... [+]Many people are curious about what is happening with the PGA Tour and LIV Golf since the parties first announced their proposed, so-called “” on June 6 of this year. But, because government investigations are typically confidential and the parties involved have an incentive to stay mum, nobody can be certain where things are presently. The best one can do is rely on typical business behavior and a basic understanding of federal antitrust laws to draw some presumptions.
Typically, when two businesses announce a planned merger, the merger does not commence immediately. The Hart-Scott-Rodino Act of 1976 requires companies of greater than a certain size, prior to commencing a merger, to submit certain paperwork and documents to the federal antitrust agencies for review.
For purposes of clarity, under antitrust laws, the term “merger” includes a wide range of technically different business transactions, including transactions that are known in the business world as both “mergers” and as “acquisitions.” Thus, despite some more recent statements from PGA Tour officials, the form of the new company that would be created if this transaction moves forward should make little legal difference in the antitrust process.
With that said, not all mergers that undergo agency scrutiny ultimately clear regulatory hurdles . Thus, for the PGA Tour and LIV Golf, they should be presently in a waiting game. That, of course, does not mean that both parties are waiting for agency review equally patiently. When companies agree to partake in a merger, one of the many terms they need to agree upon is how to allocate the risk if the transaction does not clear regulatory hurdles. Oftentimes, parties agree to split the costs 50/50; however, that is not always the case.