Fenwick antitrust and competition partner Tom Ensign spoke with Crunchbase about how potential antitrust investigations by the Federal Trade Commission (FTC) and the Department of Justice (DOJ) could produce a ‘chilling effect’ on dealmaking.
“It does seem antitrust is more in the headlines in the last 18 to 24 months than at any time in the last two decades,” Ensign told the publication, though he cautioned that he has yet to see this chilling effect in real-time.
Over the past year, the FTC has implemented several changes, and those in the industry are taking notice. Ensign compared the changes to the opening moves in a game of chess. “It might not look like anything is happening, but it really is.”
Ensign pointed to the blanket suspension of the early termination of the 30-day Hart-Scott-Rodino (HSR) Act waiting period as an example. The FTC maintains that the change was due to what it called an “unprecedented volume of filings.”
Ensign questioned the reasoning behind this change, noting that there were 4,765 HSR filings on average between 1998 and 2000. While last year, there were 4,130 such filings. “When senior FTC officials repeat the unprecedented volume of filings mantra, they ignore the history of the FTC and DOJ during similar periods,” he said.
Last August, the FTC also announced that it would send pre-consummation warning letters in connection with deals that it cannot thoroughly investigate within the set timelines. The letters notify parties that their transactions remain under investigation, and to proceed at their own peril.
Although the FTC does not appear to be actively investigating more deals than before, the agency has signaled that it is looking more closely at deals that might previously have gone unnoticed.
“All of these changes are designed to burden and chill the M&A process,” Ensign said. “I have not observed a chilling effect in M&A yet, but I think that’s the intent.”
The full article is available on Crunchbase.