Full Definition of Mergers and Acquisitions Law

Mergers and Acquisitions embody the area of law that involves the acquisition of or merging of a corporation of one or more others and/or any of various methods of combining two or more organizations.

Merger and acquisitions are mainly governed by federal law and reviewed by the Department of Justice (DOJ) and the Federal Trade Commission (FTC) before being consummated. Section 7 of the Clayton Act grants these government agencies the legal authority to review mergers, set the rules on how the parties report their transactions to the government and how the transactions are evaluated. Section 7 of the Act prohibits mergers and acquisitions that may substantially lessen competition or potentially create a monopoly.

The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR) grants the DOJ and FTC the authority to evaluate the reporting of the mergers and acquisitions. Under the HSR Act the merging parties cannot acquire voting securities or assets without first filing a Pre-merger Notification and Report Form (typically, if the transaction meets specific size-of-person and size-of-transaction tests), and they have to wait until the appropriate waiting period expires (30 days – 15 days for cash tender offers). The HSR Act also has rules on how the parties report the transactions under the framework of the Horizontal Merger Guidelines, which provides rules on how mergers are evaluated for potential anticompetitive effect, product market, geographic market, market concentration, entry analysis and other factors.