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.
The Federal Trade Commission, along with the Department of Justice, is the primary agency which deals with mergers and connected antitrust issues. The concern in some cases is that too much consolidation of industry resources could lead to reduced competition, higher pricing and reduced quality of goods and services. Because of this concern, businesses have to submit themselves to federal review to address these issues.
Not every merger and acquisition is required to undergo the merger review process, but only those which meet certain value and size requirements. Some stock or asset purchases, as well as some real property purchases, may also be exempt from the process. Proposed transactions which meet the requirements for the review process involve both the buyer and the seller filing forms providing notice of the proposed deal to both the Federal Trade Commission and the Department of Justice.
Either the FTC or the DOJ will be assigned to review the proposed merger, and once this happens, the agency will have the ability to request non-public information about the businesses involved, including their financial profiles, their respective markets, and other information related to the merger.
In our next post, we’ll continue looking at the merger review process and speak a bit about how an experienced attorney can help a business navigate the process.