Abandoned Deals Surge as U.S. Antitrust Scrutiny Intensifies

The number of abandoned mergers and acquisitions is at its highest in years, as the current U.S. administration is pursuing a more aggressive antitrust policy, pushing for more lawsuits and fewer settlements.

More lawsuits and fewer settlements are shaping a more challenging environment for major transactions.
Six high-profile mergers were abandoned in the first six months of 2024, amid increased U.S. antitrust scrutiny – a figure that surpasses yearly totals from the past 10 years.
Meanwhile, a critical European leadership change signals a potential regulatory shift for Big Tech in the bloc.

The number of abandoned mergers and acquisitions is at its highest in years, a trend spurred by the current U.S. administration's aggressive antitrust enforcement, according to a Bloomberg Law report.

Major deals announced in the first half of 2024 have faced heightened scrutiny, with many being called off under pressure from regulators, notably the Department of Justice (DOJ) and the Federal Trade Commission (FTC).

Why This Is Happening

This increase in failed transactions reflects the administration’s December 2023 antitrust policy, which signaled a shift toward more lawsuits and fewer settlements, as authorities aim to prevent anti-competitive mergers before they reach completion.
Macroeconomic factors, such as high interest rates and volatile capital markets, are also having an impact on deals. Deal volumes have dropped across the globe, dipping 19% in 2023 compared to the previous year in the U.S. and more than 25% in Europe.

Failed Deals

Six significant merger inquiries during the first half of 2024 ended with the FTC or DOJ saying the parties nixed a proposed transaction, a figure that exceeds yearly totals from the previous decade, according to a Dechert LLP report. The surge in abandonments coincides with a decline in settlements and negotiated fixes, once a hallmark of antitrust enforcement.

WillScot Holdings Corp. and McGrath RentCorp, two of the largest modular and portable storage rental companies, called off a planned merger on September 18 as it faced a potential challenge.
Amazon.com Inc. dropped its proposed $1.4 billion acquisition of Roomba maker iRobot Corp. earlier this year, after FTC staff informed the tech giant they were recommending a lawsuit.
Qualcomm Inc. abandoned its purchase of semiconductor firm AutoTalks Ltd.
Novant Health Inc. dropped a hospital purchase in North Carolina after a federal appeals court entered an injunction temporarily blocking the deal.

According to DOJ’s antitrust head Jonathan Kanter, more than 20 potential deals have been abandoned in response to the division’s inquiries. Now, “fewer problematic deals come in front of us,” he said.

Why this matters: According to M&A lawyers, the current administration’s enforcers have effectively changed the conversation around antitrust. “The main effect,” said Barry Barnett, an antitrust litigator at Susman Godfrey in Houston and New York, “is that it makes the companies thinking about merging think twice about it.”

Potential Regulatory Shift in the EU

Meanwhile, the recent reshuffling of top positions in the European Union signals a potential shift in the regulatory landscape for technology giants like Apple, Google, and Meta.

Thierry Breton, who has been a vocal critic of American tech monopolies, has resigned. Known for his confrontational style, Breton often targeted companies like Apple for allegedly squeezing competitors out of the market and emphasized that children should not be guinea pigs for social media, according to a WIRED report.

Breton is to be replaced by Finnish politician Henna Virkkunen, who has previously worked on the Digital Services Act. “Her style will surely be less brutal and maybe less visible on X than Breton,” Umberto Gambini, a former adviser at the EU Parliament, told WIRED. “It could be an opportunity to restart and reboot the relations.”

Another Big Tech adversary to be replaced is Margrethe Vestager, who garnered a reputation as one of the world’s most powerful antitrust regulators. Vestager recently celebrated a victory in a case forcing Apple to pay $14.4 billion in back taxes to Ireland. She will be replaced by Teresa Ribera, who will have a broader focus on competition and Europe’s green transition, potentially pushing Big Tech further down the priority list.