Special Merger Rules in Regulated Industries

Mergers in regulated industries like healthcare, energy, telecom, and banking face stricter rules in 2025. Agencies such as the FTC, DOJ, and FCC now enforce tighter thresholds, including the Herfindahl-Hirschman Index (HHI) and new notification limits, to ensure fair competition and protect public interests. Key updates include:

• Healthcare: Market share over 30% or HHI > 1,800 triggers scrutiny.
• Energy: Focus on grid stability and consumer benefits.
• Telecom: Spectrum caps and foreign ownership limits apply.
• Banking: Reviews prioritize financial stability and community impact.

With new 2023 Merger Guidelines and rising regulatory challenges, companies must plan carefully, align with sector-specific rules, and address public interest concerns to succeed.

Merger Regulation Framework

The U.S. merger regulation system blends general antitrust enforcement with rules tailored to specific industries. This setup aims to safeguard competition and address public concerns. By 2025, stricter measures have been introduced, especially in highly regulated industries.

Oversight Agencies

Several federal agencies collaborate to evaluate mergers, each focusing on unique aspects of competition and public welfare. The Department of Justice (DOJ) and Federal Trade Commission (FTC) handle overall antitrust enforcement, while other agencies bring specialized oversight:

According to the 2023 Merger Guidelines, a merger is likely flagged as anticompetitive if the post-merger Herfindahl-Hirschman Index (HHI) exceeds 1,800, increases by more than 100 points, or leads to a market share above 30%.

In addition to these agency-specific evaluations, mergers are reviewed under broader public interest criteria, which can differ across sectors.

Public Interest Factors

Regulators rely on public interest standards to assess mergers. The 2023 Merger Guidelines focus on protecting consumers and enforcing stricter competition rules.

Important considerations include:

• Impact on consumer pricing and protection
• Preservation of competitive markets
• National security concerns
• Infrastructure stability
• Service quality and accessibility

These factors carry extra weight in industries subject to heavy regulation.

This framework provides the foundation for more detailed, sector-specific merger requirements, which will be explored next.

Sector-Specific Merger Requirements

Each industry has its own set of rules and thresholds for mergers, reflecting its particular challenges and priorities. In 2025, these requirements vary widely, and understanding them is key to ensuring a smooth transaction process.

Healthcare Merger Rules

Healthcare mergers are closely examined under the 2023 Merger Guidelines. The FTC and DOJ view transactions as potentially anticompetitive if the market share exceeds 30% or the Herfindahl-Hirschman Index (HHI) rises by more than 100 points. Mergers in markets with an HHI over 1,800 or causing a 100-point increase are especially scrutinized.

Some critical factors include:

Energy Merger Rules

In the energy sector, the Federal Energy Regulatory Commission (FERC) handles mergers through a two-phase review process.

Key steps in the Energy Mergers Regime include:

• Consulting with state utility commissions
• Evaluating infrastructure safety risks
• Assessing potential consumer benefits
• Analyzing the impact on grid stability

Telecom Merger Rules

The Federal Communications Commission (FCC) oversees telecom mergers, emphasizing spectrum management and public interest. Additionally, foreign ownership exceeding 25% is reviewed under the Communications Act of 1934.

Banking Merger Rules

Banking mergers are reviewed by agencies like the Federal Reserve, FDIC, and OCC to ensure financial system stability and prevent market overconcentration.

Key compliance areas include:

• Adhering to the Bank Merger Act and Change in Bank Control Act
• Conducting financial stability evaluations
• Assessing community impact

Successfully navigating these sector-specific rules requires careful planning and adherence to regulatory expectations, which will be detailed further in the next section.

Merger Compliance Guidelines

These guidelines provide clear steps for handling the complexities of merger reviews within regulated industries, building on the regulatory framework discussed earlier.

Pre-Merger Planning

Planning ahead is key to ensuring compliance in regulated industry mergers. Companies should consult the sector-specific thresholds for HHI and market share mentioned earlier.

Multi-Agency Compliance

Mergers often involve oversight from multiple agencies, especially when they span different sectors. For example, a healthcare merger may require coordination between state agencies and federal regulators. Using a centralized tracking system can streamline submissions and deadlines.

