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When mergers and acquisitions involve the U.S. government

On Behalf of | Jul 30, 2015 | Mergers and Acquisitions

The federal government wants a say when two Nevada companies join forces or one business acquires another. The U.S. Department of Justice and Federal Trade Commission review mergers and acquisitions. The agencies’ chief concerns are about the effects of these business dealings upon the public.

The agencies aren’t as concerned about small businesses as they are larger companies. The Hart-Scott-Rodino Act requires companies to inform the government about deals exceeding $76.3 million. Even if your company is under review, it’s likely to survive government scrutiny. All but five percent of reviewed merger filings are approved.

Reviews determine whether a transaction is likely to negatively influence consumer prices, product quality, business competitiveness and innovation. Antitrust laws are designed largely to prevent monopolies. The most closely watched mergers are those involving competitors.

Both agencies have the power to put a halt to a merger using guidelines that project whether a deal will cause future problems. It may seem odd that the agencies make this determination in advance. However, the government feels preventing competition problems is easier than undoing future damage. Post-merger reviews are possible when complaints about anti-competitive practices surface.

The identification of a problem doesn’t mean that a merger or acquisition is dead in the water. The parties can satisfy the government by agreeing to work out the competition problems. The agencies can put the brakes on the deal if the parties refuse to cooperate by filing a complaint with a federal court.

The government is obligated to keep the details of a merger investigation private unless the businesses involved divulge plans to the public. Even then, the agencies may admit that an investigation is underway without providing any further information.

Escobar, Michaels & Associates Law Frim LTD helps businesses determine whether a merger or acquisition review is required. We can also file the necessary papers with the government and represent a company’s best interests during any disputes.