Applied Materials, Inc. (NASDAQ:AMAT) and Tokyo Electron Limited have called off their planned merger to create a giant supplier of chip maker equipment. The reason for the cancellation of deal was objection by Justice Department. In the last two years, there have been many attempts by major companies to acquire their competitors. However, the failure of Applied Material deal shows that U.S. antitrust enforcers remain of the lookout for risk of market concentration.
Gary Dickerson, the CEO of Applied Materials stated that based on the DOJ position, there was no realistic chance of merger of his company and Tokyo Electron. The failed deal had been pending since 2013. The news comes just days after Comcast Corporation (NASDAQ:CMCSA) backed off from its bid to buy Time Warner Cable Inc (NYSE:TWC) due to opposition from te Justice Department.
In the case of Comcast, the government regulators feared that the combined power of the firms in broadband would impede the development and expansion of online video offerings.
In the case of Applied Materials and Tokyo Electron, the regulators feared that the merger would eliminate the competition between the two firms. In a statement, Acting Assistant Attorney General RenataHesse said that the concessions offered would not have replaced the competition eliminated by the merger.
Companies in the last two years have been aggressive in attempting mergers that they did not try before. This is due to a perception that the current crop of enforces are willing to allow controversial deals to happen. The Federal Trade Co, recently allowed real estate portal Zillow Group Inc (NASDAQ:Z) and TruliaInc (NYSE:TRLA) to combine.
However, after the cancellation of Applied Material and Tokyo Electron deal, the message being sent is that the regulators are alive and well and are making a pushback. At the American Bar Association Antitrust conference, Justice Department officials said that some companies were pushing the envelope too far.
