A turning point? Merger Control, Foreign Direct Investment and Foreign Subsidies Regulation in 2025

Five Key Developments and Trends Impacting Global Deal-Making in 2025

Changes in the leadership of merger enforcement agencies in the United States, United Kingdom and European Union, together with recent enforcement developments, have the potential to impact global deal-making in 2025, at a time when many are anticipating an uptick in deal volumes.

Although it is very early days for the new administration in the United States, many are expecting continued robust antitrust enforcement, albeit under more traditional theories of harm. In the EU and UK, we are seeing an agenda shaped by political pressure to drive economic growth and competitiveness. All of this is against a significant prior period of intense scrutiny of, and challenge to, global transactions. Here are five important developments that are set to impact global deal-making in the coming year.

1. Changes in leadership come with changes in priorities

New US DOJ and FTC Leadership are likely to revert to a more traditional enforcement approach

• President Trump nominated Abigail Slater to be Assistant Attorney General for Antitrust at the U.S. Department of Justice (DOJ). Ms. Slater has extensive antitrust enforcement experience. She spent ten years at the Federal Trade Commission (FTC), including as adviser to a former commissioner, and was a tech policy adviser on the National Economic Council during the first Trump administration.
• The President designated Andrew N. Ferguson, a Republican FTC commissioner since April 2024, as chairman on January 20, 2025. Former Chair Lina M. Khan left the FTC on January 31. Mr. Ferguson was formerly Solicitor General of the Commonwealth of Virginia, counsel to Sen. Mitch McConnell (R-Kentucky), counsel to the Republicans on the Senate Judiciary Committee, clerk to Justice Clarence Thomas and clerk to Judge Karen LeCraft Henderson on the D.C. Circuit Court of Appeals.
• The President nominated Mark Meador to be an FTC commissioner for a term of seven years from September 26, 2024. Mr. Meador, who would give the Republicans a majority on the Commission, was in private practice and held positions at the DOJ Antitrust Division and FTC. He later advised Sen. Mike Lee (R-Utah) on antitrust issues and was antitrust counsel on the Senate Judiciary Committee.
• Based on antitrust enforcement in the first Trump administration and statements about enforcement policy in the current administration, we anticipate that the incoming U.S. antitrust agencies will:
  • continue to focus on “big tech”;
  • thoroughly investigate vertical mergers;
  • be less skeptical of private equity acquirers compared to the Biden administration;
  • revert to more traditional theories of competitive harm in merger challenges;
  • reinstate early terminations of the HSR waiting period for deals that clearly do not have competitive issues; and
  • show greater willingness to accept consent agreements with structural remedies to fix mergers, rather than litigating to prohibit them.

