How to Get the Right Deals Done

What is the key point you took away from Brunswick’s antitrust event last week? How is the debate among the dealmaking community evolving?

Andrea Gomes da Silva [AGDS]: I was struck by what a central role antitrust has assumed in the policy debate about how to influence investment and devise industrial strategy. That debate drives real discussions and decisions in boardrooms.

Stuart Hudson [SH]: The point that has stuck with me is how varied the experiences of dealmakers is. All the senior bankers and lawyers we’ve spoken to have seen situations where management teams have decided against doing a deal because of concerns over the likelihood of antitrust approval, whether that’s in the UK, the EU or US. But there have also been plenty of cases where dealmakers have been positively surprised, with deals getting through at a very early stage or without any formal investigation at all. This points to the uncertainty that businesses face and the need to look beyond headline media narratives about what’s going on at the various antitrust authorities.

One of our panels looked at the hallmarks of a regulatory regime. It was not clear to me that any particular regime was found to be close to perfect, but were there any aspects of that discussion that you think are worth keeping in mind for the UK?

AGDS: It was clear from all the discussions that there is a desire for predictability, stability and transparency in regulatory regimes. Interestingly, the UK is one of the most transparent regimes, with the CMA issuing regular guidance, working papers setting out their interim analysis and lengthy, reasoned provision and final decisions. And yet, we are hearing a lot of dissatisfaction from businesses about their interactions with the CMA, who find that the CMA is not transparent enough, particularly in remedy negotiations – criticism that the CMA has responded to with its recently published draft guidance on the Phase 2 merger process.

SH: There’s a big desire from companies and their investors both for predictability and for consistency. They want regulators to have a well-communicated approach that they stick to over time; and they want consistency across the various different authorities in a given jurisdiction, so that for example, you don’t have the finance minister saying one thing and the financial regulator demanding something different. However, it also became clear that there can be a tension between these two things. Ministers and regulators are more likely to be consistent if they’re all under the same political control, but if that happens there’s also likely to be more unpredictability, because political priorities can change very quickly.

AGDS: The role of courts is another aspect where the intersection with policy is worth considering. This is an area where the UK has been criticized, because of what some have called a lack of genuine judicial scrutiny. Yet appeals to the Competition Appeal Tribunal are heard in a matter of a few months (in contrast to the EU, where the appeals process takes years), and the CMA is able to reflect evolving policy priorities and signal that it is doing so through its guidance. In contrast, the US agencies need to persuade a court to block a merger, which mean that changes in policy can take longer and are ultimately not in the domain of the agency, so there can be a disconnect between an agency’s espoused policy and what is reflected in case outcomes.