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Temporary Merger and Acquisition (M&A) Ban?

Senator Elizabeth Warren (D-Mass.) and Representative Alexandria Ocasio-Cortez (D-NY- 14) plan to introduce legislation that will temporarily ban large mergers and acquisitions (M&A), the duo says. However, critics say the legislation risks blocking proposed M&A deals that make strategic sense.

The forthcoming proposal, known as the The Pandemic Anti-Monopoly Act, would put a moratorium on M&A deals that involve:

  • Companies with over $100 million in revenue or financial institutions with over $100 million in market capitalization;
  • Private equity companies, hedge funds, or companies that are majority-owned by a private equity company or hedge fund;
  • Companies with an exclusive patent that impacts the crisis, like personal protective equipment; and
  • Transactions that must otherwise be reported to the FTC under current law.

The M&A pause would end once the Federal Trade Commission (FTC) unanimously determines that small businesses, workers, and consumers are no longer under severe financial distress, the legislation’s backers say.

FTC Weighs In

Still, FTC Commissioner Noah Phillips told CNBC that shutting down mergers entirely “doesn’t make a lot of sense.” Here’s his interview:

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