Rising protectionism, concerns about technology’s reach are politicising, delaying merger reviews, lawyers say

As concerns rise about the reach of big technology companies and China’s growing political and economic influence around the globe, cross-border mergers and acquisitions are increasingly becoming politicised, deal lawyers said.

Global merger and acquisition activity hit record levels last year, but the rate of deals falling apart was at its highest since the global financial crisis, according to a new report from the law firm Freshfields Bruckhaus Deringer.

“Antitrust agencies around the world are facing mounting political pressure to scrutinise the impact of large, innovative players on competition and consumer choice in the digital era,” Freshfields said. “Political concerns about levels of concentration and the reach of some platforms across a broad range of markets are driving authorities to question whether they have the right tools to deal with these issues in a timely and effective manner. The result is a growing call for expansive regulatory intervention that would impact a large number of businesses.”

About 60 per cent of G20 countries have introduced or are considering expanding their regulatory review of foreign investment on national security and other public interest grounds, Freshfields said. The G20 is made up of many of the world’s largest economies, including China, the European Union and the United States.

A trade war between the US and China also has added an additional layer of complexity to cross-border transactions, particularly when it comes to deals involving technology.

Since taking office, US President Donald Trump has blocked two deals on national security concerns: Chinese investment firm Canyon Bridge Capital Partners’ US$1.3 billion deal for Lattice Semiconductor in 2017 and Singapore-based Broadcom’s proposed US$117 billion deal for Qualcomm last year.