By, Bloomberg BNA
Although mega-merger volumes were down in 2017 year-over-year, the stage is set in 2018 for a renewed focus on the effects of so-called mega- mergers on businesses and consumers. December 2017 ushered in the announcement of the two latest mega-mergers—the $69 billion CVS-Aetna deal and the proposed $52 billion merger of Disney and 21st Century Fox. Amazon’s recent purchase of Whole Foods was also part of this year’s lineup of blockbuster deals.
Despite the overall drop in the volume of mergers and acquisitions in 2017, the outlook for 2018 is bullish. PwC’s leader of U.S. deals, Bob Saad, said Dec. 14 that he expects a “very strong and active year.”
“I’ll come right out and say that PwC is extremely, extremely bullish on the M&A market in 2018. We were bullish on ‘17… we are significantly more bullish as it relates to the year ahead of us,” Saad said, speaking at a PwC event on M&A activity.
Saad pointed to the Amazon-Whole Foods merger as evidence of another dynamic he predicts in 2018—more complex deals. We can expect to see more deals where “the lines of industries are really blurring,” he said.
Regulators and lawmakers in Washington will be looking next year at how these massive deals may reshape the health care, pharmaceutical, and entertainment industries and whether they will impact the cost of services and products for millions of Americans.
The CVS-Aetna merger, which represents the joining of the largest pharmacy chain in America with the country’s third-largest health insurer, setting off renewed concerns in Washington among some Democrats. Minnesota senator Amy Klobuchar, ranking member on the Subcommittee on Antitrust, Competition Policy and Consumer Rights, is seeking a hearing on the proposed merger and antitrust concerns.
Klobuchar asked Republican senator Mike Lee of Utah, chairman of the panel, and Senate Finance Committee Chairman, Republican Charles Grassley of Iowa, to schedule a hearing on the proposed merger, “so that there is appropriate oversight over the antitrust review process.”
House Energy and Commerce Committee ranking member Frank Pallone Jr., a Democrat from New Jersey, wrote a letter to the panel’s Democratic chairman, Rep. Greg Walden of Oregon, also requesting a hearing on the CVS-Aetna merger. Pallone wrote that it is “critical that Congress closely examine the changing relationships among health care entities and the impact these changing relationships have on the way health care is delivered in this country.” Neither panel’s Republican chairmen, however, had announced hearings as of Dec. 19.
Beyond scrutinizing individual mergers, a handful of Democratic lawmakers have introduced the Merger Retrospective Act. Introduced by the recently formed “Antitrust Caucus” and Rep. Keith Ellison of Minnesota, the bill will direct the Federal Trade Commission and Department of Justice to assess the effect of each merger on price, quality, and availability of products and services, along with employment reduction and worker compensation.
Not everyone is concerned about these mega-mergers. President Donald Trump sees the Disney-Fox merger as a potentially positive development for Americans. Trump spoke with Fox Executive Chairman Rupert Murdoch and congratulated him on the deal, according to White House spokeswoman Sarah Sanders. The president thinks “this could be a great thing for jobs, and certainly looks forward to, and hoping to see a lot more of those created,” Sanders said at a press briefing on Dec. 14.