The Law Office of Lynnette Ariathurai A Professional Corporation

Increased antitrust activity can affect business merger plans

One way for a company to grow its business is to purchase another company within the same industry. Such a business merger would likely result in a larger company with a larger portion of the market share in California or wherever the merger is completed. However, there are several legal concerns that companies may want to consider before moving forward with acquiring a competitor.

One major concern is the possibility of antitrust action from regulators if a merger is proposed between two significant players within one industry. This has become an even bigger concern as of late, since antitrust regulators have taken a more active stance in regulating mergers. Recently, the proposed merger between Sprint and T-Mobile, as well as between 21st Century Fox and Time Warner, were abandoned before regulators even took an official position regarding the merger bids.

However, in the proposed merger between Sprint and T-Mobile, the antitrust chief of the Justice Department as well as the F.C.C. chairman openly opposed the merger. They had made these views clear during meetings with the executives of the companies. In the Fox and Time Warner case, lawmakers were already preparing for a minimum of four public hearings regarding the possible merger.

With this increased vigilance from regulators, those involved in a proposed business merger in California or elsewhere may want to carefully analyze the situation. A legal analysis may be needed in order to determine the likelihood of success if regulators were to challenge the merger in court. This would likely require knowledge of past case law, which can give clues as to how the courts would ultimately interpret the legality of a proposed merger bid.

Source: The New York Times, "For Mergers, a Shadow of Antitrust Challenges", James B. Stewart, Aug. 8, 2014

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