Despite suffering four major losses at antitrust trials recently, the Department of Justice (DOJ) has merger fights underway in several industries, including airlines, publishing, national security, and residential locks—and legal experts think it unlikely that the Biden administration's regulators will slow their efforts to make American business more competitive.
In fact, the DOJ and the Federal Trade Commission (FTC) have promised they will continue to press on aggressively. The top DOJ competition lawyer, Jonathan Kanter, told lawmakers on September 20 that "part of the job that we have before us is to litigate cases and to take risks when it's appropriate and necessary to defend the American public, particularly in areas such as healthcare."
"We are not going to back down from bringing meritorious cases," Kanter said.
In the same hearing, FTC Chair Lina Khan noted that the agency had in the past year sued to block six mergers outright.
"Congress has tasked us with stopping unlawful mergers," Khan told Reuters. "If we determine that a merger would violate the law, we have a responsibility to act, and we will not shrink from that duty."
The DOJ lost two merger fights in September when it failed to stop UnitedHealth Group's purchase of Change Healthcare and U.S. Sugar's purchase of Imperial Sugar Co. The DOJ had previously lost in July when a jury found chicken producer executives innocent of price-fixing. An FTC judge also ruled on September 1 against the DOJ’s effort to stop Illumina's merger with Grail.
However, the DOJ and FTC’s efforts have not been without effect. Companies have begun to noticeably changed their behavior. They are now structuring deals to altogether avoid being accused of breaking antitrust law, and they are preparing for court battles that in the past they would have been able to avoid through negotiations with the agencies to sell some of their assets or otherwise remedy competition concerns.
"Anyone thinking about doing a merger that raises antitrust concerns must either fix it before notifying the government or go into the merger review ready to litigate," said Andre Barlow of the law firm Doyle, Barlow & Mazard PLLC.
"The days of cooperating with the antitrust agencies in a merger review to work out a negotiated settlement may be gone. The antitrust agencies are taking a litigation approach so the merging parties must do the same," Barlow said.
Despite, the prominent losses, the Biden administration's regulators have had some big victories.
The FTC sued to stop Lockheed Martin’s purchase of Aerojet Rocketdyne Holdings Inc. and Nvidia Corp's purchase of Arm Ltd. The agency also filed complaints to block the mergers of large healthcare companies in New Jersey, Rhode Island, and Utah. All of these deals were abandoned by the companies involved.
The DOJ has also gotten deals called off after applying legal pressure, including in shipping containers, construction materials, and engineering.
However, Professor William Kovacic, who teaches antitrust at the George Washington University Law School, believes the agencies could be hurt by continued losses in court.
"Ultimately, to build your program, you need litigated victories," Kovacic said. "There is some undefined critical mass of victories you need to be credible."