DOJ Merger Investigation Closure Credits AI Competition And Highlights Targeted Second Request Reviews

Reasoning that growing AI competition would protect against the risk of potential competitive harm in the sales enablement software space, the U.S. Department of Justice (DOJ) recently announced closure of its investigation into a proposed merger between Seismic Software, Inc. and Highspot Inc., two of the leading sales enablement software providers. In doing so, the DOJ appears to have embraced its commitment to efficiently focus in-depth merger reviews on key issues and defenses in an effort to short-circuit the merger review timeline.

It is not often that the DOJ publicly provides its rationale for closing merger investigations. When it does, it is usually for especially high profile or politically sensitive transactions. It is unlikely that this transaction was viewed in either sense within the DOJ. So, the DOJ’s decision to publicly explain its closing decision for this transaction is particularly interesting, especially as it relates to AI competition in the technology sector and the process for in-depth merger reviews that require extensive document and data productions (i.e., “Second Requests”). In particular, the DOJ’s endorsement of AI entry as a primary justification for closing its investigation is a positive development for companies considering M&A opportunities in industries currently, or imminently, facing legitimate AI competition. 

According to the DOJ, closely competing merging companies often point to AI as a competitive constraint that will maintain an industry’s competitive dynamics going forward. Seismic and Highspot provide software to improve ROI for sales teams, with functions that train salespeople, coordinate coaching, and provide/track sales materials, among others. After reviewing the companies’ evidence in this transaction, the DOJ credited entry from AI-native companies as being timely, likely, and sufficient to lessen the risk of competitive harm allegedly caused by the transaction. 

This is notable when viewed against the backdrop of the U.S. antitrust agencies’ general skepticism toward entry arguments (especially here with the DOJ acknowledging a lack of meaningful entry from larger diversified technology companies). The credited entry from AI-native companies could also be read as perhaps less advanced than would be expected when operating as a primary basis for closing a merger investigation. The DOJ, for example, characterized the AI-native companies’ timely and likely entry in a more speculative tone­, noting that the companies are “growing quickly to win” and “increasing competitive pressure.” 

From a Second Request process perspective, the DOJ highlighted its prioritization of evidence relating to AI entry and repositioning—the evidence that appears to have ultimately led to the DOJ closing its investigation. This follows from the DOJ recently announcing that it would be implementing targeted/phased Second Request investigations to better expedite investigation closure prior to Second Request compliance. The DOJ’s prioritization in this investigation is consistent with its earlier announcement, which should be a welcome sign to transacting parties seeking accelerated closing timelines in the face of a historically prolonged Second Request review process.