Two federal agencies review most large mergers before they close: the Federal Trade Commission and the Justice Department's Antitrust Division. A company planning a big acquisition must notify the government first under the Hart-Scott-Rodino Act, the 1976 amendment to the Clayton Act. The agencies then decide whether to clear the deal, negotiate fixes, or sue to block it.
The popular assumption is that merger review is a rubber stamp — deals get signed, then someone complains. The mechanics run the other way. The legal test is written into Section 7 of the Clayton Act, which the FTC says prohibits mergers where the effect "may be substantially to lessen competition, or to tend to create a monopoly." The standard is preventive: a deal can be stopped before any harm shows up in prices.
This article walks through the filing, the investigation, and the choice each agency faces at the end. It also covers which agency takes which case, and what timelines companies actually face.
Which agency reviews a merger, and why does it matter?
The FTC and the DOJ's Antitrust Division share jurisdiction over mergers. They clear cases between themselves so one agency leads each review. According to Investopedia's overview of antitrust law, the two agencies may also coordinate with other regulators where a merger raises public-interest questions beyond pure competition.
The split follows sector lines. The DOJ holds sole antitrust jurisdiction in certain industries, including telecommunications, banks, railroads, and airlines. The FTC tends to take cases in parts of the economy where consumer spending is high — healthcare, drugs, food, energy, and technology, including digital communications.
Which agency leads matters less than people assume, because both apply the same core statutes. But the remedies differ. The FTC typically proceeds through its own administrative process and can seek a federal court injunction. The DOJ sues in federal court and is the only one of the two that can bring criminal antitrust cases.
What triggers a review, and what do the agencies look for?
Most reviews start with a mandatory filing. The Hart-Scott-Rodino Act requires companies planning large mergers or acquisitions to notify the government in advance, before the deal closes. The FTC's own guidance lists other triggers too: consumer or business correspondence, congressional inquiries, or reporting on consumer and economic subjects can spark an investigation.
Once a deal is on the desk, staff economists and lawyers study whether combining the firms would lessen competition in a relevant market. The concern is not limited to consumers. The Justice Department's guidance notes that an illegal merger can harm consumers through higher prices or fewer choices, and can also harm workers through lower wages or fewer employment options.
A common screening tool is market concentration. Regulators use the Herfindahl-Hirschman Index, which squares the market share of each firm and adds the results. As one industry explainer summarizes it, a market below 1,500 on the index is generally treated as competitive, 1,500 to 2,500 as moderately concentrated, and above 2,500 as highly concentrated — a level that raises potential antitrust concern. The index is a screen, not a verdict; agencies weigh other evidence alongside it. We covered a connected angle in How Corporate Share Buybacks Work — and Who Benefits.
What happens during a second request?
If the initial filing raises questions, the reviewing agency can issue a "second request" — a demand for far more documents, data, and sworn testimony from both companies. This is the step that stretches timelines. Complying can take months, because the agencies ask for internal analyses, pricing data, and market studies.
During this period the companies generally cannot close the deal. The waiting period gives the agency time to build a record before deciding whether to challenge the merger in court.
Not every deal gets this treatment. Many transactions clear after the initial waiting period expires with no action. Others are resolved through negotiations, where the parties agree to conditions — often divesting a business unit — that address the agency's competition concerns. If no resolution is found, the FTC can issue an administrative complaint or seek injunctive relief in federal court, per the agency's own description of its process.
How does an agency decide to challenge a deal?
The decision turns on the Clayton Act test: whether the merger, in the agencies' judgment, may substantially lessen competition. The antitrust statutes describe unlawful mergers in general terms, and the FTC notes that courts decide which ones are illegal based on the facts of each case. That means the agency's prediction has to survive a judge's review, which shapes what it will accept in settlement.
When an agency believes a law has been violated, it will try to stop the practice or resolve the anticompetitive portion of a proposed merger. Failing that, litigation follows. The agency does not need to prove harm already occurred — the statute reaches deals that merely tend toward monopoly.
Recent enforcement shows the pattern. In 2023, the DOJ and eight states sued Alphabet's Google over its digital advertising business, alleging illegal monopolization. The complaint sought divestiture of parts of the advertising business. This reporting on the antitrust case against Google documents how the litigation progressed, and the company was found liable on two counts in April 2025 relating to publisher ad server and ad exchange markets, with remedies still to be decided at a later hearing. The case is about conduct rather than a merger, but it illustrates the same enforcement toolkit: a market-definition fight, a liability ruling, and a remedies phase.
What timelines and penalties do companies face?
The practical timeline has three phases. First, the HSR waiting period after filing, during which the deal cannot close. Second, if a second request issues, an extended compliance and investigation phase measured in months. Third, if the agency sues, litigation that can run well past the parties' planned closing date — unless the parties settle on remedies first.
Companies that ignore the process face real exposure. Violating the Sherman Act carries criminal penalties of up to $100 million for a corporation and $1 million for an individual, plus up to 10 years in prison, and the maximum fine can rise to twice the gain from the illegal conduct or twice the victims' losses if either figure exceeds $100 million. Criminal prosecutions are typically reserved for clear violations such as price fixing or bid rigging, not merger timing violations, but the broader point holds: the antitrust statutes carry both civil and criminal teeth.
Private plaintiffs add another layer. The Clayton Act lets private parties sue for triple damages when conduct violates the Sherman or Clayton Acts, and to obtain court orders blocking anticompetitive practices. A cleared merger does not erase that exposure if competition problems emerge later.
What this means for companies and markets
Our analysis of the process: merger review is front-loaded. The expensive decisions — how much data to prepare, whether to offer divestitures early, whether to litigate — come before closing, not after. Companies that treat the HSR filing as a formality tend to meet the second request unprepared. Companies that map their market shares and competitive overlaps before filing can anticipate which agency will take the case and what remedies it will want.
For the market, the system's design reflects a judgment made over a century of antitrust law. As the FTC puts it, the objective has stayed constant: to protect the process of competition so businesses have strong incentives to operate efficiently, keep prices down, and keep quality up. The review machinery — filing, waiting period, second request, challenge or clearance — is how that judgment gets applied one deal at a time. Readers tracking how other policy levers affect corporate costs can see a parallel in How Tariffs Work And Who Actually Pays Them, where the burden of a policy also lands unevenly across firms.
What remains unsettled is how aggressively the agencies define markets in fast-moving sectors like digital advertising and technology, where the Google litigation is still in its remedies phase. The statutes have not changed; the interpretation of them continues to move case by case.
