Capital One's (COF) $35 billion deal for Discover Financial (DFS) and Walmart's (WMT) $2.3 billion acquisition of smart TV maker Vizio (VZIO) mean American companies are once again spending big on M&A. signaled that it was willing to spend more.
But that optimism may not last long.
The Federal Trade Commission's (FTC) recent proposal to block Kroger's (KR) $25 billion acquisition of Albertsons (ACI) could block trading activity and potentially expose investors to may pose significant risks.
“[The Biden administration] Former FTC Commissioner Mozell Thompson sent a clear message on Yahoo Finance Live that the merger will be considered more carefully and with a broader approach. “The Biden administration is sending signals that could have a chilling effect on mergers, and the market is responding.”
Since stepping into the White House in January 2021, the Biden administration has made antitrust law a priority. The FTC filed 24 merger enforcement challenges in fiscal year 2022, according to its annual Hart-Scott-Rodino report. This is the second highest number in the past 10 years.
The FTC lawsuit challenging the Kroger-Albertsons partnership is the latest in a long list of steps the Biden administration has taken to block consolidation across industries, from big tech companies to airlines.
Recent victories include a federal judge siding with the Department of Justice (DOJ) to block JetBlue's (JBLU) $3.8 billion acquisition of Spirit Airlines (SAVE) and biotech company Illumina's (ILMN) This includes decisions to sell.
Experts warn that the offensive toward consolidation of American companies is likely to continue regardless of who wins the 2024 presidential election.
“The populist movement is changing the way many Republicans view antitrust,” Brian Gardner, chief Washington policy analyst at Stifel, told Yahoo Finance. “Those who think there will be a massive M&A boom if Trump wins will be very disappointed.”
Gardner continued, “The M&A antitrust law that the Biden administration has been working on started at the end of the Trump administration. The Biden administration took the ball and ran with it. …We're seeing subtle changes. [if Trump is elected]However, I don't see any major changes. ”
Sen. J.D. Vance (R-Ohio) recently praised FTC Chair Lina Khan's antitrust enforcement efforts, telling attendees at Bloomberg's RemedyFest technology forum that she “has done a pretty good job.” I'm doing it,” he said.
Bipartisan opposition to Kroger's deal to buy Albertsons was evident from the beginning. Both Sen. Amy Klobuchar (D-Minn.) and Sen. Mike Lee (R-Utah), the top Republican and chairman of the Senate Judiciary Committee's antitrust committee, said the deal would harm competition and consumers. At a bipartisan hearing shortly after the bill was passed, he expressed concern that the bill would reduce options. A contract has been announced.
And bipartisan opposition spread to the state level. The lawsuit includes a group of nine state attorneys general, including Nevada Attorney General Aaron Ford, who told Yahoo Finance that the merger would eliminate price competition and compromise product quality. Ta.
The FTC's challenge to Kroger's acquisition of Albertsons is one of the first cases to be subject to new merger guidelines issued by the FTC and Department of Justice, including how mergers impact competition in the labor market. It is also important to point out that it also includes consideration of
As a result, broader mergers are likely to be called into question, and expanded guidelines could reshape the business environment for years to come.
“The antitrust landscape is going to be tough,” Thompson added. “Companies considering a merger need to not only focus on the timing of the merger, but also to be able to demonstrate the real benefits. …The deal can still go through, but the cost will be more It’s going to be more expensive and it’s going to take longer.”
sheena smith Anchor of Yahoo Finance. Follow Smith on Twitter @SeanaNSmith. Have a tip about a deal, merger, activist situation, or more? Email seanasmith@yahooinc.com.
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