Antitrust and Unfair Competition Law

Competition: SPRING 2023, Vol 33, No. 1


By Sarah Melanson and Megan Yeates1

This article is submitted in response to the California Law Revision Commission’s (CLRC) study of certain aspects of California’s antitrust law under Assembly Concurrent Resolution No.95.2 This article is specifically focused on the question of "whether California should be directly involved in the approval of mergers and acquisitions."3 For completeness, and as noted in the First Supplement to Memorandum 2022-50, the current federal pre-merger review process under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) "is not technically an ‘approval’ process, because there is no legal requirement that the [Federal Trade Commission (FTC)] formally approve mergers before they can occur. Instead, after completing its review of a proposed merger that is subject to review, the FTC will either decline to take further action, negotiate a consent decree to avoid anticompetitive effects, or initiate legal action to challenge the merger. Further, . . . states can also challenge a merger or acquisition, even if the FTC declines to do so."4 In line with the approach suggested in the First Supplement to Memorandum 2022-50, this article "read[s] the language [of the CLRC resolution] broadly, as encompassing a range of reform possibilities"5 and therefore considers broadly whether modifications to the existing merger review regime or any form of premerger notification regime should be introduced in California.

Merger control requires a delicate balance. Merger control broadly seeks to prevent a subset of acquisitions that threaten to substantially lessen competition or create a monopoly.6 Any reforms to merger control must be carefully considered so as not to impose unnecessary and inefficiency-creating burdens on all businesses. These burdens can discourage businesses from pursuing acquisitions that are welfare-enhancing, leaving consumers worse off and undermining the overall dynamism and innovation of business.

This article will first outline the existing merger control processes in place in the US that already allow federal and state governments to review and investigate mergers, including mergers falling below premerger notification thresholds and / or where local effects are relevant to the assessment.

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