Mergers & Acquisitions 2022 Annual Review

6 MORRISON FOERSTER In 2022, antitrust scrutiny of acquisitions continued to increase, with United States and global antitrust agencies coalescing around broader investigations and more aggressive enforcement. Some transactions were blocked or abandoned, and United States agencies, despite losing a few merger challenges in court, remained resolved to challenge more deals. In 2023, merger agreements should proactively address increased agency review and prolonged investigatory timelines, the low probability of the agencies accepting a settlement, and the heightened possibility of protracted litigation. By anticipating new enforcement rules and policies, such as the updated merger guidelines and potential FTC rulemaking, dealmakers can limit, or at least address, delays caused by merger review. Despite Losses, Agencies Won’t Back Down. In 2022, DOJ lost three merger challenges in federal district court ( United States Sugar/ Imperial , Booz Allen Hamilton / EverWatch , and United/Change ) and is appealing two of those ( United States Sugar and United ). The FTC lost its administrative challenge to Illumina/Grail and is appealing to the full Commission. Despite these losses, the agencies maintained a busy docket—DOJ went to trial with American Airlines and JetBlue over a joint operating alliance and sued to block a merger in the door locks industry, ASSA Abloy/Spectrum . ■ DOJ is applying increased scrutiny during the investigation phase in key industries, such as digital platforms, agriculture, retail supply chain, and healthcare. ■ DOJ has not been willing to engage in detailed settlement negotiations. This trend will likely continue into 2023, with more parties offering settlement packages, being turned down, and then “litigating the fix” in federal court—as was the case with United/Change . ■ Private equity roll-ups, where multiple smaller businesses in the same industry are merged into one larger consolidated company, is another area of focus. ■ Labor is an area of keen interest: DOJ blocked Penguin Random House’s acquisition of Simon & Schuster based on a monopsony theory of harm to authors. FTC Sets a More Aggressive Enforcement Policy. The FTC likewise has trended toward more aggressive enforcement and reliance on non-traditional theories of liability. ■ The FTC’s new strategic plan changes the FTC’s focus from “harms to consumers” to “harms to the public” and removes a reference that enforcement will not unduly burden legitimate business activity. ■ The FTC issued a new policy statement concerning unfair methods of competition, setting out a new framework that adopts a broader view of FTC authority under Section 5 of the FTC Act. Under Section 5, the FTC also proposed a general ban on employee non-competes as an unfair method of competition, as described below in the Employee Non-Competes section on pages 8-9. ■ The FTC has been active in merger challenges, with a heavy focus on vertical and nascent competition theories in the digital platforms and life sciences spaces. In addition to Illumina/Grail , the FTC sued to block Meta’s proposed acquisition of Within and challenged Microsoft’s proposed acquisition of Activision. Legislative Developments. Many observers expected comprehensive antitrust legislation in 2022, but action is still pending. Proposed bills include calls to prohibit Big Tech companies from prioritizing their own products on their platforms over those of competitors, open app stores to rival marketplaces, and promote interoperability between platforms. 1. ANTITRUST AGENCIES CONTINUE AGGRESSIVE ENFORCEMENT, WITH MIXED TRIAL OUTCOMES