How to Navigate Antitrust Complexities in M&A

[00:00:00] Kaj Rozga’s Background & ABB Overview

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Kison: Hi, how are you doing today?

Kaj Rozga: Hi, Kison. Thanks for having me. I'm doing well. Hey, we're here live in New York in VRC's office, Valuation Research Corporation. So quick plug for them for sponsoring our recording location today. And uh, hey, before we kick off, I know you're an attorney. Let's get our disclaimers out of the way.

[00:04:00]
Kison: Nothing here is advice that you should take or act on. Thank you.

Kaj Rozga: Yeah, I'm an attorney and an employee. So, um, just want to be clear, you know, anything I say here today is in my own capacity, my personal capacity. Nothing I say today is on behalf of my employer or any clients I've represented in the past. I'm here, um, to speak from my own perspective.

Kison: Nothing to be construed as investment advice. Legal advice. By continuing to listen to this podcast, you agree not to sue anybody for anything that's associated with this podcast?

Kaj Rozga: That sounds like, uh...

Kison: That sounds like a good start. There you go. Can we kick things off a little bit? Can we kick things off a little bit about your background?

[00:05:00]
Kaj Rozga: Sure. Um, yeah. So I have a, I'm an antitrust specialist, but, um, within that I'm a bit of a generalist. So that means I've done a little bit of it all. I started in the government, doing enforcement side of work at the FTC, investigating, litigating merger challenges. And then I went into private practice, where I've, um, have over a decade of experience representing clients in all matters of antitrust.

That can be litigation, that can be investigations, that can be transactional, that can be M&A advisory, compliance, anything touching antitrust, I've done it at some point pretty much. I was in private practice for most of my career in law firms, and then recently went in-house, where I am now at ABB, and have a U.S.-Canada focused role at ABB, supporting all things antitrust-related, including, as we'll talk about today, mergers and acquisitions.

[00:06:00]
Kison: You've done it all. In fact, you're one of the FTC attorneys that everybody complains about, most of the people in this podcast.

Kaj Rozga: Probably, but it gives me a nice perspective on what it's like to be in the government. I like to think that it gives me a better approach to thinking like a government attorney thinks and being empathetic as well, which I think is always a good tool to have.

Kison: I was going to say, to your advantage, because now you get the perspective from both sides. Yeah, I agree. Can we talk through some of the key antitrust trends? Today is like my day here. Can we walk through some of the key antitrust trends that business leaders might be aware of at a high level? But not fully appreciate.

[00:06:30]
Kaj Rozga: Sure. Happy to. I think it's always nice to level-set that kind of question with the fact that most deals get minimal, if any, scrutiny or review. Even those that get reviewed, most of those will get cleared without conditions. And there's some small fraction of deals that receive really close scrutiny and ultimately get challenged by the government. So, I think it's always important just to keep that in mind.

Because as lawyers, we can always sound very cautious and risk-averse because the climate out there is an aggressive one, but putting on a practical sort of business cap, I always remind myself of what the statistics show in terms of deal clearance, etc. But there's also, of course, a deterrence effect to always be thinking about.

[00:07:00]Antitrust Trends: Government Levers & Key Enforcement Themes

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And there's always the cost burden and delay of going through a difficult merger clearance process. So I think for those two reasons alone, even if you don't think your deal is getting challenged, you definitely want to know what are the trends, what are the landmines, etc.

So I break it up into three categories. I think about it as the government really has three levers that it can pull to make your deal more challenging. The first is, of course, the most obvious one. It's the substantive lever. That's the ability of the government to legally challenge a deal, try to block it or impose some kind of remedy as a condition for the deal to go through.

The other lever they can pull is, I think of more like a soft power. It's messaging. It's how they talk about enforcement. How do they message to the business community? What their priorities are. And there, the motivation might be to see a deal stop at the boardroom, as I've heard it put, meaning, to deter borderline deals from even going forward.

[00:08:00]
And then the third lever the government can pull is process. And that means, if you have a deal that's reportable, meaning you have to submit a filing to the government to secure some kind of clearance, that process is one where the government agencies have some flexibility in how they go through that process. They can make that easier, or they can make it difficult, depending on how, what their thoughts are about the deal, etc.

