When Mergers Become A Private Matter: An Updated Antitrust Primer

COMPANIES PURSUING MERGERS and acquisitions that raise potential antitrust issues typically obtain counsel on the likelihood of government investigations and enforcement actions. When it comes to assessing such risks, even businesses that only infrequently engage in M&A activity generally know the right questions to ask. In most instances, therefore, these issues are given appropriate advance consideration, minimizing the chance of surprises. Yet outside of the context of hostile acquisitions, the typical attorneyclient dialogue about M&A antitrust risks only rarely focuses on the possibility of private legal actions. To be sure, the prospect of private parties complaining to the government is high on the list of topics routinely discussed with counsel. But business people might not think to ask about private antitrust litigation, and many lawyers would regard the risk of such litigation as so low that it need not be discussed, absent exceptional circumstances. While the conventional wisdom that private merger suits are unlikely to stop a merger is still largely correct, recent developments serve as a reminder that antitrust merger challenges launched by private parties, though infrequent and often unsuccessful, do continue to arise and may be increasingly common going forward. Sprint’s and Cellular South’s recent suits opposing the proposed AT&T/T-Mobile merger are high-profile examples.1 As those suits illustrate, competitors that bring private merger cases continue to face an uphill battle in overcoming rigorous antitrust injury requirements. Private merger actions filed on behalf of consumers, on the other hand, generally do not face the same legal hurdles and have become increasingly common in the past several years. Private merger challenges may emerge before or after the government has completed its review and the parties have consummated the transaction. While some courts are particularly skeptical of private lawsuits filed after the challenged transaction has obtained government clearance,2 prior agency approval does not preclude a follow-on private lawsuit.3 Whatever the timing, private suits can inject additional uncertainty and unexpected burdens on the merging parties. And private plaintiffs can sometimes use the threat of such disruptions to gain strategic advantage or elevate pressure to settle. In merger-related client discussions, downplaying the prospect of private litigation may be perfectly reasonable in most cases; this still remains a relatively uncommon threat. However, no client or attorney wants to be surprised by litigation, so it pays to be alert for those situations posing a somewhat higher risk of private merger litigation and to stay abreast of relevant trends. Particularly with consumer lawsuits appearing to be on the rise, it is an appropriate time for antitrust counselors to take stock of the current law and recent developments in this area.