Understanding Mergers: Benefits, Review Process, and Proposed Changes

Story by U.S. Chamber of Commerce

The United States is home to the most dynamic economy in the world thanks in part to vigorous competition in the marketplace and a healthy mergers and acquisition (M&A) environment. In fact, the U.S. was the global leader in M&A activity last year, accounting for nearly half of the $5.8 trillion in deals globally.

However, some in Washington think the government should play a much larger role overseeing M&A activity—remaking the U.S. economy with a government-knows-best approach.

Before such drastic changes are made, it’s important to understand the benefits of merger activity for consumers and the economy as well as the government’s highly successful track record in challenging problematic mergers.

Here is a quick refresher:

1. Mergers are a vital part of our economy that benefit consumers.

In any given year, more than a thousand mergers occur in the U.S., strengthening our economy, boosting global competitiveness, improving products and services, and fueling efficiencies that benefit consumers.

2. The government has the power to challenge a merger in court if concerned that it would harm competition.

Companies are required to notify the federal government about any potential merger if it exceeds $92 million dollars. Roughly, 3% of all notified mergers undergo additional government scrutiny to ensure competition will not be harmed.

3. The government has a successful track record weeding out problematic mergers and protecting competition.

Over the past 20 years, the government has challenged some 780 mergers and won 769 of those challenges. That’s a 98.5% success rate.

4. While merger review is an essential part of governing, proposed changes to the existing framework of merger and acquisition law would handcuff successful businesses in every industry.

The government should create boundaries but not barriers for lawful mergers. By fundamentally altering antitrust laws, Congress would punish American businesses by taking away incentives for entrepreneurs and investors. Congress would make it less attractive to start a new business or invest in a new company.

5. Today, government enforcers are attempting to bog down and inject uncertainty into the merger review process.

Some bureaucrats have publicly pledged to ignore statutory timetables for merger review, taunting companies to close the merger and risk government objection later. By making it harder for companies to be bought or sold, the American economy will be weakened, making us less competitive globally.

Instead of harmful changes to the law or manipulation of the merger review process, Congress should provide sufficient resources to government agencies to challenge those mergers or acquisitions that are likely to lessen competition and harm consumers.

American is home to the most dynamic economy in the world. Let’s keep it that way.