Trump Return Signals Revival of Settlements in M&A Enforcement

A flip in party control of the White House is expected to upend a Biden administration policy that largely opposed settlements to resolve merger investigations, with big consequences for corporate dealmakers.

One of the Biden antitrust regime’s sharpest breaks from past practice was its skepticism of merger remedies, which involve crafting behavioral or structural tweaks to a deal, as a condition of approval, to relieve potential anticompetitive aspects. An example is an acquirer divesting a business line where there are competitive overlaps with its deal target.

Biden-era leaders took a view that such fixes often fail to cure underlying competition fears. A judge on Dec. 10 granted a win for regulators in blocking Kroger Co.'s $24.6 billion purchase of Albertsons Cos. and ruling a proposed divestiture of stores wasn’t sufficient.

But lawyers predict the second Trump administration will seesaw back to the old approach.

“Fundamentally, we’ll get back to the principle that deals often have pro-competitive aspects that benefit society,” said George Paul, a White & Case antitrust partner. “And if you can resolve one underlying concern and make the deal happen, that can be a good thing.”

Consent agreements to settle merger probes still happened with Lina Khan heading the Federal Trade Commission and Jonathan Kanter in charge of the Justice Department’s antitrust division. But they plummeted in recent years, with just 12 documented since 2022, compared to an annual average of 20 from 2011 to 2020, according to data compiled by the law firm Dechert.

Andrew Ferguson, President-elect Donald Trump’s pick to run the FTC, has said he wants to keep pressure on Big Tech. But he’s also circulated a memo that calls for ending Khan’s “war on mergers,” Bloomberg News reported.

“We are the entire planet’s engine of innovation,” Ferguson said on “The Dynamist” podcast in November before being nominated. “I don’t agree that there are giant economic-wide problems and we need to carpet-bomb them with antitrust and dry up all the deal flow.”

An aide to Ferguson didn’t respond to a request for comment for this story.

Merger Remedies

Khan and Kanter’s skepticism of settlements was rooted in a belief that their agencies shouldn’t act like “arms of law firms” as deals are crafted, said John Kwoka, a Northeastern University law professor whose research casts doubt on the efficacy of merger remedies. Kwoka was an economics adviser to Khan from 2021-22.

“In many instances,” Kwoka said, “the agencies adopted the position that prohibiting anticompetitive mergers rather than moving pieces around on the board was the appropriate policy.”

In practice, it meant dealmakers had fewer options when facing scrutiny. Some deals never got done because leaders said “there’s no real remedy the DOJ or FTC is going to accept,” said Sebastian Fain, a Freshfields M&A partner in New York.

Rare settlements came in high-profile oil acquisitions executed by Exxon Mobil Corp. and Chevron Corp. this year. The FTC allowed the deals to proceed provided that certain executives at the acquired entities don’t serve on the Exxon or Chevron boards.

Melissa Holyoak, a GOP FTC commissioner who along with Ferguson will soon make up the Republican majority, indicated at an American Bar Association event in November that a Republican-led FTC may be more receptive to merger remedies.

Holyoak told an auditorium full of antitrust lawyers in Washington that consent agreements have benefits, including giving the business community insights into the agency’s thinking.

“We’re not in the business to stop deals to stop deals,” Holyoak said then, adding that the agency should leave resolutions “on the table.” An aide to Holyoak didn’t respond to a request for further comment.

‘Ground Is Shifting’

Neither the DOJ nor FTC will want to be perceived as “passive” on antitrust enforcement under a second Trump administration, said Daniel Crane, a University of Michigan antitrust law professor.

Still, Trump’s November election win is breeding a lot of optimism on Wall Street.

“The ground is shifting,” said Mahvesh Qureshi, a Hogan Lovells corporate partner. “When you move from an environment where some of the uncertainty has wobbled that confidence, the mere promise—the fact that other dealmakers have a greater sense of confidence as they head into 2025—will have an effect.”

Alongside Ferguson, Trump tapped JD Vance aide Gail Slater to lead the DOJ’s antitrust division. He also plans to nominate Mark Meador, a former senior attorney for Senate Judiciary Committee Republicans, to be the third GOP member at the FTC.

Slater and Meador have similarly taken a hard line on Big Tech, but it’s not as clear what their views are on Khan and Kanter’s broader approach to mergers and acquisitions. Meador and Slater didn’t respond to requests for comment.

If the first Trump term is any indication, a more traditional mode of antitrust enforcement will take shape.

Makan Delrahim, who led the DOJ’s antitrust division from 2017-21 and is now with Latham & Watkins LLP, did voice opposition to deal fixes that included “behavioral remedies,"demonstrating some consistency with the Biden administration’s overall stance on settlements.

But the DOJ during Delrahim’s tenure also issued a remedies manual taking a favorable view of structural merger remedies, including the role that private equity can play in buying divested assets.

Private equity involvement over the last few years, by contrast, became a “red flag,” said Dechert partner Mike Cowie.

“The expectation with the new administration is they will take a more commercial approach to remedies” and will ask, “‘Have these types of transactions or remedies worked in this sector?’” Cowie said.

Even so, the first Trump administration generated plenty of unpredictability in deals enforcement.

“There’s a level of randomness to it,” Fain said. “You don’t know what’s going to catch someone’s attention on a given day.”