Enforcement activity. Despite the Biden administration's stated goal of more robust antitrust enforcement, the enforcement agencies' overall enforcement activity was down slightly in 2022 as compared to the past two years (22 enforcement actions in 2022, 28 in 2021, and 37 in 2020). In 2022, the FTC announced 15 enforcement actions and the DOJ seven.

Aggressive enforcement and willingness to litigate. Assistant Attorney General Jonathan Kanter announced in early 2022 that the DOJ intended to focus on making changes to antitrust enforcement, including reducing its use of consent decrees. According to AAG Kanter, consent decrees are difficult to enforce and frequently do not effectively remedy antitrust harm. In keeping with AAG Kanter's statement, the DOJ did not approve a single merger enforcement consent decree in 2022. The agencies also demonstrated a willingness to challenge mergers in court, with the FTC bringing six lawsuits and the DOJ four. Both agencies have expressed skepticism about the effectiveness of behavioral remedies and litigated vertical challenges are becoming more frequent. The new merger enforcement guidelines expected this year are likely to reflect this shift.

Testing expansive theories of harm with mixed success. Both agencies have pursued nontraditional or expansive theories of harm in litigation. So far, the courts have declined to adopt significantly expanded views on merger enforcement. Both the FTC and DOJ suffered notable losses in their unsuccessful challenges of deals involving vertical theories in Illumina/GRAIL and UnitedHealth/Change. The UnitedHealth/Change case also unsuccessfully pursued a theory that focused on potential harm from the exchange of personal data that would result from the merger. The agencies have also focused on potential or nascent competition, for example, in the FTC's challenge to the proposed Meta/Within merger and unsuccessful Illumina/GRAIL challenge (an appeal is pending). The DOJ was, however, successful in pursuing a rarely litigated monopsony theory based on harm to top selling authors who supply books to publishers, rather than on harm to consumers in the Penguin Random House/Simon & Schuster case.

FTC prior approval policy. The FTC continued to make regular use of prior approval provisions, implementing the policy announced in October 2021. Every consent decree entered into by the FTC since has included a prior approval provision. (See Article, Prior Approval and Prior Notice Antitrust Risk-Shifting Provisions.)

Litigation. Consistent with statements that the agencies would be less open to accepting remedies to settle their competitive concerns, including in vertical deals, the agencies sued to block ten mergers in court in 2022, which represents the second highest number of cases brought since 2008. Of note in 2022:

Expanded Section 5 enforcement. In November 2022, the FTC issued a policy statement indicating an expanded view of enforcement by the agency under Section 5 of the FTC Act. Under the expanded scope, the FTC may consider pursuing future enforcement of mergers that do not violate the Sherman Act or Clayton Act. For example, the FTC may identify a series or pattern of mergers that cause anticompetitive harm even where the individual mergers may not have violated antitrust law. The FTC has also signaled it intends to pursue mergers that involve nascent competitors or competitors in future markets. For more on the Section 5 policy statement, see Legal Update, FTC Issues Policy Statement on Section 5.

Proposed mergers that may harm consumers by, for example, raising prices or reducing innovation.

Consummated mergers that have harmed or may harm consumers or competition.

A decision to close. This involves an agency decision to close the investigation and allow the merger to proceed. Occasionally, the agency releases a statement providing its reasons for closing a significant merger investigation (known as a closing statement).

A consent decree or an order. This involves a settlement agreement between the agency and the parties, including a remedy for the merger, such as a divestiture.

Fix-it-first remedy. This involves a structural solution, such as a divestiture, implemented before closing by the parties to address the agency's concerns and avoid a consent decree.

Litigation. This involves a lawsuit filed by the FTC or DOJ to prevent or undo the merger. The agencies typically seek a preliminary injunction in federal district court to prevent the deal from closing. The FTC may also seek permanent relief in an internal administrative court.

An abandoned deal. This is a decision by the parties to abandon their deal in response to a merger investigation or the threat of litigation.

Corporate Transactions and Merger Control: Overview.

How Antitrust Agencies Analyze M&A.

Merger Remedies.

A nascent, innovative competitor (see, for example, What's Market, In the Matter of Medtronic plc, Medtronic, Inc., Intersect ENT, Inc. (consent decree)).

A competitor with special characteristics of significant importance to the relevant markets or where the elimination of that competitor would significantly increase market concentration (see, for example, What's Market, In the Matter of IFM Global Infrastructure Fund, Buckeye Partners, L.P., and Magellan Midstream Partners, L.P. (consent decree)).

Vulnerability to coordination. This theory, used by the agencies in six enforcement actions (29%), involves markets that are particularly susceptible to coordination, where the merger was likely to increase the incentives of the remaining competitors to collude. For a summary of an action involving the vulnerability to coordination theory, see What's Market, In the Matter of ARKO Corp. GPM Investments, LLC, GPM Southeast, LLC, and GPM Petroleum, LLC (consent decree).

Raising rivals' costs. This theory, used in three enforcement actions (14%), applies where the proposed merger may allow a dominant firm to raise the price of a key component or input that rivals need to produce their product or offer their service. For a summary of an action involving raising rivals' costs, see What's Market, In the Matter of Lockheed Martin Corporation and Aerojet Rocketdyne Holdings, Inc. (litigated case).

Loss of a potential entrant. This theory, used by the agencies in three enforcement actions (14%), is used where the buyer or target is an imminent competitor in a market or the buyer and target are competitors in an imminent future market (see, for example, What's Market, In the Matter of Hikma Pharmaceuticals, PLC, Custopharm, Inc., Water Street Healthcare Partners, LLC, Water Street Healthcare Partners III, L.P., Water Street Healthcare Partners IV, L.P., and Long Grove Pharmaceuticals, LLC (consent decree)).

Four are ongoing without any significant court decisions to date. See What's Market:

Two were abandoned shortly after the FTC filed a complaint (see What's Market, In the Matter of Lifespan Corporation and Care New England Health System (litigated case) and What's Market, In the Matter of Lockheed Martin Corporation and Aerojet Rocketdyne Holdings, Inc. (litigated case)).

One is ongoing, without any court decision to date (What's Market, U.S. v. ASSA ABLOY AB and Spectrum Brands Holdings, Inc. (ongoing litigation)).

The district court ruled for the merging parties and the DOJ filed a notice of appeal in November 2022, in What's Market, U.S. and State of Minnesota and State of New York v. UnitedHealth Group Incorporated and Change Healthcare (ongoing litigation).

The parties abandoned their deal after the DOJ filed its complaint in What's Market, U.S. v. Grupo Verzatec S.A. de C.V., Stabilit America, Inc., Crane Company, and Crane Composites, Inc. (litigated case).

The district court denied a motion for a preliminary injunction and the DOJ dismissed its complaint after the parties closed the merger, in What's Market, U.S. v. Booz Allen Hamilton Holding Corporation, Booz Allen Hamilton Inc., EverWatch Corp., EC Defense Holdings, LLC, and Analysis, Computing & Engineering Solutions, Inc. (litigated case).