U.S. antitrust chief promises faster reviews of U.S. mergers, potentially cutting e-discovery review time in half

26 September 2018 (Washington, DC) — The U.S. Department of Justice’s antitrust enforcer, at an antitrust conference in D.C. yesterday, has vowed to speed up merger reviews, promising corporate America that he will not place an undue burden on dealmaking.

Makan Delrahim, appointed last year by Donald Trump to lead the justice department’s antitrust division, said he would aim to resolve most investigations within six months if businesses co-operate and provide information from an early stage:

Whoever the deal makers are, if they want to have a deal and they want to have certainty upfront as soon as possible, they can have that. My hope is to not have the process for a transaction review be an undue burden.

Delrahim shares responsibility for enforcing U.S. antitrust laws with his counterpart at the Federal Trade Commission, and his remarks were obviously welcomed by executives and bankers who have complained about the length of time the government takes to complete its merger investigations … though he did not receive a standing ovation 🙂

As a former Posse List member told me (who now works in the DOJ’s antitrust review division):

We’ve already been told to push early for substantial compliance. Not the one where parties certify under the Second Request. Just “when you guys think you have enough documents from their e-discovery review, call a halt. Tell them enough”.

Significant merger reviews in the US took almost 11 months on average to complete in 2017 (according to figures calculated by Dechert). In 2013 they took just over seven months. Off-the-record DOJ contacts told us they’d like to get it to 5-6 months.

The only question … raised by many … is that given the increasing complexity of transactions and the involvement of multiple antitrust agencies globally, will there really be a serious impact on review periods?

Delrahim said he would seek to speed up the process by encouraging dealmakers to meet the DoJ early on (“meet and confer”) and by offering more clarity about the sort of information he expected companies to provide. He said the department was not “unilaterally disarming”.

From our Posse List source: “they want to move away from the traditional laundry list request”.

And in keeping with this move, he also announced that he had revoked an Obama-era policy on merger remedies and reverted to rules issued in 2004 under the George W Bush administration:

Negotiating remedies to anti-competitive mergers often adds significant time to the merger review. We will issue an updated policy.

I chatted with two attorneys who handle antitrust reviews and they both said the 2004 policy document has a stronger emphasis on structural remedies, such as forcing the sale of business units or blocking a deal outright, rather than fixes that attempt to constrain the behaviour of a merged company.

The reality? Less work for staffing agencies and vendors but this change in policy will have little effect on the vast majority of corporate dealmaking in the U.S. As Dechert noted in their report, only a small fraction is subject to scrutiny by the DOJ. In 2017 the antitrust division opened investigations into 2.3 per cent of proposed deals.