Why Fast, Predictable Merger Timelines Matter for Small Businesses
Unpredictable and lengthy antitrust merger review timelines in the United States have caused serious harm to small and medium-sized artificial intelligence (AI) firms. This uncertainty and undue delay chill innovation, deter investment, and undermine the primary exit path for startups, whether or not a deal is ultimately approved or blocked. In the AI market, where competitive advantages are fleeting, the speed and predictability of merger review are core determinants of competitive success. This paper analyzes the widespread costs of delays and uncertainty in the merger review process and outlines the imperative to create a faster, more predictable, and more transparent merger review process calibrated to the realities of the AI era.
Recommendations
Rewrite merger enforcement policy guidelines. Withdraw the 2023 guidelines, which cite older caselaw to unnecessarily treat procompetitive mergers as presumptively illegal. Issue updated guidelines that reinforce the current state of federal antitrust law as applied to vertical and horizontal mergers, clearly treating procompetitive mergers in dynamic markets as legal and unlikely to draw enforcement challenges.
Set clear timelines for enforcer review of mergers. Congress should introduce statutory deadlines for the completion of Second Requests and limit the use of procedural tools that create indefinite delays. Legislation should make permanent the practice of issuing early termination letters and prohibit enforcers from dragging out inquiries indefinitely. This would provide the certainty needed for parties to manage transaction risk and would prevent the process from being used as a de facto veto. The FTC and DoJ’s declaration in their recent premerger notification form RFI that they seek to “reduce the burden for non-problematic transactions,” is a positive pronouncement, but voluntary reforms are insufficient without enforceable deadlines.
Incorporate the costs of delay into enforcement analysis. The agencies should be required to formally consider and weigh the economic costs of prolonged regulatory uncertainty, including lost innovation, chilled investment, and the risk of firm failure, when deciding to extend a review or challenge a transaction. The Eastern District of Texas’s vacatur of the 2025 HSR rules was grounded in part on the FTC’s failure to demonstrate that the benefits of its new requirements outweighed the significant compliance costs, a principle that should be applied more broadly to the merger review process as a whole.
Conclusion
In the AI era, a slow, unpredictable merger review process coupled with litigation programs designed to deter procompetitive mergers has inflicted demonstrated harms on dynamic markets. Lengthening timelines, escalating procedural burdens, and aggressive enforcement postures significantly worsen avenues for exit and access to capital for startups in AI markets. The costs of this approach fall hardest on these startups and the venture capital investors who fund them, short-circuiting the investment cycles that are essential to the innovation ecosystem and the consumers who benefit from it.
The United States is not operating in a vacuum. Competitor nations, from the United Kingdom to the European Union to the Asia-Pacific region, are actively reforming their merger review processes ostensibly for the better but remain unable to shake countervailing interests like protectionism and populism. This leaves American merger enforcement policy with a golden opportunity to unshackle itself from recent missteps. The United States should be a global hub for AI development.
The vacatur of the burdensome 2025 HSR form, the FTC’s move away from its two-prong administrative proceeding approach, the re-institution of early termination letters, and the DoJ’s emphasis on providing clear, stable guidance to the business community all point toward a recognition that procedural reform is necessary. Policymakers must build upon these developments with concrete legislative and administrative action. By reinforcing the second Trump Administration’s partial shift away from merger deterrence, Congress and the Executive Branch can help ensure that AI startups have a fighting chance and consumers benefit from the investment cycle that powers dynamic AI markets.