A new EU Commissioner with a blended agenda

• The new EU Competition Commissioner, Teresa Ribera, took office on December 1, 2024. As Commissioner for a Clean, Just and Competitive Transition, her formal title (and past experience) emphasizes sustainability and tackling climate change. The new Commission is seeking to develop the interface between antitrust and sustainability as blended objectives, while also driving a program of regulatory simplification.
• Taking its cue from the Draghi report, the Commission published its Competitiveness Compass – a “roadmap to restore Europe’s dynamism and boost our economic growth” on January 29, setting out its key priorities to reignite growth in Europe. Regulatory simplification is one of the cross-sector enablers to drive greater innovation and competitiveness, making business in Europe easier (although the initial focus is not on antitrust regulation). Some Member States and business associations have called for lighter-touch merger control. Others have gone a step further and are pushing for more permissive merger control enforcement, giving more prominence to innovation and investment in or beyond strategic sectors, as part of an agenda to support growth and Europe as a global player. Some Member States do not appear to agree with this nor do smaller businesses or consumer organizations. Commissioner Ribera will need to navigate this challenging environment and find answers to conflicting expectations in the up-coming review of the horizontal merger guidelines.
• Pending that review, we may see increased pressure to allow the creation of the famed “European champions” in strategic sectors, or to block takeovers from outside the EU. The telecom sector could be one candidate where a deepening of the single market may help to make European consolidation acceptable from a competition policy perspective. Commissioner Ribera will need to devote her attention early on in her mandate to address the vexed question of how to set jurisdictional rules so as to catch mergers that are harmful to competition but which are below the current jurisdictional thresholds (see further point 4 below).
• More broadly, we expect a focused effort on streamlining and speeding up antitrust enforcement, particularly as regards exclusionary abuse cases in sectors with little competition. We also anticipate an ambitious simplification of state aid rules, notably in sectors of strategic importance for the greening of the EU economy, resilience and innovation. We expect a push to enable major EU and domestic funding projects in strategic areas and a review of public procurement rules to support industrial goals and enable European businesses to be preferred. Based on recent statements by Commissioners Ribera and Virkkunen (responsible for digital matters), we do not expect the Commission to heed the calls of the Trump administration to go easy on U.S. companies in the enforcement of EU digital regulation. Finally, other members of the new Commission have signaled a more geostrategic use of enforcement powers under foreign direct investment (FDI) regimes and the EU foreign subsidies regulation (FSR) to protect EU objectives such as boosting EU economic sovereignty and promoting European competitiveness.

UK CMA under intense political scrutiny to drive growth

• The UK government is on the warpath against regulators perceived to be using red tape to block investment and growth in the UK. The CMA ended 2024 with a number of public statements seeking to emphasize its pro-growth credentials, focusing on delivering the “four Ps” of proportionality, predictability, process and pace. It issued a draft Annual Plan with pro-growth actions ostensibly woven through its agenda and objectives. On the same day, it announced the establishment of the Growth and Investment Council, as part of its drive to engage better with businesses “to help identify opportunities for competition to unlock growth and investment.” Finally, it indicated in late 2024 that it was taking a new approach to behavioral remedies in merger cases and would consult on this in 2025.
• However, this was clearly not considered sufficient by the government. The CMA’s Chair, Marcus Bokkerink, was unexpectedly ousted by the government in January and replaced by Doug Gurr (formerly leader of Amazon’s UK and China businesses) as interim Chair. The UK Chancellor (finance minister) has made it clear that greater change is needed. The interim CMA Chair has highlighted the need for efficiency, with simple, rapid processes and good, clear decisions; expertise to ensure case teams are up to speed with sectors they are investigating; and engagement with the business community to address issues that disincentivize investment. In concrete terms, we expect significant revisions to the contents of the draft Annual Plan (due to be published by the end of March), and a new robust “Strategic Steer” from the government to shape the CMA’s approach alongside a Chair drawn from the business community with a hand firmly on the institutional wheel.
• It is not yet clear how process and procedure may change in individual cases (there is certainly scope to reduce the length and complexity of pre-notification), or whether changes will impact on the fundamentals of substantive analysis. The CMA signaled at the end of 2024 that it will be taking greater note of post-merger efficiencies, and a more creative and constructive approach to remedies earlier in the merger review process (see point 5 below). However, as a statutory body, the CMA is subject to an overarching duty to “promote competition, both within and outside the United Kingdom, for the benefit of consumers”.
• How far the government can expect the CMA to rebalance its approach in favor of businesses remains to be seen – certainly the interim Chair has already warned that it will “never move away from a belief in the power of competition and consumer protection” and described its north star as “a regulatory environment that encourages the greatest possible level of business investment, subject to respecting the absolute importance of healthy competition and strong consumer protection.” We therefore expect tangible change – certainly in the short- to mid-term – but that it will be within the parameters of discretion of the CMA, particularly with regard to procedure. Any structural change to the CMA such as the Phase 2 panel process and its functions would require legislation and so would take longer.

