The almost-simultaneous blocking of mergers valued at more than $20 billion in the U.S. and Europe this week signals that government regulators across the globe are showing little tolerance for deals between direct competitors.
The European Union on Wednesday thwarted CK Hutchison Holdings Ltd.'s 10.25 billion pound ($14.8 billion) bid to buy Telefonica SA's O2 unit in the U.K. to create that country's biggest mobile carrier. The move came hours after U.S. District Judge Emmet Sullivan in Washington halted the $6.3 billion merger of Staples Inc. and Office Depot Inc.
With the collapse of those two deals, some $908 billion of the transactions announced last year have now fallen apart, according to data compiled by Bloomberg. That means 2015 has been stripped of its title as the biggest year for dealmaking on record, dropping to $4.08 trillion compared with 2007's $4.09 trillion.
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Regulators in the U.S. are catching up to their European counterparts, who have traditionally leveled more scrutiny at mergers, according to Seth Bloom, an antitrust lawyer at Bloom Strategic Counsel in Washington.
"We're seeing an uptick in merger-enforcement activity," Bloom said. "There's no question about it."
The EU ban is a blow to tie-ups in the fragmented European mobile industry. Regulators cleared previous deals that reduced the number of operators to three on condition that the merging companies offer space on their systems to smaller rivals that don't own their own wireless networks. The U.K. is a vibrant market for these so-called MVNOs, or mobile virtual network operators.
Telefonica closed down 1.1 percent in Spain, while CK Hutchison slipped less than 1 percent in Hong Kong.
Across the Atlantic Ocean, Sullivan's ruling is a victory for the U.S. Federal Trade Commission, which argued that uniting the national suppliers of pens and printer paper would harm buyers. The companies said they wouldn't appeal the decision and would terminate their agreement effective May 16.
Staples shares plummeted as much as 20 percent Wednesday in New York, while Office Depot dropped 41 percent.
Antitrust officials in the U.S. are grappling with a record wave of mergers that are marrying some of the biggest companies across industries. Sullivan's decision marks the second time the FTC has blocked a combination between the two companies. In 1997, the commission successfully sued to halt their proposed merger.
Deal Blocked
In March, Los Angeles Times owner Tribune Publishing Co. was sued by the U.S. Justice Department to block its planned purchase of Freedom Communications Inc., the publisher of the Orange County Register.
The increased scrutiny in the U.S. can partly be attributed to the looming end of President Barack Obama's presidency, Bloom said. Many enforcement officials will likely leave office with Obama and want to cement their legacy, he said. Obama came into office saying antitrust enforcement needed to be stronger, and over the past few years regulators have lived up to that.
"They really wanted to prove that they have revived and enhanced antitrust enforcement," Bloom said. "That's what we're seeing now."
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