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Pharmaceutical companies take note: DOJ to revaluate mergers

Merger and acquisition (M&A) deals are common within the pharmaceutical industry. Whether pharmacies looking to merge with other pharmacies or labs looking to expand their capabilities, these transactions can help to better ensure progress within the field.

But what happens when a deal goes too far? This is the government’s concern. The United States Department of Justice (DOJ) is working with the Federal Trade Commission (FTC) to review M&A deals for compliance with federal antitrust laws. The agencies are working to achieve this goal by updating guidelines to better reflect the current marketplace.

What is the goal of the guidelines?

Agency officials state the guidelines are meant to balance the benefits of M&A deals with the need to avoid monopolies or deals that may otherwise stimy growth in the market. The guidelines achieve this goal by focusing on thirteen areas that include a review of how the M&A deal impacts concentration and whether the deal results in a bar to competitors entering the market.

In addition to the updated guidelines, agency officials also note that they will focus on “faithful and aggressive enforcement” in the event of an alleged violation of antitrust laws.

Is it concerning that the feds are updating these guidelines?

Not necessarily. The agencies have updated the guidelines in the past. Changes have occurred at least six times before the most recent proposal.

How can I avoid a violation of antitrust laws during an M&A deal?

There are numerous recommendations on how to better ensure a smooth transition before, during, and after an M&A deal — but how do you make sure the deal itself is actually legal? The answer comes down to thorough due diligence. This is more than just a catch phrase. Due diligence is a deep dive into the legalities and technicalities of any proposed deal and can make the difference between a successful M&A and a legal nightmare.

Attorney John Rivas is responsible for this communication.