So, that's how I think about it and I'm happy to go into some specific trends that we've seen in those three areas. But the bottom line would be in all three of those, so the substantive challenges, the messaging we get from the agencies, and how they go through the process of reviewing a merger. All of those have seen more aggressive positions taken from the antitrust agencies in the U.S. and in many major jurisdictions around the world.

And that is why your listeners will probably have heard that this is a more difficult climate for getting a deal cleared cleanly and swiftly than in the past.

[00:09:00]
Kaj Rozga: So, you know, that's how I think about it, and I'm happy to go into some specific trends that we've seen in those three areas. But the bottom line would be in all three of those—the substantive challenges, the messaging we get from the agencies, and how they go through the process of reviewing a merger.

All of those have seen more aggressive positions taken from the antitrust agencies in the U.S. and in many major jurisdictions around the world. And that is why your listeners have probably heard that this is a more difficult climate for getting a deal cleared cleanly and swiftly than in the past.

Kison: Can we break them down and maybe also correlate the trends that you're seeing within each of those? Starting with our substantive challenge.

[00:10:00]
Kaj Rozga: Sure. The substantive part of this is an important one. Maybe it's a little bit nerdier—it’s the more legal-easy one—but it's an important one.

And the bottom line here is that government authorities are taking a wider view of the potential ways that a merger can be harmful to competition and a narrower view of the ways that it can be beneficial.

So, what does that mean? That means in the course of conducting an investigation of a merger or in deciding what kinds of mergers to challenge, the agencies are bringing a wider set of theories to the table about how a merger can hurt competition.

Whereas traditionally, we’ve focused on the presence of direct head-to-head competition between two companies, now we have to look beyond that.

For example, that might include vertical relationships. If you have two companies that are vertically positioned in the supply chain but not competing head-to-head, that can be something that raises competition problems.

[00:11:00]
To the extent that there’s a potential for a competitor to feel like it’s going to get locked out of a key input or a key distribution channel, etc.

There’s also the notion of looking at future or potential competition—not just looking at what competition exists today, but what competition might exist a year from now, two years from now, that the merger might eliminate.

Here, your listeners may be familiar with or run into a lot of build-versus-buy situations. Those are the kinds of situations where an agency could look at a build-versus-buy dynamic and say, "Maybe it’s better off if the company acquiring the target has to build in the market."

That’s the kind of situation where we could see novel extensions of theories about how competition can be hurt by deals.

There’s also an expanded deal horizon. And by that, I mean the agencies are very clear that they want to use their call-in powers, which is to say that they want to look at prior deals—maybe even ones that have already closed, maybe even ones that have already been reviewed—and they have the ability to go back and look at those again from the perspective of what’s happened in the market since that deal closed.

[00:12:00] Substantive Antitrust Challenges: Vertical Competition, Industry Roll-ups & Expanded Deal Horizon

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Industry roll-ups are a big one. We’re seeing a lot from the agencies looking at private equity, in particular, roll-ups of industries and how a series of transactions—not just one individual transaction—can potentially create competition problems when looked at in combination.

And finally, the agencies are not as keen to accept efficiency arguments as reasons for why a deal should go through. What that means is if they have a competition concern about your deal, it’s going to be tougher to walk them back from that and allow the deal to be cleared on the basis of cost savings, efficiencies, or synergies that you may feel convinced will be passed on to customers in the form of better or cheaper products.

That kind of argument is tougher to make now.

So, in all of these ways, substantively, the law hasn’t changed—it’s the same words on the paper—but the way the agencies interpret those laws has adapted and grown over time, subject to court review. These are some of the ways the agencies are looking to expand how they view mergers as potentially problematic.

So that’s the substantive one.

[00:13:00]
Kison: Vertical competition, future competition, expanded deal horizon, industry roll-ups, and then efficiency arguments. These all sound like good things—except for the expanded deal horizon. I don’t understand how you would go back to a deal, especially if you’ve already integrated the company, and say, "No, this isn’t a deal you should have done."

Kaj Rozga: Yeah, I mean, it definitely raises practical challenges for the government to go after a deal that’s already closed. What’s the remedy?

