Merger Transactions Reported to FTC, DOJ Reach 10-Year High

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Cornerstone Research report: Agencies challenged a smaller percentage of transactions in FY 2018.

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“The first half of 2020 is likely to see a slowdown in reported transactions with fewer mergers being filed due to the COVID-19 pandemic.” - Bob Majure, formerly of the DOJ’s Antitrust Division and a Cornerstone Research vice president

The number of merger transactions reported to U.S. government agencies continued to grow in fiscal year 2018. The number of reported transactions topped 2,000 for the first time in the past 10 fiscal years, according to a Cornerstone Research report released today.

Reported Transactions
The report, Trends in Merger Investigations and Enforcement at the U.S. Antitrust Agencies: Fiscal Years 2009 - 2018, finds that the Federal Trade Commission and the U.S. Department of Justice reported 2,028 merger transactions in FY 2018, up slightly from the 1,992 transactions in the previous fiscal year. The FY 2018 total was approximately 40% higher than the FY 2009–FY 2017 average of 1,450 reported transactions.

“The number of transactions reported to the agencies has increased steadily in the last five years covered in the report,” said Bob Majure, formerly of the DOJ’s Antitrust Division and a Cornerstone Research vice president. “However, this trend could change, as the first half of 2020 is likely to see a slowdown in reported transactions with fewer mergers being filed due to the COVID-19 pandemic.”

The number of transactions cleared for further investigation by the agencies also increased in FY 2018 to 286 from 277 in the previous fiscal year. The FY 2009 - FY 2017 average is 234.

Second Requests
Despite the increase in the number of clearances, second requests decreased. Only 45 or about 2% of reported transactions in FY 2018 received second requests for additional information—the smallest share in the past 10 fiscal years.

Agency Challenges and Resolutions
The FTC and the DOJ challenged 39 mergers in FY 2018, the same number as in FY 2017. The percentage of challenges to reported transactions in FY 2018, however, was lower than the FY 2009–FY 2017 average. Among challenged mergers in FY 2018, about half resolved in consent orders or decrees, the lowest percentage since FY 2013. One-third of the transactions were abandoned or restructured, and court proceedings were initiated in 15%.

The report analyzes data from the previous 10 annual Hart-Scott-Rodino reports that the FTC and DOJ jointly filed to Congress and covers the period from October 1, 2008, to September 30, 2018. The report also includes a proprietary Enforcement Rate Indicator (ERI), which analyzes the share of second requests in an industry sector relative to its share of transactions.

Key Trends

  • Manufacturing accounted for the largest share of reported transactions (19.3%) and clearances (22.7%), and the second-largest share of second requests (20%). This sector accounts for the largest average share of transactions, clearances, and second requests over the previous nine fiscal years.
  • In FY 2018, 24.4% of clearances received second requests at the DOJ; compared to 12.5% at the FTC. At both agencies, second requests as a percentage of clearances were smaller in FY 2018 than historical averages.
  • Among industry sectors, information, finance, health services, other services, and real estate experienced upticks in second requests as a share of transactions in FY 2018, despite a cross-industry decrease in enforcement between FY 2017 and FY 2018.
  • The majority of second requests involved transactions exceeding $1 billion.

About Cornerstone Research
Cornerstone Research provides economic and financial consulting and expert testimony in all phases of complex litigation and regulatory proceedings. The firm works with an extensive network of prominent faculty and industry practitioners to identify the best-qualified expert for each assignment. Cornerstone Research has earned a reputation for consistent high quality and effectiveness by delivering rigorous, state-of-the-art analysis for more than 30 years. The firm has over 700 staff and offices in Boston, Chicago, London, Los Angeles, New York, San Francisco, Silicon Valley, and Washington.

See Cornerstone Research’s website for more information about the firm’s capabilities in economic and financial consulting and expert testimony.
Twitter: @Cornerstone_Res

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