Rise in tech sector intervention

In 2023, antitrust authorities continued to zero in on the potential anti-competitive effects of digital deals. As in the previous year, our data suggests that the level of antitrust intervention in the tech sector (11%) was comparatively lower than the proportion of global M&A accounted for by tech deals (25%).

However, this is up from just 8% in 2022. And the number of tech sector deals frustrated by antitrust authorities has tripled (six in 2023 compared to two the previous year). Authorities are starting to make good on their promises to closely scrutinize tech transactions and intervene more frequently.

Significantly, 20% of deals blocked in 2023 were in the tech sector. These included the European Commission (EC)'s prohibition of Booking/eTraveli and Microsoft/Activision Blizzard, blocked in the U.K. although a restructured transaction was ultimately conditionally cleared.

Adobe and Figma abandoned their deal due to EU and U.K. antitrust concerns. In 2024 we have already seen the termination of Amazon/iRobot after the EC looked poised to block the deal. Amazon’s GC cited “undue and disproportionate regulatory hurdles”.

Several other deals secured a green light only after extensive remedies were agreed, sometimes across multiple jurisdictions. Broadcom/VMware was a good example, with conditional clearances in the EU, China and South Korea.

In China, semiconductor deals continue to be heavily scrutinized, accounting for ten out of 25 conditional State Administration for Market Reform clearances since 2018 (two of four in 2023). Last year we also saw Intel abandon its purchase of semiconductor rival Tower after failing to secure Chinese merger approval.

As discussed in our article on ‘Tougher merger control enforcement frustrates more M&A’, antitrust authorities’ approaches to assessing tech mergers are evolving. They are increasingly looking at the impact of a deal on ecosystems, innovation and potential competition. 

Deals resulting in data concentration are also being closely considered. And in the coming months we expect an increasing focus on transactions involving AI activities. Microsoft’s partnership with OpenAI, for example, has drawn attention in several jurisdictions, including the EU, U.K., Germany and the U.S., although formal reviews are yet to be launched.

In some jurisdictions, the increased appetite to intervene in tech transactions will be fueled by greater information about acquisitions. In the EU, the new Digital Markets Act (DMA) regime requires “digital gatekeepers” to submit information about all deals involving digital services or that enable the collection of data. The forthcoming U.K. digital markets regime will impose similar requirements. U.S. regulators will have the benefit of additional information required up-front under the forthcoming new HSR rules.

More generally, it remains to be seen how new conduct requirements under these digital regimes, such as a ban on self-preferencing, will be considered in merger control assessments. We have already seen hints that merging parties may argue that their obligations will prevent a deal having anti-competitive effects.

Overall, the message for parties to tech M&A is clear: expect even more intense antitrust scrutiny and heightened intervention.

U.K. intervenes in 24 consumer/retail deals

Aside from tech transactions, in 2023 antitrust intervention focused on four other sectors. Consumer and retail deals represented 36% of total deals subject to antitrust intervention but only 21% of global M&A.

Most of this tally comes from the U.K. Competition and Markets Authority (CMA), which blocked two deals and imposed remedies in 24 transactions in the sector. Of these, 20 were part of two series of acquisitions by PE-backed investors in the vet sector – find out more here. As discussed in our article on merger remedies, a number of the conditional clearances related to completed mergers with the CMA ordering the purchaser to sell off the entire target business acquired, effectively amounting to a prohibition. 

Federal Trade Commission ramps up scrutiny in healthcare sector

Life sciences transactions were once again a focus for antitrust authorities. The proportion of antitrust intervention reached 11%, compared to 9% of global M&A. When looking at deals prohibited or abandoned in 2023, this soared to 24%.

As in previous years, the U.S. Federal Trade Commission (FTC was particularly active. It scored a win on appeal in Illumina/GRAIL and raised concerns that caused the termination of five healthcare transactions. This included Sanofi/Maze – a rare intervention in a licensing arrangement. The FTC also agreed a consent order in Amgen/Horizon Therapeutics, the agency’s first litigated pharma merger challenge in over ten years.

Transport intervention focuses on airline mergers

The amount of antitrust intervention in transport M&A (9%) was more than four times higher than the proportion of global M&A (2%).

Airline mergers have faced close scrutiny, accounting for two of the three prohibited transport deals. Some authorities, e.g. the EC, have taken a tougher approach to the remedies they are willing to accept. But securing approval is possible. After a 13-month review, Korean Airlines’ acquisition of Asiana was cleared by the EC in February 2024, subject to novel conditions including a fix-it-first remedy (for air passenger services) and an upfront buyer commitment (for air cargo services). The remedies will likely be a blueprint for future EC merger reviews in the airline sector.

Energy deals cleared with merger remedies

Energy transactions made up 8% of antitrust intervention in 2023, compared to 6% of global M&A. For the third year running, conditional clearances accounted for almost all of this total, spanning a number of jurisdictions.

Sustainability starts to play a role

Looking beyond the traditional sector split in the chart, this year debates have continued over the extent to which sustainability considerations can (and should) be taken into account in merger control assessments.

Some merging parties have already experienced positive outcomes. In Australia, the Australian Competition and Consumer Commission for the first time conditionally cleared a transaction on environmental benefits grounds. It concluded that, while Brookfield and MidOcean’s acquisition of Origin Energy would give rise to public detriments in the form of vertical foreclosure or discrimination, these detriments would be outweighed by the fact that the deal would likely accelerate Australia’s renewable energy transition.

In the EU, the EC has issued a policy brief showing that it is willing – in theory at least – to take sustainability related issues into account in merger reviews. This includes defining markets, assessing how closely merging parties compete with rivals, efficiencies and remedies. Overall, the EC is clear that it will be vigilant in its approach to killer acquisitions involving “green” innovators. If these fall below EU or national merger control thresholds, the authority will seek to review them under its revised referral policy.  

In Japan, new “Green Guidelines” recognize that certain mergers, such as those that strengthen R&D capabilities in technologies that contribute to the reduction of greenhouse gases, often have pro-competitive effects.

Convincing an authority to accept sustainability arguments may not be easy. Last year the Dutch Authority for Consumers & Markets rejected arguments that a merger between two waste management companies would result in sustainability benefits on the basis that the sustainability measures were not merger-specific but needed to be implemented anyway.

Some antitrust authorities are unlikely to entertain any sustainability arguments. FTC Chair Lina Khan has said that environmental, social or governance commitments will generally not be considered as a remedy to concerns.

As countries work to meet their green transition targets, we expect sustainability and environmental arguments to feature more heavily in merger control reviews. However, with a patchwork of positions emerging, a harmonized approach by authorities across jurisdictions is unlikely. Parties should be aware that sustainability related arguments resonating with some authorities will likely gain no traction with others.