Featuring Andrew Lipman, Partner, Morgan Lewis
Published December 5, 2023 | 4 min read
Key Points
- The Biden administration is taking a much more aggressive approach to antitrust enforcement.
- While no regulator will ignore a blatant violation, it’s clear that the focus is on consumer-facing industries, such as tech and retail.
- In the tech industry, there seems to be more collaboration and coordination between global regulators.
- With an upcoming election, regulators often soften their positions slightly, but this election is likely to see them double down on their agenda.
The aggressive - and progressive - stance
Vito Sperduto: The current administration, through the DOJ and the FTC has certainly taken a more aggressive approach to antitrust enforcement. They've challenged a number of high-profile mergers. What are your expectations from a go-forward perspective? How do you think the administration is going to continue to apply these guidelines and the cases they're pursuing?
Andrew Lipman: This administration's philosophy on competition and regulation is materially different from other administrations, including other Democratic administrations. And this was largely coordinated by Tim Wu, existing now former Columbia Law professor, who actually came up with the terminology network neutrality. Tim helped recruit people to the government in terms of Lina Khan, Jessica Rosenworcel at the FCC, Jonathan Kanter, who had a much more progressive-friendly philosophy on competition. This was embodied in an executive order that the President signed, which Tim Wu wrote, that criticized past enforcement actions in antitrust for not being tough enough. They were, in Tim's view, the President's view, too one-dimensional. They didn't take into account the perspective of workers, the perspective of the community, and the larger industry. They were very focused on one dimension, and that was the impact on prices.
“The fact that it's going to take longer to close a transaction is a simple deterrent in itself, which I think is what the agencies are trying to accomplish in some cases.”
Vito Sperduto, Global Head of M&A
Antitrust becomes an early deal topic
Sperduto: As an M&A practitioner, we're trying to advance the view as to how the agencies are going to look at a specific transaction very early in the process. Normally, that was brought up once all the deal terms were understood. Today, you have to probably address it at the same time as you're considering the initial steps of a process.
Lipman: You're absolutely right. Not only does it impact the terms and conditions of the purchase agreement, but it’s instructive to the boards in terms of what the probability is and what the timing is, and what the conditions are, if any, to a transaction. So I think it has to be a threshold consideration these days. In a period of rising interest rates, having a merger take 50% longer than it did a decade ago could be killing the deal from the get-go.
Sperduto: The fact that it's going to take longer to close a transaction is a simple deterrent in itself, which I think is what the agencies are trying to accomplish in some cases.
Consumer-facing industries in the spotlight
Sperduto: Do you think that the focus is going to continue to be on some of the key industries? So the technology players and the like, and therefore, other more traditional industries are going to be a little bit more below the radar?
Lipman: There's a priority dealing with consumer-facing businesses and that would include the internet firms, telecoms, pharmaceuticals, retail, auto, healthcare, and so on. The agencies are necessarily resource limited, but, if there was a transaction, just say, in trucking or concrete that was blatantly anti-competitive, I have no doubt that the agencies would get involved, but the priority seems to be focusing on consumer-facing industries. And, of course, those are the sectors that the voters care about.
Global regulators coordinate on tech mergers
Sperduto: We've talked a lot about the US regulators. How are you seeing the DOJ and FTC catching up to where some of the foreign regulators are?
Lipman: We are seeing a balkanization. And I think, you know, a good example is Activision/Microsoft, where you had EU and UK reviews. A number of deals are falling by the wayside in China, because of a lack of MofCom (Ministry of Commerce) approval. And we've seen Brazil taking a more active role and other countries as well. It clearly impacts global consolidation and the agencies, particularly the UK, EU and US agencies are clearly in communication. I think Attorney General Kanter was pretty clear about that.
Doubling down instead of easing off in election year 2024
Sperduto: We're heading into 2024, which is a significant election year, certainly there's been a lot of run up to it. Do you think that the stance of the agencies will soften any, from a combination of the fact that we're going into an election year, and also the fact that they've had some high-profile losses?
Lipman: I would say historically, as you enter, say, the last six months before a presidential election, agencies did often soften their stances. I think now, it's almost the opposite. This administration is so concerned about energizing its base, and the populist part of that base, that I think the agencies were talking about, not just DOJ, the FTC, but the FCC, as well, are actually going to double down and be even more aggressive to punctuate that position.
Featured Guest:
Andrew Lipman
Partner, Morgan Lewis
