Forced sales of Grindr, StayNTouch latest casualties as regulators increase merger, foreign investment scrutiny

From retroactively breaking up transactions to imposing record fines over abusive behaviour, regulators from Japan to the United States are casting a more sceptical eye over the influence of big technology and foreign investors on home-grown businesses.

The greater scrutiny of deals by competition and national security authorities is lengthening the time it takes to complete transactions, bringing discussions about data protection to the forefront and raising concerns that the more rigorous approach will have a “chilling” effect in an environment already weakened by the coronavirus epidemic, deal lawyers said.

More countries, including China, Japan and the United Kingdom, have moved in the past few years to create new merger review regimes or strengthen their existing programmes similar to the Committee on Foreign Investment in the United States (Cfius), which examines transactions on national security grounds, according to Alastair Mordaunt, a partner at Freshfields Bruckhaus Deringer in Hong Kong.

“Suddenly people are finding that it's not just Cfius or the European Commission or the [US] Department of Justice that are taking a long time to conduct their reviews,” Mordaunt said. “There are a number of other jurisdictions around the globe where there is an equal risk that the review process, whether we’re talking about merger control or foreign investment, could take a pretty long time.”

The Philippines, Thailand and Vietnam are some of the countries expected to increase scrutiny of mergers this year, whilst Australia and Japan are among the countries expected to more closely examine global technology giants, such as Facebook and Google, according to PaRR, a data provider on competition law and enforcement.