FTC overwhelmed with merger filings

The agency has begun sending warning letters to companies when there is not time to investigate a merger within the requisite time.

FTC overwhelmed with merger filings

The glut of merger filings has led the Federal Trade Commission (FTC) to begin warning companies who seek to merge before their investigations are completed.

According to a news release, for mergers the FTC can’t fully investigate during the requested time frame the agency will send out a form letter warning the companies that the investigation is still ongoing and that the deal may still be ruled to be unlawful.

The agency notes that the issuance of such a letter should not be construed to mean that the deal is unlawful, and the failure to receive this letter should not be taken as an indication that the deal is lawful, according to the release.

According to the FTC website, the agency received 2,067 merger filings between January and July 2021. This is a huge increase from 2020 which saw 815 filings in the same period.

The healthcare industry has been a hotbed of mergers for years, but the COVID-19 pandemic seemed to put the squeeze on the number of consolidations. A Kaufman Hall analysis released in April showed that were only 13 announced deals in the first quarter of 2021, compared to 29 announced deals the previous year.

Meanwhile, the average seller size by revenue was $676 million due to the pandemic-spurned rise in so-called mega merges, involving two companies with more than $1 billion in annual revenues, and transactions with sellers with revenues between $500 million and $1 billion. There was a total of 72 hospitals included in the announced deals.

The moves have not gone unnoticed though as President Joe R. Biden recently signed an executive order calling on the Justice Department and FTC to review and revise their merger guidelines to ensure patients are not harmed by large hospital mergers.

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