2. Notification obligations and/or thresholds are changing

New increased U.S. pre-merger filing obligations with expansive disclosure

• The effective date of overhauled Hart Scott-Rodino (HSR) filing rules is February 10, 2025. This means that the new rules will apply to all deals filed after 5 pm (U.S. Eastern time) on February 7, 2025. They impose significantly greater burdens on filers and will likely lengthen HSR filing preparation timelines dramatically (our client memo explains more). PE funds may bear the greatest burden given the complexity of typical transaction structures and the breadth of their portfolios. Several business groups have challenged the validity of the new rules. It is possible that the effective date could be postponed either by the court hearing that challenge, or by the FTC itself (our client memo explains more). However, the ability of the FTC to act may be hampered by its current 2-2 split between Democratic and Republican Commissioners. And at the time of writing, plaintiffs in the court challenge have not moved for interim relief.

New UK merger thresholds

• Revised UK merger control thresholds took effect on January 1, applicable to any transaction not completed before that date, unless the CMA’s Phase 1 review had already started. A new “hybrid test” is designed to catch low turnover/high value deals, as well as those with no substantive overlap, including vertical and conglomerate deals. Digital businesses designated with “strategic market status” will have to inform the CMA of smaller mergers. Our client memo explains more.

EU merger control jurisdiction unchanged … for now

• The EU merger regulation thresholds remain unchanged although the fall-out from the overturning of the Commission’s use of mechanisms to review below-threshold mergers will continue, including driving consideration of future reforms (see point 4 below). The risk of a below-threshold transaction being called in by a Member State and then referred up to the Commission has been cited by business groups as a brake on investment in the EU: it is clear that greater clarity about regulatory risk would be welcome in this area, particularly as ongoing litigation on this issue will take time to reach a resolution.

FDI notification obligations continue to proliferate in the EU

• Following the introduction of the Swedish FDI regime in 2024 and Irish FDI regime in early 2025, there will be only three EU Member States without active FDI regimes: Greece, Cyprus and Croatia. However, each has draft rules in the pipeline, so it will not be long before all 27 EU Member States have active FDI regimes. Regimes already in place are increasingly active. While the EU has draft legislation in train to generate more alignment between Member States’ regimes and between investigations into the same matter, this remains some way in the distance. Centralized European Commission decision-making in relation to FDI is a political red line for Member States. In addition to inwards investment control, the EU is monitoring market activity to establish whether outbound investment controls are needed, in particular to address the risk of technology and know-how leakage that is not adequately protected through the export controls regime.

Unclear whether the UK government will reduce NSIA red tape

• In the UK, despite significant pressure on regulators to reduce red tape and disincentives to investment, the government has not flagged any intention to address the proportionality and process of the National Security and Investment Act 2021 (NSIA) regime. This includes implementing reforms proposed by the last government, including the introduction of much-sought-after carve-outs for liquidators involved in financial restructurings, and technical notifications for straightforward internal re-organizations, with limited scope for national security risks to arise (if any). We have called for wider reforms to align the NSIA regime better with UK industrial strategy, including carving out purely UK domestic transactions from the notification regime and creating fast tracks investors from close UK allies. Our client memo reviews the statistics on NSIA enforcement to April 2024.

U.S. CFIUS regime likely to be a rare area of continuity

• Current CFIUS, outbound investment and export controls regimes reflect initiatives from the first Trump administration. Using national security authorities to address the multifaceted threat posed by China was then continued and expanded upon by the Biden administration. Accordingly, U.S. national security policy is likely to be a rare area of continuity in the years to come. Our client memo explains the highlights of the past year in relation to the CFIUS, outbound investment and export control regimes, with a further client memo offering an overview of the new outbound investment regime.

FSR disclosure obligations continue to place significant burdens on companies

• Since the EU’s foreign subsidies screening mechanism came into force in October 2023, the Commission has continued to insist on extensive information disclosure beyond reporting obligations, such as disclosing LP commitments in PE funds and even foreign financial contributions below the €1 million threshold. Calls for a simplified procedure currently remain unanswered, with officials indicating that any changes to the regime before the planned formal guidance is issued in early 2026 are highly unlikely.

