Consent Decree
A consent decree is a court-approved agreement between a merging party and a government agency — typically the FTC or DOJ — under which the party agrees to specific remedies, such as divestitures or behavioral restrictions, in order to resolve antitrust concerns and obtain clearance to proceed with a transaction.
When antitrust regulators identify competitive concerns arising from a proposed merger, they have several enforcement options: they can seek to block the deal entirely through litigation, or they can negotiate a resolution that addresses the concerns while allowing the deal to proceed. A consent decree — also called a consent order or settlement decree — is the instrument through which a negotiated resolution is formalized and made legally binding through court approval.
The most common antitrust remedy imposed through a consent decree is a structural remedy: the merging parties must divest specific business lines, brands, facilities, or assets that compete directly with each other in concentrated markets. By removing the overlap, regulators restore the competitive conditions that existed before the merger. For example, if two grocery chains seeking to merge own competing stores in specific metropolitan areas, they may be required to divest stores in those markets to an independent buyer as a condition of approval.
Behavioral remedies — also called conduct remedies — impose ongoing restrictions on how the combined company may operate rather than requiring asset divestitures. These might include obligations to license technology to competitors, maintain interoperability with rival platforms, or continue servicing competitors on pre-merger terms. US antitrust agencies historically preferred structural remedies, viewing behavioral commitments as more difficult to monitor and enforce over time. European competition authorities have used behavioral remedies more extensively.
The consent decree process requires the parties to negotiate with staff at the FTC or DOJ to identify an acceptable package of remedies, then submit the package for public comment under the Tunney Act before a federal court enters the decree. The Tunney Act review is meant to ensure that the decree is in the public interest, though courts have generally given considerable deference to the government's negotiated settlement.
Violations of a consent decree expose the parties to civil contempt proceedings and significant financial penalties. The FTC and DOJ have dedicated compliance teams that monitor ongoing obligations under entered decrees, and the agencies have sought contempt findings against companies that failed to comply with divestiture requirements or behavioral conditions.