Antitrust Risk-Shifting Provisions in Merger Agreements After the Financial Collapse

Abstract

The global financial crisis has drastically altered the market for corporate acquisitions. With many potential buyers unable to secure funding, potential sellers now have significantly fewer options than in the past. Others have observed that merger agreements have therefore shifted from generally favoring sellers to favoring buyers.

Whether the recent trend toward buyer-friendly merger covenants has also affected antitrust risk-shifting provisions has not yet been examined. We surveyed the 30 largest largest merger agreements from 2007 and 2008 to identify any patterns or trends in antitrust risk-shifting terms and to see if merging parties have found new ways to apportion antitrust risk in the current deal environment. This sampling provides the first attempt to quantify the effect of the economic downturn on merging parties' assessment of antitrust risk.

Keywords: antitrust, merger covenants, merger enforcement, financial downturn

JEL Classification: K21, L41