There’s a case right now—the FTC has a case against Meta—and part of the theory is related to their acquisition of Instagram and WhatsApp, arguing that those historical acquisitions prevented competition from blossoming in the social media space.

The DOJ, the other enforcer of antitrust laws, has a case against Google targeting their ad tech stack. Part of that case also has to do with prior acquisitions they made, such as DoubleClick.

So these are cases the agencies are bringing. And what that means for practitioners is that deal risk from a regulatory perspective does not go away just because you closed the transaction.

[00:14:00]
You always want to be mindful of that. Keep your lawyers in the loop, keep your sophisticated deal counsel involved throughout integration and afterward—especially if you’re doing more deals in the same area or sector.

Make sure you’re looking at the whole horizon of transactions when assessing deal risk.

Kison: Roll-ups are popping up everywhere. I thought they were doing a good thing. You start creating your nice, consistent brands and then build more consistency. Everybody loves franchises. I feel like that’s what’s iconic of America. You name it, it’s a franchise for every business. But they can be deemed as anti-competitive?

Kaj Rozga: Yeah, I mean, really, the theory there is if you look at each individual transaction, maybe it’s a minnow, right? But if you look at a series of transactions—10, 15 transactions—maybe the cumulative effect of that is that you’re creating a whale.

Sure! Here's the next portion of the transcript following the same timestamp per minute format:

[00:15:00]
Kaj Rozga: The FTC has a case in Texas against a private equity-funded group of anesthesiologists, arguing that a series of roll-up transactions has consolidated the market for anesthesiologists in a local market in Texas, which overall created a problem for competition.

So the question becomes, can you point to the efficiencies or the benefits of all those roll-ups combined? And I think it’s more difficult to do that in this climate because the agencies are more skeptical of efficiency arguments.

From their perspective, they believe that those efficiencies don’t always play out the way the parties expect them to.

Kison: These agencies sound like tough parents that just don’t want to budge.

[00:16:00]
Kaj Rozga: I think there’s been a shift in the agencies’ default stance—it’s no longer presumed that a deal is going to be pro-competitive. Instead, you now need a compelling argument to prove that it is.

But again, we always have to come back to that baseline. Most deals that you put in front of the agencies are not going to receive scrutiny. This applies only to a fraction of deals.

And, you know, we can talk about this more today, but there are also ways to prepare yourself and try to avoid falling into one of these categories while still creating those value-added deals you’re talking about.

Kison: I know it depends on the governing body, but is there a percentage of deals that go through secondary review?

Kaj Rozga: Yeah, there are some great reports on this. Some law firms put out reports with statistics on how many deals receive a detailed inquiry and how many receive a challenge.

[00:17:00]
I don’t have the numbers off the top of my head, but I can say that north of 90% of deals will get through.

Now, a lot of those deals are smaller ones or ones with no competitive overlap or minimal vertical overlap. These are deals that, on first blush, the agencies can quickly conclude don’t require any further inquiry.

But that’s why your in-house lawyers and outside counsel are essential. They help flag the few deals that might raise issues so you can plan in advance.

Kison: Let’s move on to messaging.

Kaj Rozga: Yeah, I think this is an area where the current agencies under the Biden administration have really leaned in hard.

The way I think about messaging is that, to the extent that government agency leadership is out there giving speeches, attending conferences, publishing policy documents, guidelines, and blogs, those are all opportunities for the government to communicate how they view their role as merger enforcers.

[00:18:00]
And the themes have been consistent:

1. Too many mergers have been cleared.
2. Too many industries have become too consolidated.
3. Merger efficiencies don’t always materialize as expected.
4. Remedies used in the past to clear deals conditionally haven’t worked.

When you put all those themes together, you get a certain skepticism toward letting a potentially anti-competitive transaction go through.

And this kind of messaging has a significant deterrence effect. From the boardroom down, that deterrence is real. Deals can be squashed early in the process because of concerns about antitrust regulatory clearance.

[00:19:00]
And deals may even get killed at the boardroom level because companies don’t want to expose themselves to regulatory risk, reputational harm, or the extreme costs of going through a difficult review process.

That deterrence effect is hard to measure, but it’s definitely influencing decision-making.

