Nissan-Honda Merger: An Example of the Complexities Involved in Cross-Border Mergers
By Taryn Pastore; Photo Credit: Nissan
The Nissan-Honda merger highlights global anti-trust concerns and the complex procedures involved in a multi-national merger.
Nissan’s financial situation has steadily been on the decline; its market share dropped 1.9% in the last five years and sales decreased by 26% in the last ten.[1] Nissan has been selling only about half the amount of cars as other car dealerships.[2] In order to save the company in the short term, Nissan has created a plan to save $3 billion in costs by cutting its workforce, slashing its production capacity, and selling shares to Mitsubishi.[3] These cost cutting measures are only supposed to work for the short term while Nissan creates other plans like making more popular products, more fully investing in the EV market, or merging with another car company like Honda.[4]
In December, Nissan declared its intention to merge with and into Honda.[5] Both companies are worried about their ability to keep up with their competition in a market moving towards EVs.[6] Currently, Honda is doing better than Nissan, financial-wise, but both companies do not offer much in the ways of EVs or hybrid vehicles.[7] By merging, these two companies hope to boost their competitiveness and gain more versatility with EVs and hybrids.[8]
With a merger as large and global as this one will be, it raises several questions about anti-trust and anti-trust procedure in international mergers. The larger the two companies are, the more difficult it is for a merger to be approved.[9] Essentially, when two international companies merge, every country that may be competitively affected by the merger potentially needs to be notified.[10] “Potentially” because each country’s anti-trust laws are different, and the merging companies need to comply with all of them or else the transaction could be stopped completely.[11] Once the necessary countries are notified of the merging companies intent to merge, those countries, if in accordance with their internal laws, conduct their investigations to determine if the transaction would violate any anti-trust policies.[12] Each country comes with its own complexities. For example, the United States is authorized through the Hart-Scott-Rodino Antitrust Act to conduct a “second request” of information from the companies involved in the merger.[13] The second request is much more invasive than the first request as the first request only pertains to public records of the companies.[14] The second request is for any additional information that is not public record that would inform the FTC (Federal Trade Commission) of any anti-trust concerns.[15] The second request is limited by a review board created by the FTC and the DOJ (Department of Justice), but the second request imposes more burden on the merging company, both time-wise (as the process has now been extended) and manpower-wise (as their employees must gather all the requested information).[16] This process is difficult and time consuming for complying with just one country’s policies; imagine complying with several dozen in the same period of time.
Even if the merging companies comply completely with the procedures and requests from all the involved countries, the merger can still be blocked if even one country declares it to have anti-competitive effects.[17] If a complete merger is blocked, the merging companies still have options like negotiating with the countries that denied the merger, deciding to merge only in the countries it was approved in, or litigation of the denial.[18]
Because a cross-border merger is so complex, it is especially important for merging companies to have all their ducks in a row, including a convincing argument that the merger will not stifle competition.
Nissan and Honda need to show that either the merger itself will not stifle competition or that the market is shifting in a way that Nissan and Honda will not be competitive without this merger, and thus not stifle competition.[19] If Nissan and Honda can sufficiently show that Nissan’s outlook is so troubled that the merger is necessary for Nissan to remain competitive, it may be enough to convince anti-trust agencies that the merger won’t stifle competition.[20] If Nissan and Honda have sufficient evidence, they can also argue that the car market is shifting towards EVs and because both Nissan and Honda don’t have a robust history with EVs, this merger is necessary for both Nissan and Honda to remain competitive in the car market.[21]
Regardless of the strength of Nissan and Honda’s arguments against the merger’s anti-competitive effects, if the process is not completed in the right way at the right time, they may not even get the chance to present their case.[22]
Taryn Pastore is a second-year law student from Mt. Juliet, Tennessee. After graduation, she will be moving to Washington D.C. to focus on corporate law.
[1] James Ochoa, Nissan’s financial nightmare is making its US dealers lose sleep, TheStreet (Dec. 4, 2024), https://www.thestreet.com/automotive/nissans-financial-nightmare-is-making-its-us-dealers-lose-sleep.
[2] Id.
[3] Id.
[4] See id; Phillip Gelderblom, How The Nissan-Honda Merger Transpired, TOPSPEED (Jan. 25, 2025), https://www.topspeed.com/nissan-honda-merger/.
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] See Michael Byowitz et al., International merger control: careful planning and execution are a must to avoid delay in transaction consummation, Thomas Reuters (Aug. 6, 2003), https://us.practicallaw.thomsonreuters.com/7-102-4412.
[10] Id.
[11] Id.
[12] Id.
[13] Id; 15 U.S.C.A. § 18a (2000).
[14] Byowitz, supra, note 9; 15 U.S.C.A. § 18a.
[15] Byowitz, supra, note 9; 15 U.S.C.A. § 18a.
[16] See Byowitz, supra, note 9; 15 U.S.C.A. § 18a.
[17] See Brian N. Hartnett et al., Merger Control in International M&A, Squire Patton Boggs (Oct. 2018), https://www.squirepattonboggs.com/~/media/files/insights/publications/2018/10/merger-control-around-the-globe/competition–antitrust-merger-control-in-international-mahandout.pdf (“Failure to obtain approval prior to closing can lead to severe fines and legal invalidity of the purchase agreement.”).
[18] Id. (“Failure to obtain approval prior to closing can lead to severe fines and legal invalidity of the purchase agreement.”); see Fed. Trade Comm’n, Premerger Notification and the Merger Review Process, https://www.ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/mergers/premerger-notification-merger-review-process?utm_source=chatgpt.com (last visited Jan. 28, 2025) (A potential outcome is to “. . . enter into a negotiated consent agreement with the companies that includes provisions that will restore competition . . . .”).
[19] Madison Mills, The antitrust hurdles Nissan, Honda may face on merger talks, yahoo!finance (Dec. 18, 2024), https://finance.yahoo.com/video/antitrust-hurdles-nissan-honda-may-173117963.html.
[20] Id.
[21] Id.
[22] Byowitz, supra, note 9.