How the FTC and DOJ Challenge and Block Mergers
Most deals clear quietly, but some end in court or with forced sales of businesses. Here is how a federal merger challenge unfolds and what recent cases show about the outcomes.
The FTC and the Justice Department’s Antitrust Division challenge a merger by investigating it during the HSR waiting period, then either settling, usually by requiring sales of overlapping businesses, or suing in federal court to stop it. The legal test, in Section 7 of the Clayton Act, is whether the deal may substantially lessen competition.
Only a small share of reported deals draw a challenge. Those that do can take a year or more to resolve, which is why antitrust risk is usually the biggest open question for a large merger.
Which agency reviews a merger?
Both agencies enforce the merger laws, and they split each deal between them through a process called clearance. Which agency takes a case usually depends on industry experience: the FTC often reviews hospitals, pharmaceuticals, retail and consumer goods, and the DOJ often reviews telecom, airlines, banking and defense.
The process starts with the HSR filing. Our guide to the Hart-Scott-Rodino filing covers thresholds, fees and the waiting period.
What happens during a merger investigation?
A merger investigation usually moves through these stages:
- Initial review. Staff read the HSR filing and public information during the 30-day waiting period (15 for a cash tender offer) and may talk to customers and competitors.
- Second request. If concerns remain, the agency demands documents and data, which extends the waiting period until 30 days after the companies substantially comply.
- Negotiation. The companies present economic analysis and may offer to sell businesses where the two overlap.
- Decision. The agency closes the investigation, accepts a settlement or files a lawsuit.
Companies sometimes agree with the agency to delay closing beyond the statutory period, through a timing agreement, so the review can finish without a lawsuit.
How do settlements with divestitures work?
A settlement lets the deal close if the companies sell assets or accept conditions that fix the competition problem. At the DOJ it takes the form of a consent decree that a federal judge must approve under the Tunney Act after a public comment period. At the FTC it is a consent order, also subject to public comment.
Two recent examples:
- HPE and Juniper Networks. The DOJ sued to block HPE’s purchase of Juniper in January 2025. On June 28, 2025 it announced a settlement requiring HPE to divest its global Instant On campus and branch wireless business and to auction a perpetual license to the source code of Juniper’s AI Ops for Mist software to competitors (DOJ press release). The deal closed, and the court held a Tunney Act hearing on the settlement on March 23, 2026.
- Synopsys and Ansys. The FTC required both companies to sell certain software tools to Keysight Technologies before the deal closed in July 2025.
How does a lawsuit to block a merger work?
If no settlement is reached, the agency sues. The two agencies use slightly different routes:
| DOJ | FTC | |
|---|---|---|
| Where it sues | Federal district court | Federal district court for a preliminary injunction, plus its own administrative trial on the merits |
| What it asks for | A permanent injunction blocking the deal | An order pausing the deal until the administrative case is decided |
| Who decides | A federal judge, with appeals to a circuit court | A federal judge on the injunction; an administrative law judge and then the Commission on the merits, with appeal to a circuit court |
In practice, the preliminary injunction usually decides an FTC case. Few companies wait through a full administrative trial after losing the injunction.
Recent outcomes show the range:
- Kroger and Albertsons. A federal court in Oregon granted the FTC a preliminary injunction on December 10, 2024 (FTC statement). The companies ended the merger agreement that week.
- Tapestry and Capri. The FTC sued in April 2024, a federal court granted a preliminary injunction on October 24, 2024, and the companies abandoned the deal on November 14, 2024.
- Microsoft and Activision Blizzard. A federal court denied the FTC’s request for a preliminary injunction in July 2023, and the deal closed in October 2023.
What is an FTC administrative trial?
The FTC can try a merger case before its own administrative law judge, and the full Commission then issues a decision that companies can appeal to a federal circuit court. The process can also be used after a deal has closed.
Illumina’s purchase of Grail went this way. The deal closed during the FTC’s challenge, the Commission ordered Illumina to divest Grail, and after the Fifth Circuit ruled on the appeal in December 2023, Illumina completed the divestiture in June 2024.
What happens to shareholders and employees when a deal is blocked?
When a deal is blocked or abandoned, the merger agreement is terminated and each company carries on independently. Target shareholders keep their shares, but the share price is no longer tied to the offer, a pattern explained in our guide to why a stock trades below the deal price.
Many merger agreements require the buyer to pay the target a reverse termination fee if antitrust approval fails. That money goes to the company, not to individual shareholders. Our guide to breakup fees and go-shops explains how those clauses work. Retention bonuses and severance promised for the merger generally depend on the deal closing; employees should check the terms in their own agreements with HR.
Bottom line
The signals that a deal is in antitrust trouble usually appear in this order: a pull-and-refile of the HSR filing, a second request disclosed in an 8-K or proxy, an extended outside date, and then a lawsuit or a settlement announcement from the agency. Agency press releases and court dockets are the primary sources for each step; company statements describe the same events in the most favorable terms.
FAQ
Can the FTC or DOJ undo a merger after it closes?
Yes. HSR clearance does not protect a deal from later challenge, and the agencies have sued to unwind completed acquisitions, as the FTC did with Illumina and Grail.
Do state attorneys general review mergers too?
Yes. States can sue under federal and state antitrust laws, and they often join federal cases. They can also comment on or challenge federal settlements, as several did in the HPE and Juniper Tunney Act review.
How long does a merger challenge take?
A second request investigation often runs several months, and a preliminary injunction case typically adds several more. Kroger and Albertsons announced their deal in October 2022, and the court blocked it in December 2024.
Does the government always win when it sues?
No. Courts have denied injunctions in some cases, such as Microsoft and Activision Blizzard in 2023, and the deals then closed. Outcomes depend on the evidence about each market.