Kison: So it’s both the government’s messaging and how the market perceives it?

Kaj Rozga: Absolutely. You’ll hear varying levels of panic or concern about antitrust, depending on the audience and the speaker.

That’s why it’s critical to have sophisticated support along the way—so you get a balanced, well-informed risk assessment.

Because in reality, it’s never as extreme as people think. It’s always nuanced and requires looking at the specifics of the deal in front of you.

[00:20:00]
Kison: Now, let’s talk about the process. I keep hearing it’s getting more expensive.

Kaj Rozga: Yeah, this is a big one. I’ve heard it called the merger tax.

The way I see it, it’s almost like a war of attrition. The agencies can slow a deal down, make it more difficult, and increase costs.

Again, this isn’t every deal—it’s not even most deals—but for borderline deals, the agencies may:

• Issue larger requests for information
• Be less willing to negotiate on compliance scope
• Drag out the review process

All of these things increase the costs and burden of getting a deal done.

[00:21:00] Government Positioning & Impact on Deals

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And this can kill a deal altogether. If regulatory scrutiny delays the process too much, you could blow past the closing date in your transaction documents.

If you’re a global company, there’s the added complexity of regulatory review outside of the U.S.—for example, in the EU or UK. That process might be even slower and longer, meaning the U.S. agencies might wait to see what those jurisdictions decide before making a move.

So, the three levers agencies have—substantive challenges, messaging, and process delays—all work together.

For borderline deals, companies need to carefully assess:

• How long the deal will take to close
• The regulatory risks
• The distraction and burden on the company
• The potential costs involved

If you’re a target, you might be particularly vulnerable to the uncertainty of a long closing timeline.

[00:22:00]
It also affects how parties negotiate risk allocation in transaction documents.

For example, when companies anticipate regulatory scrutiny, they have to consider:

• How long they’re obligated to litigate
• If and when they can walk away
• The outside date for closing and potential extensions

We now see cases where regulatory review takes 12 to 18 months. That’s a long time, and it needs to be factored into the deal negotiations.

Kison: Let’s break down the process. Who should be really concerned about this? Does it only apply to public companies? Or is it more about the nature of the deal?

[00:23:00]
Kaj Rozga: No, we shouldn’t be paranoid about every deal. But you must ensure you know whether your deal requires a mandatory merger filing.

This could be in the U.S., the EU, or elsewhere. If your deal requires a filing, you need to prepare for it.

Once an agency sees the deal, they’ll assess it based on factors like: The buyer’s profile. Some acquirers face more scrutiny than others, simply because they’re repeat players. The industry sector. Some industries, like tech, are more frequently on the radar. And the competitive dynamics of the transaction. Does the deal raise concerns about horizontal competition, vertical integration, or market consolidation? Your inside and outside counsel will flag deals that might require extra scrutiny, so you can prepare in advance.
Kison: That makes sense. Let’s talk about risk mitigation. You’ve mentioned getting attorneys involved early, but can you explain how companies can proactively manage their antitrust risk throughout the deal process?

Kaj Rozga: Yeah, I think about it in phases. Before a deal even exists, companies should be thinking about how they document their strategy and competitive positioning. With the new HSR form changes, regulators will have access to more internal strategy documents than ever before, so companies need to be mindful of how they frame their competitive landscape, growth strategies, and potential M&A plans. Then there’s the pre-deal phase, where you start identifying targets or buyers. This is where conducting a feasibility analysis is key. You want to assess early on whether a deal could present regulatory challenges so you don’t waste time on something that is unlikely to go through or that will take years to resolve.

[00:34:00] Mandatory Filings & Second Requests

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Once you get into active deal negotiations, document control becomes even more important. At this stage, anything written about the deal is potentially subject to regulatory review. That’s why legal teams should be involved in shaping how risk is discussed internally. Then you have the filing stage, where you need to do a full analysis of what merger filings are required. This isn’t just about the U.S. but also other jurisdictions that might have oversight. Once the deal is signed but not yet closed, you have to be careful about things like gun jumping, meaning you can’t start integrating or coordinating competitive decisions before you actually receive clearance. Finally, post-close, you still have risks. The government can come back and review past deals, particularly if you’re in a space where there are ongoing concerns about consolidation.
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Kison: That’s interesting. So even if you close the deal, there’s still a chance regulators could come back and say it was anti-competitive?

