Key Facts
United States
- The U.S. agencies announced the conclusion of six significant merger investigations in Q1 2024, double the number seen last quarter. This marks the end of six quarters of three or fewer significant investigations. In line with recent trends, each significant merger investigation ended with a complaint or an abandoned transaction. Q1 2024 saw no merger settlements.
- Four significant merger investigations ended in an agency-announced abandoned transaction in Q1 2024. This is a DAMITT record high for any quarter back to at least 2011 and more than any full year since then other than 2021 and 2023.
- These outcomes do not mean that every transaction receiving Second Requests is being challenged or abandoned. Instead, an analysis of Second Requests disclosed in SEC filings shows four of those deals closed in Q1 2024 without an adverse agency action. In other words, merger investigations are increasingly binary: either transactions are fully challenged or fully cleared. There is little middle ground.
- The average duration of a significant merger investigation ticked up to 12.3 months in Q1 2024, slightly above the annual DAMITT average in recent years. Over the last 12 months, the average duration of a significant merger investigation was 11.6 months. By contrast, the average duration of transactions with Second Requests disclosed in SEC filings that closed without agency action was 8.3 months in Q1 2024, slightly down from an average of 8.9 months over the last 12 months.
European Union
- The EU Commission concluded four significant merger investigations in Q1 2024, a 100 percent increase from Q1 2023, but 23 percent below the Q1 average over the 2019-2023 period.
- Remedy packages agreed in Q1 2024 following Phase II investigations were markedly more complex than remedies agreed in previous mergers in similar industries, hinting that the EU Commission expects more substantial remedies.
- The average duration of Phase II merger investigations concluded in Q1 2024 hit a new record-length of 27.1 months (more than two years!). While the increase is driven by an outlier, the 39.5-month review of Korean Air/Asiana Airlines, it still confirms a move towards challenging Phase II investigations for merging parties.
- Phase I remedy investigations averaged at 11.7 months over the last 12 months, slightly below the record-high duration observed in 2023 but still 20 percent above the 2019-2023 average.
U.S. Merger Enforcement Activity Picks Up
The Number of Significant Merger Investigations Has Doubled Over the Last Quarter
While the count of significant merger investigations is often low in the first quarter, Q1 2024 was an exception. The six significant merger investigations concluded in Q1 2024 amount to double the number concluded in each quarter of 2023 and half the total number concluded in all of 2023. The math here is easy; we did not even need a calculator.
Lest we make a mountain out of a molehill, it is important to put this surge in activity into perspective. While above average for a typical first quarter, Q1 2024 fell slightly below the DAMITT quarterly average since 2011.
Indeed, the relatively strong showing in Q1 2024 only reinforces our DAMITT 2023 Annual Report, which highlighted the abnormally low number of significant U.S. merger investigations concluded in 2023. It is precisely the prolonged drought over the last six quarters that makes Q1 2024 look like a flood. In this regard, it is unclear whether this higher number of significant merger investigations is an anomaly or the start of a new trend.
Still, when we look at the U.S. significant merger investigation heartbeat by quarter, the sharp uptick in Q1 2024 is notable.
To view the full article please click https://www.dechert.com/knowledge/publication/2024/4/damitt-q1-2024--merger-enforcement-begins-2024-with-a-bang.html here.
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