3. Skies brightening for PE investors?

A fair(er) wind for PE deals in the U.S.?

• During the first Trump administration, antitrust enforcers had a neutral to benign view of private equity. For example, a since-rescinded Mergers Remedy Manual issued by the DOJ during the first Trump administration recognized that “in some cases a private equity purchaser may be [a] preferred” purchaser of divestiture assets. At the very least, according to the manual, the DOJ used “the same criteria to evaluate both strategic purchasers and purchasers that are funded by private equity or other investment firms.”
• In contrast, during the Biden administration, the agencies viewed private equity with skepticism. For example, former FTC Chair Lina Khan questioned whether private equity “business models may distort ordinary incentives in ways that strip productive capacity and may facilitate unfair methods of competition and consumer protection violations.” The current Merger Guidelines have a lengthy discussion of “roll-up” strategies. Several enforcement actions were directed at private equity firms, one of which, for example, resulted in a consent decree that imposed prior approval and prior notice provisions out of a concern that private equity firms “increasingly engage in roll-up strategies that allow them to accrue market power off the Commission’s radar” (i.e., that are not reportable under the HSR Act).
• An early indication that the new administration might be less inclined to single out private equity comes from then-Commissioner (now Chairman) Ferguson’s statement in an administrative action against private equity respondents in a matter challenging several acquisitions of anesthesiology practices in Texas. The then-FTC majority characterized this as a competitively problematic “antitrust roll-up scheme case” in line with the 2023 Merger Guidelines. Mr. Ferguson took issue. He explained in a concurring statement, joined by Commissioner Holyoak, that the majority “suggest that this case is extraordinary because it involves ‘private equity’ and ‘serial acquisitions,’ and hint at antipathy toward private equity.” His view, however, is that “this case is an ordinary application of the most elementary antitrust principles” and there is “no reason for the Commission to single out private equity for special treatment.”

An easier passage for roll-ups in the UK?

• The CMA recently addressed the perception that it is “interventionist” as regards PE deals, and, whether justified or not, acknowledged that this could have a chilling effect. It referred to the need to balance protecting future innovation and potential competition with ensuring the flow of entrepreneurial capital that could itself drive innovation. It also recognized the burden on businesses of a CMA merger investigation (which, given the voluntary nature of the UK regime, is rarely a rubber-stamping process). The CMA also recognized that internal roll-ups are important both for enabling smaller firms to scale and for investors to achieve an exit. Those statements may not have gone far enough, however. As noted above, the government has since replaced the CMA Chair in order to establish a new growth-driving approach to antitrust enforcement.
• We may therefore see a softening of the CMA’s focus on looking out for PE roll-ups. Just as important, though, is the issue of the regulatory burden of notification and review and the CMA will need to address the ever-lengthening duration of pre-notification discussions, which now average around three months before the eight week clock starts and can last for much longer.

BAU for EU merger clearance

• The mandatory notification requirements under the EU Merger Regulation will continue to mean regular EU filings for PE-backed transactions. In our experience, PE purchasers are not treated differently to other acquirers in the EU. As noted above, business organizations have flagged the regulatory burden of the merger regime on notifying parties and third parties – any reduction in red tape as part of the general EU drive for regulatory simplification would, of course, be welcomed. As noted, regulatory simplification is a core theme of the new Commission’s Competitiveness Compass driving for economic growth. While merger control is not part of the first simplification omnibus proposals, more generally there is a drive to consider speeding up antitrust procedures.

• Foreign investment controls around the EU are a more complex landscape to navigate, mainly because of the diversity and divergences between these regimes. As noted, future reforms to FDI within the EU may generate greater alignment and better coordination across the Member States, but this remains some way off.

