New AGs, New Justices: What the Midterms Mean for Deal Risk
State antitrust enforcement is losing two of its most visible leaders at the very moment state AGs are taking on big cases themselves. And in Texas, a low-profile election swept out all three justices on a court built to lure incorporations to the state. For companies weighing where to operate, where to incorporate and how much litigation risk to price into a deal, both developments matter.
Two Aggressive Enforcers Exit
In Colorado, Phil Weiser won the governor’s race, and Democrat Jena Griswold will succeed him as attorney general. In Texas, Ken Paxton lost his Senate bid, and Democrat Nathan Johnson won the race to succeed him as AG. Both outgoing AGs were aggressive enforcers. Weiser took Kroger and Albertsons to trial in Colorado’s own challenge to their merger. Paxton led a multistate challenge to Google’s ad tech business and sued BlackRock, State Street and Vanguard over alleged coordination in coal markets. With a dedicated antitrust division and the resources to sustain litigation at that scale, Texas gives Johnson real choices about where to aim. Elsewhere, California’s Rob Bonta and Arizona’s Kris Mayes won reelection, providing continuity even as Colorado and Texas change hands.
States Are Charting Their Own Course
The trend is already visible. In Live Nation–Ticketmaster, a coalition of states pressed ahead after DOJ announced a settlement and won a jury verdict. In Nexstar–Tegna, a multistate coalition secured a preliminary injunction after federal regulators cleared the broadcast deal. And in Paramount–Warner Bros. Discovery, California secured its own settlement, including commitments on domestic film production and protections for Hollywood workers. Those cases show three ways states can shape an outcome: try a case, keep a deal from being integrated or negotiate separate terms.
We expect that pattern to continue over the next two years. To the extent DOJ retrenches and becomes more willing to resolve cases through negotiated remedies, state AGs will have more room to decide whether those terms go far enough. Deal teams should assess early which states have a reason to act, who might lead a coalition and whether a state challenge could outlast the closing deadline.
Texas’s Business Court Gets a New Bench
Texas’s less-noticed election result may matter just as much. The legislature created the Fifteenth Court of Appeals in 2023 to hear appeals from the specialized Texas Business Court and many civil cases involving state government. The court opened in 2024, and its single statewide bench was meant to give companies a more consistent body of business law. Voters have now replaced all three of Gov. Greg Abbott’s appointees with Democrats Jerry Zimmerer, Tom Baker and Marc Meyer.
The new justices may be more skeptical of some corporate defenses. Zimmerer, for example, voted against compelling arbitration in a consumer dispute, a ruling the Texas Supreme Court later reversed. How the court will approach shareholder suits, conflicted transactions and merger injunctions is still an open question. But the shift could also help companies with substantial Texas operations in disputes with state regulators, where a court more skeptical of government power may be more receptive to their arguments.
Texas’s push to attract more incorporations to leave Delaware may have unraveled on Tuesday. Gov. Greg Abbott’s pitch rested in part on a new business court system and stronger statutory protections for boards. A Democratic sweep of statewide offices, including all three seats on the court that hears Business Court appeals, was hardly the scenario its architects had in mind. Time will tell whether the “Texit” push has staying power. In the meantime, boards weighing a move will be watching closely as the new justices decide their first major cases involving shareholder rights and board discretion.