Antitrust Angst

February 27, 2025

4 minute read

by Shannon L. Saccocia, CFA, Chief Investment Officer—Private Wealth, Neuberger Berman

Does the retention of the Biden-era M&A guidelines raise more doubts about the new U.S. administration’s pro-business agenda?

At first glance, 2025 isn’t following the script.

For sure, U.S. and European equity markets keep nudging to new all-time highs. But uncertainty among U.S. small businesses rose quite sharply in January. Merger and acquisition (M&A) activity was disappointingly muted, too, after dealmaking prospects had been talked up on the back of the Republican election victory. And that was before last week’s confirmation that the Biden era’s strict guidelines for reviewing M&A proposals will be staying in place.

Is corporate America starting to question the pro-business credentials of the new government?

Rapid-Fire Change

Let’s take the subject of business uncertainty first.

The Uncertainty Index published by the National Federation of Independent Business (NFIB) jumped by a substantial 14 points, to 100, after January’s survey. That’s the third-highest level on record. And the uncertainty is exerting a real effect: The survey also revealed that the number of respondents planning capital spending over the next six months had dropped by seven percentage points to 20%.

That should not be too surprising, however. A new government is always a cause of uncertainty, and the forceful nature of this new government’s proposals makes things particularly uncertain.

The real question is how business perceives the government’s overall longer-term bias. The NFIB’s Optimism Index can tell us about that, and it is still close to its highest level in almost five years. That optimism is what we see feeding into equity market prices.

Rapid-fire change inevitably complicates decision-making. But for the business community, looser regulation is a bigger prize than calm continuity—and it was always likely to be a story for the second half of 2025, not the first.

Level the Playing Field

But what about the news from the Federal Trade Commission (FTC)? Does that throw the deregulation story into doubt?

The new FTC chair, Andrew Ferguson, emphasized the advantages of “stability” when announcing the decision to retain the Biden-era M&A guidelines last week. “The wholesale rescission and reworking of guidelines is time-consuming and expensive,” he reasoned. “We have limited resources to patrol the beat and constant turnover undermines agency credibility.”

Not to put too fine a point on it, those arguments haven’t prevailed at many other regulatory agencies and government departments, which might suggest the tough antitrust stance is aligned with the new team in the White House. Vice President JD Vance is on record with his approval of Lina Khan, the zealous antitruster and perceived antagonist of Wall Street dealmakers who previously served as FTC chair.

That said, it is likely that the scope and implications of the guidelines will be interpreted more tightly under the FTC’s new leadership.

As drafted, they say that mergers should be blocked if they increase concentration in an already highly concentrated market, eliminate a potential entrant to a concentrated market, eliminate substantial competition or raise the risk of coordination, create a firm that can limit access to its rivals’ products and services, or tend to create a monopoly. The guidelines also urge agencies to consider the distinctive characteristics of multisided platforms when assessing platform-related merger proposals.

On the face of it, they appear most concerned with proposed mergers of very large companies, and especially large technology and platform companies. If the Vance wing of the new administration sees deregulation as a way to level the playing field for smaller, upstart competitors, the same M&A guidelines, when less expansively applied, could support—rather than contradict—that agenda.

Support

Therefore, while a return to 1980s-style megamergers may not be in the cards, we still anticipate a revival in dealmaking this year. The FTC’s news may appear at first blush to be bad for Wall Street fees and bonuses, but it could be good for Main Street, and good for private companies and listed small- and mid-caps with disruptive ideas—even if they do want to synergize.

So, yes, U.S. small business uncertainty is elevated in the face of tariff threats (which continued to multiply last week), the precarity of the immigrant workforce and the new administration’s aggressive approach to discretionary government spending. However, broadening equity market performance and small business optimism suggest that most investors and executives continue to anticipate support from the Trump administration, once the initial flurry of activity dies down.

What to Watch For

- Tuesday 2/25:
  - S&P Case-Shiller Home Price Index
  - U.S. Consumer Confidence
- Wednesday 2/26:
  - U.S. New Home Sales
- Thursday 2/27:
  - U.S. Durable Goods Orders (Preliminary)
  - U.S. Q4 GDP (Second Preliminary)
- Friday 2/28:
  - U.S. Personal Income and Outlays