In Depth
WHAT WILL CHANGE
Merger policy is likely to be much more pro-business than during the Biden era.
- Enforcement agencies are likely to abandon the 2023 merger guidelines. In 2023, the Federal Trade Commission (FTC) and the US Department of Justice (DOJ) released revised merger guidelines.[1] These new guidelines lowered market share and concentration levels at which a merger would be presumed illegal. It is anticipated that the Trump administration will abandon enforcement of the presumption at these lower concentration levels and restore enforcement under the prior guidelines.[2] This means that the Trump administration is likely to allow deals to proceed if there are a number of significant competitors to the merging firms, although “3 to 2” and “4 to 3” mergers will still likely be blocked. Furthermore, early termination of the Hart-Scott-Rodino Antitrust Improvements (HSR) Act waiting period is expected to be granted for non-problematic deals. However, it is still important to avoid “bad documents” and customer complaints.
- Antitrust analysis is likely to focus solely on traditional economics. While the Biden administration sought to expand the scope of analyzing a transaction’s effect on labor, the Trump administration will likely focus squarely on a transaction’s impact on prices and innovation, dismissing labor effects when analyzing mergers.[3] Although a win for the Biden-era FTC, in FTC v. Tapestry, Inc., the US District Court for the Southern District of New York applied a traditional horizontal merger analysis and found a narrow market definition.[4] Even though this helped the FTC block the merger, this narrow market definition could be a powerful offensive tool. This is especially true for consumer products mergers, indicating that deals can proceed if the merging parties’ products in the same category are meaningfully differentiated by price, quality, or brand image.
- “Fixable” deals are likely to return. The Biden administration has all but disallowed merging parties from fixing problematic aspects of their deals to avoid regulatory challenge. However, under the second Trump administration, enforcement agencies are likely to permit more deal fixes through divestitures and consent orders, paving the way for more mergers, as they did during the first Trump term.
- Vertical deals are likely to be allowed more frequently. Similar to the return of fixable deals, the Trump administration is expected to be more open to considering behavioral remedies in vertical mergers that would otherwise be problematic. This is a departure from the Biden administration’s policy, which largely foreclosed the possibility of such settlements. The Biden administration lost its vertical merger challenge in the merger of UnitedHealth and Change Healthcare,[5]bwhere the court accepted the merging parties’ behavioral commitments and rejected the government’s challenge. In addition, the Trump administration is less likely to scrutinize vertical deals and is more likely to recognize the cost savings generated by many vertical transactions.
Premerger procedure changes face an uncertain future, but firms should plan for the new rules to take effect as scheduled.
The new rules for premerger notification under the HSR Act are set to go into effect on February 10, 2025,[6] less than a month after Trump will enter office. These rules could be blocked by Congress, delayed by the president, or rescinded or changed by the new DOJ and FTC. However, current FTC staff assumes the new rulemaking will go into effect in February 2025, and we suggest merging parties prepare to comply with the new rules for deals filed after February 10, 2025. Furthermore, even if current FTC Chair Lina M. Khan steps down on day one of the Trump administration, the FTC will still comprise two Republican and two Democratic commissioners, making it unlikely they will reach a majority required to delay the rule.
Agency appointees are expected to endorse a more predictable mainstream antitrust policy.
- Pam Bondi, the former attorney general of Florida from 2011 to 2019, has been nominated for US attorney general. During her tenure as Florida’s attorney general, she joined other states in bringing antitrust suits against generic drugmakers and optical disk drive manufacturers. Along with five other states, Bondi settled with the National Football League in a resale ticket price floor case. Furthermore, she investigated the broiler chicken industry. She does not appear to favor progressive antitrust enforcement as the original attorney general nominee, Matt Gaetz, does.
- Most candidates being rumored for senior antitrust and competition roles in the DOJ and FTC have corporate or law firm experience.
The FTC is likely to roll back many initiatives from the Biden era.
Once Trump nominates a new member of the FTC to bring its composition to three Republicans and two Democrats, the Commission is likely to withdraw the FTC’s rule significantly restricting employee noncompetes and the very aggressive and broad-reaching 2022 Policy Statement on FTC Act Section 5 enforcement.[7] The 2022 Statement has been strongly criticized by current Republican FTC commissioners and Project 2025.[8] In its place, the FTC could readopt the more moderate 2015 Policy Statement on Section 5, which limited the application of Section 5 to conduct that came close to violating the Sherman Act.[9]
Patents are likely to receive greater protection.
Like the first Trump term, where there was little antitrust challenge to standard essential patents, the second Trump term is expected to be pro-patent in antitrust matters, too.
Companies in the political crosshairs could see renewed scrutiny.
In Trump’s first term, the DOJ challenged the merger of Time Warner and AT&T. Trump expressed opposition to the merger under the belief that it would give greater influence to CNN, which had been critical of him and his administration. Similarly, companies that are critical of or disfavored by the second Trump administration could face similar scrutiny and investigation.
WHAT WILL LIKELY STAY THE SAME
State attorney general enforcement is likely to remain steady or even increase.
State attorneys general, particularly from states with Democratic attorneys general, are likely to step in to fill the void left by a reduction in FTC and DOJ antitrust enforcement. For example, in Trump’s first term, the DOJ settled a telecommunications merger, but states sought an injunction to block the deal in court. Most states have pending antitrust investigations and suits against “Big Tech” companies. Additionally, several state attorneys general are challenging a major grocery merger, supporting the FTC appeal of its noncompete rule, pushing legislation to stop price-gouging, and considering broader premerger notification requirements.
The focus on Big Tech is likely to persist.
The first Trump administration filed cases against and investigated prior acquisitions by several major technology companies. Project 2025 recommends that the FTC continue to investigate Big Tech for potential antitrust violations. However, there may be some departure from the Biden administration’s approach to remedies. The Biden DOJ asked for a remedy that would force Google to sell its Chrome browser, while Trump has expressed potential for settling the Google case short of a breakup.
Criminal enforcement is likely to continue its current trajectory.
The first Trump administration filed a similar number of cases as the Biden administration, as shown in the chart below. It is likely that this trend will continue.
Overall, we expect the Trump administration to be much more favorable to transactions as compared to the Biden administration. The Trump administration is likely to be less willing to challenge vertical transactions or transactions under novel theories, such as bundling, and we expect more merger settlements. We believe the Trump administration will not scrutinize private equity transactions to the same extent as the Biden administration and will focus on challenging traditional horizontal transactions. From a conduct perspective, we expect the Trump administration to continue scrutinizing Big Tech and maintain criminal antitrust enforcement at a moderate level.
