Biden's tough line on M&A
The Biden administration isn't kidding when it says that it will sue to block mergers it views as anticompetitive, rather than negotiating settlements.
Driving the news: Cargotec and Konecranes, both listed Finnish makers of cranes and other cargo handling equipment, yesterday abandoned a $5 billion merger announced in late 2020. The move came just hours before the U.S. Justice Department was set to file suit, which would have been the seventh such action since President Biden took office.
- British antitrust regulators also yesterday said they opposed the merger, which had received European Union approval last month.
Why it matters: Resolution will give greater clarity to port operators, particularly when it comes to ordering new machinery or knowing what company will service that equipment. This obviously is important for any industry, but in this case is heightened given the world's shipping and supply chain bottlenecks.
Behind the scenes: U.S. regulators didn't believe that proposed remedies/divestitures would have solved competition issues in a shipping industry that's been consolidating for the past three decades.
- In short, they viewed Cargotec and Konecranes as trying to play a sort of regulatory arbitrage; believing they could get approval in one jurisdiction that would then cause other jurisdictions to fall like dominoes.
- If this was indeed the companies' plan, it didn't work.
The bottom line: Consent decrees from the DOJ and FTC once were commonplace. Now they're the exception to the rule. It's a major obstacle to strategic M&A, but could be a boon for private equity.