic competition.

Meanwhile, many jurisdictions are expanding their investment and subsidies screening regimes. The remainder of the year will prove pivotal as both regulatory and legislative changes take effect, making it increasingly difficult to have a deal cleared. As the global picture for deal-making changes, there are a few key points corporates need to be aware of in the merger control process.

Increased scrutiny
According to the White & Case Global Antitrust Merger study, the European Commission (EC) is more likely to block a merger than ever before. In 2022, the EC issued two prohibition decisions, compared to none in 2021 or 2020. The EC also published a guidance paper encouraging national competition authorities to refer certain transactions for review, even if they fall below the standard thresholds.

In the US, antitrust enforcers under the Biden administration are actively challenging more cases, attempting to block vertical transactions, and scrutinising acquisitions by private equity firms. In Australia, tougher merger control enforcement is manifesting in longer review periods.

In 2020–21, the Australian Competition & Consumer Commission (ACCC) extended the benchmark timelines from eight weeks to 12 weeks for phase one, and from 20 to 24 weeks for phase two. Similarly, there has been a hardening in the approach taken by the Competition Markets Authority (CMA) in the UK.

In 2022, the number of phase one cases referred for an in-depth phase two investigation, abandoned, or resolved with remedies, outnumbered those that were unconditionally cleared for the first time.

In the Middle East and North Africa (MENA) region, the Saudi Arabian competition authority blocked its first deal on substantive grounds, and Morocco issued a $1.1m fine against Swiss and French companies for failing to notify an acquisition. Competition authorities across the MENA region are ready to scrutinise deals more closely, and parties should expect more merger control enforcement for the time being.

Regulatory divergence
Since the UK formally left the EU the risk of divergent views between the EC and the CMA has increased, exemplified by the recent Cargotec/Konecranes merger. While the EC cleared the transaction, the CMA blocked the merger, considering the same remedy package insufficient to address its concerns.

Likewise, the recently announced Booking/Etraveli merger was cleared by the CMA in phase one, but is currently being investigated by the EC in phase two. With this context, the divergence between the CMA and the EC will continue to be a risk that companies must manage, in addition to potentially divergent trans-Atlantic views. For example, in Cargotec/Konecranes, the US Department of Justice, like the CMA, considered the parties’ proposed remedy package to be insufficient even though the EC accepted it.

The European Commission is more likely to block a merger than ever before

A number of legislative changes and court judgments this year will affect merger review both substantively and procedurally. In the EU, the EC plans to expand the categories of cases that can be reviewed under the simplified EU merger control procedure. Meanwhile, elsewhere in Europe, the UK government has put forward proposals to reform various aspects of the merger control regime, and also impose certain obligations on ‘Big Tech’ in relation to deals they do.

The new Department of Justice (DOJ) and Federal Trade Commission (FTC) Merger Guidelines are expected to be released in the US, forming a key framework for the US antitrust agencies when reviewing transactions. In Australia, the ACCC proposed changes to the substantial lessening of competition test which will encourage additional deal scrutiny. Finally, across the MENA region, a new merger control regime will come into force in Egypt and new competition laws are already being enacted in Jordan and Lebanon.

Countries across the globe are adopting aggressive and expansive stances towards merger enforcement, creating a challenging merger clearance environment for businesses internationally. The EU’s Foreign Subsidies Regulation will also add another layer of complexity to M&A deals this year, and businesses can expect a lengthy transition period to adapt to the requirements of the regulation.

Undoubtedly, the merger control landscape is becoming progressively more complex. However, with increased planning of the merger control and wider regulatory processes, businesses can avoid potential surprises along their path.