Kaj Rozga: Exactly. And that’s why regulatory risk management doesn’t end at closing. You need to ensure compliance with any conditions imposed by regulators and also be prepared for potential post-close reviews. If you’re a serial acquirer, the cumulative effect of multiple deals could become a regulatory issue down the line, even if each individual deal seemed low risk at the time.

[00:46:00] Gun-Jumping & Pre-Closing

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Kison: Let’s talk about gun jumping. Can you explain how companies should be thinking about that?

Kaj Rozga: Gun jumping is when companies start acting as if the deal has closed before they’ve received regulatory clearance. The key principle is that until closing, both companies need to remain independent competitors. That means they can’t coordinate pricing, share competitively sensitive information without proper protocols, or start integrating business functions. There are ways to manage this risk, like setting up clean teams, which are designated groups that can receive certain information but are separate from the competitive decision-making process. Regulators take gun jumping very seriously, and there have been multimillion-dollar fines for companies that fail to keep their businesses separate during the waiting period.
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Kison: So companies can plan for integration but can’t actually execute anything?

Kaj Rozga: Right. Planning is allowed, but execution is not. The challenge is defining where that line is. You can do things like mapping out the integration strategy, identifying synergies, and setting up teams, but you can’t start making joint decisions that impact the market. For example, you can’t start coordinating customer pricing or supplier contracts. There’s also a communications component. You need to be careful about how you talk about the deal, both internally and externally, to avoid giving the impression that the companies have already started operating as one.

Kison: That’s a good point. So let’s say a company does get flagged for an antitrust issue. How should they be thinking about responding?

Kaj Rozga: The first step is to take it seriously and engage experienced legal counsel immediately. If you get a second request, that means the government is taking a close look, and you need to be prepared for an extensive document production process. The strategy depends on the specifics of the case. Sometimes companies decide to fight it in court, but that’s a long and expensive process. Other times, they negotiate remedies with the regulators, like divesting a portion of the business to address competitive concerns. The key is to have a clear plan and to engage early with regulators rather than waiting for them to escalate their concerns.
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Kison: What are some alternative deal structures companies can consider if a full acquisition is likely to be challenged?

Kaj Rozga: There are a few different approaches. One option is taking a minority investment instead of acquiring full control. That allows you to establish a strategic relationship without fully combining operations. Another is forming a joint venture where each company retains its independence but collaborates in a specific area. You can also consider licensing arrangements or commercial partnerships that allow for collaboration without triggering full regulatory scrutiny. But it’s important to note that even minority investments and joint ventures can be subject to antitrust review, especially if they involve significant competitive overlap.

[00:54:00] Using Antitrust Considerations in Negotiation

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Kison: What about using antitrust as a negotiating tool? Are there ways companies can leverage these concerns in deal negotiations?

Kaj Rozga: Absolutely. If you’re a seller, you can use regulatory risk as a justification for negotiating a higher price, especially if the buyer has a higher likelihood of facing scrutiny. If you’re a buyer, you can push for risk-sharing provisions in the deal documents, such as reverse breakup fees, where the seller gets compensated if the deal gets blocked. You can also negotiate the obligation to litigate, meaning whether the buyer is required to fight a challenge in court or if they can walk away. These provisions have become a bigger focus in dealmaking because of the heightened regulatory environment.
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Kison: We’ve covered a lot. Before we wrap up, what’s the craziest thing you’ve seen in M&A?

Kaj Rozga: One case I worked on at the government involved a hospital merger where internal emails became a huge issue. There was a document where someone on the deal team had written notes saying the deal would “stick it to employers,” referring to how insurance rates could be pushed higher after consolidation. That single document became a focal point in the trial, even though it wasn’t written by an executive or someone in a decision-making role. It was a reminder of how even one careless internal comment can come back to haunt a deal.
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Kison: That’s wild. So it really comes back to document control and being mindful of what’s written internally.

Kaj Rozga: Exactly. Good document practices, strong legal oversight, and proactive risk management can make all the difference in getting a deal done smoothly.