The panelists structured their remarks around four questions, answering what recent trends have emerged in their respective jurisdictions, whether the catalyst for these trends was tougher merger enforcement in the United States (U.S.) or other homegrown factors, what role international organization such as the ICN have played, and - looking into their crystal balls – what developments they foresee for the future.
Ms. Magyari kicked off the discussion by outlining the trend toward tougher merger enforcement in the U.S. in the last few years. The United States Department of Justice (DOJ) and the United States Federal Trade Commission (FTC) have been formulating theories of harm outside their usual practice, especially pertaining to serial acquisitions, partial ownership acquisitions, and specific issues related to platform mergers. They have also increased their scrutiny of transactions which they had not necessarily examined closely before such as acquisitions by private equity firms. In practice, this trend has materialized in more second requests being issued than before, asking parties to pull and refile their merger notifications, or looking into non-reportable transactions. Authorities have also publicly recognized that their goal has been to bring more transactions to the courts. All of these culminated in the DOJ and the FTC releasing new Merger Guidelines in 2023, covering a series of new topics in the spirit of these trends. As a result, there has been a public rhetoric and a perception by some that this tougher enforcement approach in the U.S. has created a global wave of tougher merger enforcement. But is it really a question of importing tougher merger enforcement from the U.S., or have homegrown factors played a role, and did some jurisdictions move out ahead of the U.S.?
Just north of the U.S., Canada has seen major changes in merger review after many rounds of consultation, including a swing toward tougher enforcement. Susan Hutton detailed how recent amendments to the Competition Act included the codification of the U.S. practice of imposing a rebuttable “structural presumption” that mergers are anti-competitive if they meet certain thresholds resulting in a deemed “significant increase in market share or concentration.” Changes were also made to the notification thresholds to require sales “into” Canada from target-controlled entities to be counted toward the “size of target” threshold, likely resulting in an increase in notifiable transactions to include more foreign-to-foreign deals. The so-called efficiencies defence was also repealed. The standard for remedies changed, adopting the U.S. standard of restoring competition to the pre-merger state, whereas previously courts only required that any diminution of competition that remained not be “substantial.” Also of note, considering labour-side impacts in merger enforcement is now codified and so-called “interim interim” injunctions (injunctions to prevent closing pending the hearing of the request for an injunction – essentially having the effect of an TRO in the United States) are now automatically granted if an injunction is requested by the Commissioner of Competition.
In her view, Ms. Hutton thought that the changes in Canada are likely the result of a symbiosis of both homegrown and international factors. The close relationship and communication between Canadian and U.S. regulators have had a significant influence on Canadian merger enforcement. The cross-pollination of ideas with other international agencies at the ICN also contributed to the push by the Commissioner for reforms. However, there are homegrown factors that have undeniably played a role in seeing those reforms passed into law, including the unique circumstances of a minority Parliament which gave greater scope for opposition amendments to government legislation to succeed, recent litigation losses by the Commissioner which he used as a platform for promoting additional amendments, and growing income disparity combined with high inflation that has seen a desire by all major political parties in Canada to be seen to be tough on big business. Going forward, Canada is likely in her view to see a shift away from quantifying efficiencies and anti-competitive effects, towards greater emphasis on market definition and documentary evidence, and Canada is already seeing longer merger reviews in a greater number of cases.
In Latin America, we have seen some changes, not necessarily as broad and as structured as in Canada, according to Barbara Rosenberg, but some level of increased regulation and/or enforcement has been seen across Brazil, Chile, Mexico, Argentina, and Colombia. For example, the Brazilian Minister of Finance has recently suggested twelve new measures to increase enforcement scrutiny regarding the digital environment; it is yet to be seen if this will turn into regulation and/or more effective enforcement. In Mexico, a greater number of mergers have been scrutinized for coordinated and vertical effects, with many requests for information sent to third parties and greater scrutiny of overlaps resulting from minority stakes. Likewise, throughout the region, there is an increased focus on non-compete and non-solicitation agreements in labour markets, as well as some new theories of harm being either investigated and/or incorporated in merger guidelines, such as conglomerate effects, portfolio effects, and killer acquisitions.
Ms. Rosenberg commented that some of these changes may have been inspired by changes in the U.S. and the E.U. but homegrown factors also played a role. Although so far she is not seeing a greater number of cases challenged and/or blocked in the region, it is clear that authorities are paying more attention and looking into a wider range of different theories of harm. While authorities are shifting towards some American and European enforcement trends, they are not explicitly citing their international counterparts as a reason for these changes, except when it comes to non-compete obligations. The increased scrutiny of horizontal overlaps resulting from minority stakes, for example, had almost never been a topic of concern in Mexico, but has recently become an area of focus, as it has in Europe and elsewhere.
Andrea Pomana spoke about some of the trends coming out of Europe. Although there have not been any formal changes, the European Commission has been reforming its own thinking about its approach to merger control. This affects in particular the referral system from the EU Members States to the Commission. In a landmark decision, in Illumina/Grail, the European Court of Justice put an end to the Commission’s practice to expand its jurisdiction to review mergers that are not notifiable at all in the European Union – neither at the Commission’s nor at the EU Member State level. The Court of Justice emphasized the importance of legal certainty. It found that the merger regulation rules and thresholds set for determining whether or not a transaction must be notified are an important guarantee of foreseeability and legal certainty for companies involved in a transaction.
Regarding international influence on European competition policy, Ms. Pomana commented that regulators have been trying to evaluate mergers based on objective criteria, not political trends. As regards the question of whether enforcement is home grown, she pointed, for example, to the case of the German competition authority being a global pioneer in taking up a battle against Facebook and tackling digital markets as the first competition authority to do so back in 2016. So, although there have been some informal trends in Europe toward tighter enforcement, these appear to be mostly homegrown, influencing others rather than being influenced by them. As to the future, it remains to be seen how European competition will look under a new Commissioner for competition (Spanish minister Teresa Ribera has been nominated, subject to approval by the European Parliament).
Belinda Harvey spoke about trends in the Asia-Pacific. With twelve different jurisdictions, there is a patchwork of trends. One trend that ran across all jurisdictions is the appetite by regulators to review mergers that fall under the notification thresholds. In Japan, authorities have been actively reviewing non-notifiable mergers, calling into question the use of thresholds to determine anti-competitive effects. China has increased its turnover thresholds, reducing the number of notifications it receives, but has been calling in transactions of interest that do not meet notification thresholds in highly concentrated markets or sensitive sectors. As in other regions, an emphasis on the digital economy has been clear throughout the region, especially in Japan and Korea. Australia is moving towards a mandatory control regime which will come into effect in January 2026.
Ms. Harvey said that while U.S. policy has been an influence in competition policy reform in Australia, homegrown factors including highly concentrated sectors and macroeconomic challenges, including inflation have been instrumental in the changes proposed to merger clearance. The development of Australia’s proposed merger control regime has taken inspiration from not only the U.S., but most merger control jurisdictions across the globe. The regime will be mandatory and suspensory based on turnover and transaction value, with different thresholds for “very large” acquirers and cumulative thresholds to capture incremental acquisitions. A nexus to Australia will be required, but the level of control to trigger notification will be low.
U.S. influence has not been consistent across the Asia-Pacific. In China, in particular, influences tend to be more homegrown as Chinese authorities are driven strongly by domestic political factors including their own industrial policy.
All panelists agreed that with global economic pressures such as inflation, not to mention a host of new tribunals, commissioners, legislation, and guidelines, the intensity of merger enforcement internationally appears to be on the uptick for the foreseeable future.
