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M&A monitor

Biden victory puts ‘killer acquisitions’ on notice

It’s not just in China where tech M&A is in the spotlight.

Joe Biden’s election victory and a renewed focus on tech antitrust at both the European Commission and in the UK mean transatlantic antitrust enforcement of tech deals is expected to ramp up significantly in 2021. One area where this could be most keenly felt is in relation to ‘killer acquisitions’ – that is, buyouts of emerging technology start-ups by big tech companies.

Many tech deals have flown under the antitrust radar in the recent past either because they fall beneath the reportability threshold (as is the case in Europe) or because (in the US) the antitrust agencies were not minded to substantively review them, even if they were reported. But in response to the phenomenal growth of big tech – which has only accelerated through 2020 – the EU has said it will now investigate any such bids referred by member states even where they don’t meet the filing requirements. Coupled with the zeal of the UK Competition and Markets Authority (CMA) to review international tech transactions (more on which below) and an expected increase in enforcement under the new US administration, the outlook for 2021 may be challenging.

Against this backdrop, many exit strategies will now need to account for this risk. And because the deals in question invariably involve a US buyer, we can expect moves by Washington and Brussels to align on theories of harm to boost the credibility of their enforcement efforts, and to play to each other’s procedural advantages to enable the strongest possible cases to be built on both sides of the Atlantic.