4. Below-threshold mergers continue to vex in EU but other agencies have it covered

The challenge of “killer acquisitions”

• Concerns about preserving potential competition and innovation, combined with the focus on ensuring the contestability of digital and tech markets, have put a spotlight on ensuring enforcers can review the impact of high value acquisitions of early stage businesses with low turnover, which often fall below merger control thresholds. This has been a particular concern in the EU.

EU - new approaches and a thresholds review

• The ECJ’s landmark decision in Illumina/Grail in September 2024, stopped the Commission from accepting merger control jurisdiction from EU national competition authorities (NCAs) where their own domestic merger thresholds are not met (our client memo explains more). However, a possible loophole remains where NCAs use call-in powers to take jurisdiction over a below-threshold transaction. Italy’s use of call-in powers in order to refer the NVIDIA/Run:ai deal to the Commission is the first test of this approach. The Commission accepted jurisdiction and cleared the transaction without conditions in late 2024. However, NVIDIA has appealed the case, challenging the basis of the Commission’s jurisdiction. In parallel, the Commission will be reviewing EU legislative thresholds, although with no commitment to making changes. We do not expect any legislative change in 2025 and judgment in the NVIDIA appeal before the end of the year is unlikely. We expect the Commission to continue to accept jurisdiction based on NCAs exercising call-in powers in the meantime – although as noted, this can generate significant deal risk for parties which is difficult to quantify and may, therefore, operate as a disincentive to investment.

U.S. – no threshold-based restrictions on jurisdiction to review

• The concept of “killer acquisitions” as potentially harming competition has been the basis for several merger challenges and is included in the DOJ-FTC Merger Guidelines. The size of the transaction is no impediment to a full agency review. Certain deals are exempt from federal pre-merger notice and waiting requirements because they fall below the relevant reporting thresholds. However, the agencies have several means to alert them to non-reportable transactions, including routine surveillance of industry trade publications or expressions of concern from industry participants. They can challenge mergers they determine to be anticompetitive regardless of size (assuming there is an effect on interstate commerce). Furthermore, merger challenges can be brought both before and after a deal closes. State attorneys general are empowered to bring merger challenges in federal court. Individual states have antitrust laws that can be used to challenge anticompetitive mergers in state courts. Federal law also provides for a private right of action.

New UK “hybrid” threshold to capture killer acquisitions and non-horizontal mergers

• As noted, the UK has already taken steps to address the scope of its jurisdiction. The revised UK merger thresholds that took effect on January 1, 2025 include a “hybrid” threshold designed with “killer acquisitions” (and vertical or conglomerate mergers) in mind. A new information obligation for digital businesses designated as having significant market status will create transparency for below threshold acquisitions (although this will be a slow build – the first designation processes have just commenced). The regulatory risk in the UK for these deals, particularly in relation to AI and tech markets, is not focused on jurisdiction, but on the CMA’s very cautious approach – as the CMA’s Chief Executive recently recognized, some perceive the CMA case teams to be looking for problems.

• In particular, pre-notification scrutiny has become steadily more drawn out in relation to both jurisdiction and substantive issues before a decision is taken on whether to start the statutory clock to review a deal formally. The scrutiny applied to various AI partnerships and investments have been notable examples of this from the CMA over the last year. Indeed, some have been under scrutiny for over a year without a decision on jurisdiction being announced, and others have involved detailed disclosure and review of internal documents of the parties – despite the fact that the CMA ultimately concluded that it did not have jurisdiction (under the pre-2025 thresholds).

5. Deal parties may encounter changed and diverging approaches to remedies

Reinstated openness to structural merger remedies in the U.S.

• Until recently, merger remedies in the form of consent decrees requiring divestitures or conduct restrictions were commonplace. In the first Trump administration, the DOJ instituted a policy strongly disfavoring conduct or behavioral remedies. To be acceptable to the DOJ, a remedy had to be structural—that is, involve business unit divestiture. During the Biden administration, the DOJ did not accept formal remedies prior to commencing litigation. Instead, the DOJ sought full-stop injunctions for deals they determined to be anticompetitive. We anticipate that the current Trump administration will revert to the prior approach of accepting structural remedies where they address competitive concerns.

