Lengthy review processes and the increasing complexity of proposed mergers and acquisitions are a few factors contributing to slow governmental M&A review in recent years — a trend that's become a cause for concern among U.S. businesses, according to a Bloomberg BNA report.
Here are seven findings from the report.
1. The Federal Trade Commission and the U.S. Department of Justice's tendency to spend more than a year reviewing M&A deals has caused businesses to become more aggressive in their requests for a more streamlined process. For example, after waiting more than one year for the FTC to issue a decision on its proposed merger with Camp Hill, Pa.-based Rite Aid, Deerfield, Ill.-based Walgreens Boots Alliance issued a "certification of compliance" compelling the FTC to approve or block the merger by the end of July.
2. Sean Heather, vice president of the Center for Global Regulatory Cooperation at the U.S. Chamber of Commerce, told Bloomberg BNA several factors have contributed to longer review periods in recent years, including an increase in the number of complex mega-mergers and agencies' extensive data collection and analysis prior to issuing a decision.
3. Roughly 81 large-market deals were announced during the first quarter of 2017, the most of any quarter during the last five years, according to a Bloomberg Law report. However, neither the FTC nor the DOJ have increased their resources to accommodate the spike in the number of announced deals.
4.The average M&A process for significant merger probes in 2016 — ones that ended in a settlement or other public action — lasted approximately 10 months, on average, according to an analysis conducted by global law firm Dechert, cited by Bloomberg BNA. In 2011, the average process lasted approximately seven months.
5. Mr. Heather also acknowledged companies sometimes fail to immediately provide the information the agency needs to complete the review.
6. FTC Acting Chairman Maureen Ohlhausen voiced her sympathy for the "burdens" businesses must endure while waiting for a decision. During a speech at a conservative think tank in Washington, D.C., Ms. Ohlhausen commented on an initiative to streamline information demands during probes at the agency. However, the FTC has not released details about the initiative, including a timeline for implementation, according to the report.
7. Mr. Heather said the government should hold itself accountable and institute a one-year timetable to review all mergers.
"There's no reason why the government can't make its case within a year," he said.