THE ECONOMIST: Global dealmakers face new uncertainty in matter of antitrust

At the start of the year dealmakers around the globe were sharpening their pencils. Donald Trump’s incoming administration was promising to slash corporate taxes and tear up red tape in the world’s mightiest economy. Political leaders in other large markets at last appeared to grasp that in order to keep up with America, they had better put innovation and economic growth ahead of caution (in risk-averse Europe) or common prosperity (in Xi Jinping’s China).

Top trustbusters, including freshly appointed ones in America, Britain and the European Union, heard the message loud and clear. Big, they signalled, would no longer necessarily be seen as bad. Suspicion and zealous enforcement were out. Predictability and permissiveness were in. Animal spirits among empire-building bosses were up, together with the share prices of firms that advise them on mergers and acquisitions (M&A).

Two months into 2025 hopes of a deals bonanza — and the advisers’ rich market values, which have slid by around a fifth from their peaks — feel like a distant memory. Mr Trump’s $US4 trillion ($6.4t) tax cut may be at risk from a few Republican fiscal hawks in Congress who want more of it offset with unpopular reductions in federal spending. His tariff threats turned out to be no bluff: Just ask Canada, Mexico and China, which on March 4 got slapped with swingeing new levies. And boardrooms must contend with what broader Trumpian dismantling of the rules-based international order means for their businesses. Thank goodness the new antitrust cops are no longer adding to the uncertainty. Right?

Wrong. Lina Khan and Margrethe Vestager, who in the past few years personified activist trust-busting in America and the EU, respectively, may be gone. But their successors, and those successors’ political taskmasters, look no less eager to use competition law as a Swiss-army knife: an all-purpose tool for achieving policy goals beyond ensuring that consumers don’t get a raw deal. That, at least, is what Schumpeter concluded after a day of rubbing shoulders with competition regulators, executives, lawyers and other M&A types. They gathered in London on February 27 for the inaugural Antitrust Summit hosted by Economist Impact, a commercial division of The Economist’s parent company.

On the surface, antitrust czars do seem deal-friendlier. In January Britain’s Labour government sacked the chairman of the Competition and Markets Authority (CMA), Marcus Bokkerink, apparently for not being growth-minded enough. Sarah Cardell, the CMA’s chief executive, now says that where her agency has discretion “You will see action to promote growth.” Teresa Ribera, the EU’s top competition regulator, has been tasked with revising the bloc’s merger guidelines to be “more supportive of companies scaling up in global markets”. Across the Atlantic, Andrew Ferguson, whom Mr Trump picked to head the Federal Trade Commission, has pooh-poohed Ms Khan’s “war on mergers”.

It isn’t just talk. In December Ms Ribera’s agency blessed the $US16.5b takeover by the parent company of Novo Nordisk, the Danish maker of Ozempic, a celebrated weight-loss drug, of Catalent, an American contract drug manufacturer. It also approved the $US700m purchase of Run:ai, which manages artificial-intelligence workloads, by Nvidia, a $US2.8t AI-chip behemoth.

The same month Britain’s CMA waved through Vodafone’s $US19b merger with Three to create the country’s biggest mobile-telecoms operator. On March 5 the CMA concluded that the partnership between Microsoft and OpenAI, the world’s biggest software firm and hottest AI-model creator, does not qualify for investigation under British competition law.

Yet acquisitive CEOs mustn’t mistake any of this for a return to the days when trustbusters cared mostly about whether a merger would raise prices for consumers. Ms Ribera is likely to be accommodating of deals that create European champions, but no less wary of “killer acquisitions” in which dominant firms snap up baby challengers before they mature into fully grown rivals. Some European politicians would like her to use competition rules to keep inflation in check, echoing requests made to Ms Khan.

Mr Ferguson has made it clear that “the FTC feels workers’ pain” and is concerned about the fate of small businesses, which sounds an awful lot like his leftie predecessor.

He is additionally troubled by firms abusing their market power in areas that anger Mr Trump’s MAGA base, such as online censorship, diversity, equity and inclusion initiatives, or efforts to combat climate change.

Then there is geopolitics. Christine Wilson, a former FTC commissioner now at Freshfields, a law firm, foresees the blending of antitrust and trade policies as more countries turn protectionist. In such a world, fixing a deal’s regulatory problem in China can create a political problem in the West, or vice versa.

John Davies of Brunswick, a firm of corporate advisers, calls this “the waterbed effect”. “You have time to work out the regulatory stuff. The political stuff can go wrong on the first day,” cautions Sir Simon Robey, co-founder of Robey Warshaw, another advisory firm.

Blades of glory

Antitrust is not, in other words, going back to being a scalpel in the service of economic efficiency. The Swiss-army knife is here to stay, with different governments switching blades in and out in line with their political goals. Right now these objectives may be conducive to a bit more dealmaking. In the long run, though, antitrust that is more political will also be more fickle. As Sir John Vickers of Oxford University, who used to run Britain’s Office of Fair Trading, observes, “If you want to promote investment in the economy, then tipping a bucket of political risk is not a wise thing to do.” Wise words