In our last post, we left off discussing the merger review process at the point where the reviewing agency—either the Department of Justice or the Federal Trade Commission—obtains the ability to request non-public information about the businesses proposing the merger. The reviewing agency uses that ability to gather all the information necessary to determine the likely effect of the merger on the market, and specifically on competition.
In our last post, we wrote about the proposed merger of Walgreens and Rite Aid, noting that Walgreens is anticipating potential concerns about its market influence post-merger. It remains to be seen, of course, how federal regulators will respond to the proposal. The main concern for regulators in any proposed merger, of course, is the potentially negative changes the merger could bring to the market when it comes to market competition.
Mergers and acquisitions can bring a lot of changes for the companies involved, not only by virtue of combining resources and workforces, but also because of changes stemming from regulatory oversight. When companies which control a large percentage of the market stand to gain even more power and influence by means of an acquisition, regulators take notice and may raise objections to the proposed business plans.