The top U.S. antitrust enforcer has identified acquihires - deals that funnel technology and staff to large firms without a traditional purchase of the target company - as a practice that can be used to avoid formal merger scrutiny.
Acting Assistant Attorney General Omeed Assefi told Reuters that such arrangements, increasingly seen among major technology companies, register as a "red flag" for enforcers when they appear designed to circumvent the merger review process.
Acquihires typically involve sizeable payments from established technology firms to promising startups, with the objective of onboarding talent and technology rather than completing a conventional acquisition. Assefi said the structure of these deals can allow a company to "essentially absorb other firms without going through that formal merger review process."
He pointed to a recent example in which Nvidia in December agreed to license chip technology from startup Groq and hire Groq's chief executive, while not buying the company outright. The arrangement demonstrates the kind of transaction Assefi described as potentially avoiding merger reporting and review obligations.
When companies pursue acquisitions, federal antitrust authorities receive detailed information about the proposed transaction so potential competitive concerns can be assessed. Assefi said he prefers that firms participate in the established review procedures rather than attempt alternate deal structures to bypass them. "When I see conduct that appears aimed to circumvent that process, as a litigator, as an enforcer, that’s more of a red flag to me than if you had just participated and complied" with the review process, he said.
Assefi added that willingness to engage in the merger review process enables the Department of Justice to quickly identify and resolve competitive issues or, if none exist, conclude its review promptly and allow deals to close.
The acting antitrust chief declined to comment on ongoing matters or to discuss specific companies beyond the examples he referenced.
Summary
DOJ antitrust leadership is scrutinizing acquihires as potential mechanisms to evade merger review. Officials urge companies to submit transactions for formal review so regulators can address concerns or clear deals expeditiously.