No change for merger remedies in the EU?

• The Commission prohibits a merger outright only where no suitable remedy can be identified. There is a strong preference for structural remedies that create a permanent solution requiring minimal monitoring or future enforcement. There have been no signs that this approach will change under the new Commissioner – indeed, Commission officials have expressed disapproval of the UK CMA’s recent acceptance of investment commitments in Vodafone/Hutchison (discussed below) as risking customer harm, due to insufficient competition at the national level (the Commission plans instead to use regulatory change to enable telecom sector consolidation within Member States). However, as discussed in point 1 above, we expect a review of the horizontal merger guidelines, in particular to ensure support for innovation and intensity of investment in strategic sectors, which may play into remedy design. It remains to be seen whether the Commission will face political pressure to soften its stance in strategic sectors.

CMA’s new creative and collaborative approach to merger remedies

• Even before the recent replacement of the CMA Chair, the CMA had signaled a new openness to exploring behavioral remedies, including those which lock in rivalry-enhancing efficiencies and preserve relevant customer benefits. Recent statistics show a tangible uptick in the number of Phase 2 cases closed with behavioral remedies. Most notable was the acceptance in late 2024 of novel behavioral investment-focused remedies in Vodafone/Hutchison. Similar transactions in mobile telecoms markets have been prohibited; indeed the last major UK consolidation was blocked by the European Commission with the strong support of the CMA, due to concerns over market concentration. However, the CMA cleared the deal subject to behavioral remedies focused on delivering an eight-year investment plan in network upgrades, together with price protections for retail and wholesale customers. Greater openness to creative remedies could signal a tangibly more favorable deal environment in the UK than in recent years.

FDI remedies remain nation-specific

• Opacity remains the default for FDI regimes, in contrast to typically well documented and reasoned remedies under merger control reviews. Coordination between Member States is provided for within the EU by the FDI screening regulation but cannot be assumed or expected beyond the EU – by definition, domestic concerns and each government’s priorities shape FDI and national security decisions. Our recent experience in relation to the UK government’s clearance of EP Corporate Group/International Distribution Services (owner of Royal Mail) in the UK has been that the new government took a constructive approach and was open to discussion to allow the parties to understand concerns in order to shape economic commitments – acquirers will welcome this. On national security aspects, however, there is very limited engagement with those responsible for FDI enforcement to discuss concerns or remedies.

EU FSR remedies showing signs of flexibility

• The EU FSR regime is now a little over a year old (our client memo reports on the first year). It remains fairly opaque, although guidance has been issued and the Commission now publishes the fact of notifications. Clearance after the initial 25 working day review period/Phase 1 occurs by way of a confirmation letter from the Commission that the review has ended (which is not published). There is no reasoned decision. The Commission has signaled a more geostrategic use of this regime to protect EU businesses and drive EU objectives, although this already appears to be the case: with one exception, all known enforcement action to date by the Commission has targeted Chinese companies. The exception concerned the acquisition by Emirates-backed e& of telecoms businesses in the EU. This was the only in-depth/Phase 2 FSR case to date where remedies have been imposed. The Commission took a less absolute approach to remedying subsidies judged to be distorting than it does under the EU’s internal State aid regime, accepting behavioral remedies to remove the impact of foreign subsidies from the EU, rather than insisting they were removed outright (our client memo discusses the decision in more detail).

Conclusion

As geopolitical tensions continue and new administrations take office, 2025 is set to be a year of tensions and reckonings amongst competition, FDI and FSR agencies around the world. Despite some positive signs in the UK and EU, the regulatory burden faced by deal-makers shows no signs of reducing – and will significantly increase in the US if the new HSR form comes into effect – making regulatory preparedness and flexibility more important than ever before when looking to execute deals in an increasingly competitive marketplace.

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