Digital M&A runs into antitrust hurdles with consumer, life sciences, transport and energy deals also targeted

Rise in tech sector intervention

In 2023, antitrust authorities continued to zero in on the potential anti-competitive effects of digital deals. As in the previous year, our data suggests that the level of antitrust intervention in the tech sector (11%) was comparatively lower than the proportion of global M&A accounted for by tech deals (25%).

However, this is up from just 8% in 2022. And the number of tech sector deals frustrated by antitrust authorities has tripled (six in 2023 compared to two the previous year). Authorities are starting to make good on their promises to closely scrutinise tech transactions and intervene more frequently.

Significantly, 20% of deals blocked in 2023 were in the tech sector. These included the European Commission (EC)'s prohibition of Booking/eTraveli and Microsoft/Activision Blizzard, blocked in the UK although a restructured transaction was ultimately conditionally cleared.

Adobe and Figma abandoned their deal due to EU and UK antitrust concerns. In 2024 we have already seen the termination of Amazon/iRobot after the EC looked poised to block the deal. Amazon’s GC cited “undue and disproportionate regulatory hurdles”.

Several other deals secured a green light only after extensive remedies were agreed, sometimes across multiple jurisdictions. Broadcom/VMware was a good example, with conditional clearances in the EU, China and South Korea.

In China, semiconductor deals continue to be heavily scrutinised, accounting for ten out of 25 conditional State Administration for Market Reform clearances since 2018 (two of four in 2023). Last year we also saw Intel abandon its purchase of semiconductor rival Tower after failing to secure Chinese merger approval.

As discussed in our article on ‘Tougher merger control enforcement frustrates more M&A’, antitrust authorities’ approaches to assessing tech mergers are evolving. They are increasingly looking at the impact of a deal on ecosystems, innovation and potential competition. 

Deals resulting in data concentration are also being closely considered. And in the coming months we expect an increasing focus on transactions involving AI activities. Microsoft’s partnership with OpenAI, for example, has drawn attention in several jurisdictions, including the EU, UK, Germany and the U.S., although formal reviews are yet to be launched.

In some jurisdictions, the increased appetite to intervene in tech transactions will be fuelled by greater information about acquisitions. In the EU, the new Digital Markets Act (DMA) regime requires “digital gatekeepers” to submit information about all deals involving digital services or that enable the collection of data. The forthcoming UK digital markets regime will impose similar requirements. U.S. regulators will have the benefit of additional information required up-front under the forthcoming new HSR rules.

More generally, it remains to be seen how new conduct requirements under these digital regimes, such as a ban on self-preferencing, will be considered in merger control assessments. We have already seen hints that merging parties may argue that their obligations will prevent a deal having anti-competitive effects.

Overall, the message for parties to tech M&A is clear: expect even more intense antitrust scrutiny and heightened intervention.

UK intervenes in 24 consumer/retail deals

Aside from tech transactions, in 2023 antitrust intervention focused on four other sectors. Consumer and retail deals represented 36% of total deals subject to antitrust intervention but only 21% of global M&A.

Most of this tally comes from the UK Competition and Markets Authority (CMA), which blocked two deals and imposed remedies in 24 transactions in the sector. Of these, 20 were part of two series of acquisitions by PE-backed investors in the vet sector – find out more here. As discussed in our article on merger remedies, a number of the conditional clearances related to completed mergers with the CMA ordering the purchaser to sell off the entire target business acquired, effectively amounting to a prohibition. 

Federal Trade Commission ramps up scrutiny in healthcare sector

Life sciences transactions were once again a focus for antitrust authorities. The proportion of antitrust intervention reached 11%, compared to 9% of global M&A. When looking at deals prohibited or abandoned in 2023, this soared to 24%.

As in previous years, the U.S. Federal Trade Commission (FTC was particularly active. It scored a win on appeal in Illumina/GRAIL and raised concerns that caused the termination of five healthcare transactions. This included Sanofi/Maze – a rare intervention in a licensing arrangement. The FTC also agreed a consent order in Amgen/Horizon Therapeutics, the agency’s first litigated pharma merger challenge in over ten years.

Transport intervention focuses on airline mergers

The amount of antitrust intervention in transport M&A (9%) was more than four times higher than the proportion of global M&A (2%).

Airline mergers have faced close scrutiny, accounting for two of the three prohibited transport deals. Some authorities, eg the EC, have taken a tougher approach to the remedies they are willing to accept. But securing approval is possible. After a 13-month review, Korean Airlines’ acquisition of Asiana was cleared by the EC in February 2024, subject to novel conditions including a fix-it-first remedy (for air passenger services) and an upfront buyer commitment (for air cargo services). The remedies will likely be a blueprint for future EC merger reviews in the airline sector.

Energy deals cleared with merger remedies

Energy transactions made up 8% of antitrust intervention in 2023, compared to 6% of global M&A. For the third year running, conditional clearances accounted for almost all of this total, spanning a number of jurisdictions.