Public Interest Requirements

Public interest concerns play a growing role in regulated industry mergers. Key areas to address include:

• Consumer and Market Impact: Assess how the merger affects prices, service quality, and availability.
• Competition Preservation: Provide evidence that market competitiveness will not suffer.

The 2023 Merger Guidelines stress opposing mergers that harm competition, particularly in already concentrated markets.

To stay on track, companies should keep detailed records of all regulatory communications and compliance actions throughout the process.

While thorough preparation is crucial, mergers in regulated industries often face shifting regulations and significant challenges. These obstacles will be discussed in the next section.

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Merger Challenges and Changes

Common Merger Obstacles

Mergers in regulated industries are facing tougher challenges in 2024-2025. Regulatory agencies are stepping up their scrutiny, especially in sectors like healthcare, energy, and telecommunications.

Take the FTC's decision to block Kroger's $24.6 billion merger with Albertsons over competition and labor concerns. Or consider Avangrid's $8.3 billion attempt to acquire PNM Resources, which fell apart due to regulatory pushback. These cases show just how complex and unpredictable the merger landscape has become.

These examples underline the increasing challenges companies face, as regulators continue to refine their focus and priorities.

New Regulatory Developments

The regulatory framework has shifted significantly with the introduction of the 2023 Merger Guidelines. These new rules bring stricter oversight, especially in markets with high concentration levels.

Some key updates include:

• Workforce impact as a priority: Acting Comptroller Michael J. Hsu emphasized the importance of transparency in promoting a competitive, stable, and community-focused banking system:

"This transparency should help promote a diverse and dynamic U.S. banking system - one that is safe and sound, pro-community, pro-competition, and pro-financial stability."

• Public hearings for large mergers: The FDIC now mandates hearings for mergers that create institutions with over $50 billion in assets, aiming to enhance transparency and stakeholder engagement.
• Focus on consumer protection: With $10 billion lost annually to fraud, regulators demand stronger proof of consumer benefits and efforts to maintain competition.

To navigate these challenges, firms like Phoenix Strategy Group play a crucial role. By leveraging data-driven strategies, they help companies prepare for and manage regulatory complexities during merger planning.

Conclusion

With regulatory oversight becoming more intense, businesses are under increasing pressure to meet compliance demands. Recent changes in regulatory policies have shifted how mergers are assessed in industries like healthcare, energy, and telecom. This heightened scrutiny has already resulted in several high-profile merger denials, emphasizing the importance of thorough regulatory preparation. To succeed, companies need to approach these challenges with well-thought-out strategies.

Next Steps

For businesses planning mergers in regulated sectors, careful compliance planning is a must. Here are some steps to tackle these challenges effectively:

• Perform detailed regulatory due diligence before entering merger talks.
• Engage with regulatory bodies early and establish compliance systems that align with industry-specific rules.
• Keep communication with stakeholders open and transparent throughout the process.

For expert guidance, firms like Phoenix Strategy Group provide specialized support in navigating the complexities of these regulatory hurdles. Achieving a successful merger in regulated industries requires more than financial compatibility - it demands a deep grasp of regulatory requirements and public interest concerns. As scrutiny grows, companies must focus on building strong compliance plans to improve their chances of success.

FAQs

Which federal agency must approve media mergers?

The Federal Communications Commission (FCC) is responsible for overseeing media mergers. It evaluates whether these transactions align with the public interest by reviewing factors like media diversity, local news availability, consumer access, and market competition. The FCC works closely with the Department of Justice (DOJ) and Federal Trade Commission (FTC) to ensure that mergers comply with both antitrust laws and public interest standards.

Under the 2023 Merger Guidelines, the FCC applies stricter scrutiny to mergers that might harm competition. Key focus areas include:

• Media diversity and availability of local news
• Access to a variety of information sources for consumers
• Market competition and the risk of over-concentration
• Commitments to diverse programming options

Media companies need to be well-prepared to meet the FCC's broader public interest requirements, which go beyond basic competition concerns. This means proving their dedication to supporting local content, maintaining diverse programming, and fostering a competitive market.

The FCC's role is crucial for companies navigating the complex rules surrounding media mergers. Its oversight ensures a balanced media environment that protects public access to diverse and reliable information.

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