Antitrust Remedies in Highly Regulated Industries

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In the United States, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) (together, ‘the antitrust authorities’) are responsible for reviewing mergers and acquisitions, imposing appropriate remedies and ensuring a competitive market. From a regulatory perspective, firms in most industries must only wait for either the DOJ’s or FTC’s clearance to move forward with their transactions. However, firms in most highly regulated industries may face an additional barrier to closing their transactions. Subject not only to review by the DOJ or FTC, transactions in the banking, telecommunications, energy, agriculture, transportation and medical industries, among others, may also require transaction approval from the relevant regulatory agency that has jurisdiction over that industry. Those regulatory agencies, as experts in the respective industries over which they have jurisdiction, may have their own views on how to fashion an effective remedy to counter any alleged harms from a transaction that could differ from the antitrust authorities’ approach. Where the antitrust authorities and regulatory agencies may disagree, the merging entities often face the consequences of prolonged review periods and repeated negotiations. However, regulatory review in conjunction with antitrust review can also have many benefits. The antitrust authorities can take advantage of the regulatory agencies’ strengths, including ready access to industry-specific information, expertise on the industry dynamics, insight into the market and its participants, and the ability to effectively monitor and oversee compliance. These strengths, if used effectively, can lead to more tailored remedies than the DOJ or FTC alone might be able to implement. Striking the right balance of deferring to regulatory expertise and adhering to the antitrust authorities’ mandate to maintain competition is key to ensuring both efficient and appropriate review and remedies. This chapter contains three sections. ‘Overview of merger remedies’ identifies common types of merger remedies across all industries; ‘Highly regulated industries’ discusses the different approaches taken between the antitrust authorities and regulatory agencies in three highly regulated industries: telecommunications, banking and energy; and ‘Balancing remedies with regulation’ discusses questions raised by having both agency and antitrust review, and offers three considerations that may facilitate more efficient and effective remedies in those circumstances.