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An uptick in mergers but regulators are close behind

Andrew Ross Sorkin writes in today's New York Times that August has been a busy month for mergers, the latest data point being Hewlett-Packard's $1.6 billion bid for the data storage company 3Par.

Meanwhile, antitrust regulators are making shifts in policy that could cause headaches for dealmakers. Last week the Department of Justice and the Federal Trade Commission finalized the biggest changes they've made to how they evaluate mergers in 18 years. (Good luck wading through the language if you're not an antitrust lawyer.)

The bottom line is the new guidelines give the agencies more latitude and power when they're looking at mergers and deciding whether to greenlight them.

In the past, regulators have stuck to fairly rigid methodologies while analyzing proposed deals. They had to first define the relevant market, calculate market shares and use formulas to figure out whether a merger might hurt consumer choice. With these new guidelines, though, regulators don't have to rely on any single methodology. They don't have to first define the relevant market, and they can decide, for instance, that because consumers view the merging companies to be dominant players, they're worth scrutinizing.

As one antitrust lawyer pointed out to me today, the new guidelines give regulators more flexibility, but the more fluid rules could make it harder for companies to determine whether their proposed deals will raise red flags in Washington.

There's no telling whether any of this will result in more mergers getting blocked. So far, the Justice Department has been fairly cautious, opting to negotiate with companies whose mergers trouble regulators rather than outright stopping them.

By Jia Lynn Yang  |  August 24, 2010; 4:01 PM ET
Categories:  Antitrust  
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