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Merging companies: Consider social factors in US antitrust clearance

The benefits of highlighting ESG, jobs and other positive deal impacts 

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Merging companies: Consider social impact factors in US antitrust clearance

Amid newly heightened merger scrutiny and policy calls to use US antitrust laws to effectuate social change, companies should take social factors—like a deal’s impact on the environment and jobs—into consideration when seeking antitrust merger clearance. 

What’s changing? 

Among the several antitrust priorities of the Biden Administration, preventing undue concentration in any market is at the top of the agenda. And it’s not just the White House. The US Congress is discussing antitrust reform laws that could ensnarl even more transactions in the antitrust enforcement web. Recently, influential antitrust voices, including the FTC Acting Chair Rebecca Slaughter and FTC nominee Lina Khan, have advocated weighing social factors, such as racial justice, climate change and combatting income inequality, when government agencies analyze whether to challenge a proposed transaction under the US antitrust laws. 

What does it mean for you? 

While it is unlikely that social factors alone will determine merger clearance outcomes absent specific legislation or regulation, these factors could play a role in US enforcement agencies’ decisions on which transactions deserve their resources for investigation. Transactions likely to have a perceived negative social impact may attract an enforcer’s critical eye and may be more carefully scrutinized, including in the Second Request document collection process. At the same time, antitrust agencies may perceive transactions that are likely to have positive social impacts—for example, through sound ESG (environmental, social and governance) policies, job creation opportunities, pollution reduction plans, other sustainability initiatives, or support for income or racial equality—as posing less of a threat to competition.   

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