What is a duty to litigate?

Most merger agreements make the buyer work to win the regulatory approvals. They often ask for its reasonable best efforts.

Even so, a regulator can sue to block the deal. The duty to litigate says whether the buyer must then fight in court.

Say Woodgrove agrees to buy Litware for $50.00 a share. Before the deal closes, the FTC sues to block it. What Woodgrove must do depends on the agreement:

With a duty to litigate

Woodgrove must contest the suit, and often appeal, rather than let the deal end.

Without one

Woodgrove may be free to stop when the FTC sues, and let the deal end.

It sits in the agreement's regulatory efforts provision, beside any divestiture commitment.

Even without an express clause, a court may read broad efforts language as requiring the buyer to fight in court.

It runs as long as the agreement says. Once the outside date passes, either side may be able to end the deal.

One count covers over 700 merger agreements from 2004 to 2019.

Among deals that got a second request, 65.9% had a duty to litigate. Among deals that didn't, the share was 44.7%.

So the duty was more common in deals an agency looked at closely.

Microsoft's January 2022 agreement to buy Activision Blizzard required it to contest, defend and appeal challenges. The agreement also set limits on what it had to accept.

Kroger's 2022 agreement to buy Albertsons required it to take any and all actions to contest a suit.

In both deals, the FTC asked a federal court to block the deal, and the buyer fought it. The two cases ended in opposite ways:

Microsoft and Activision Blizzard

The FTC went to court in June 2023. The court refused to block the deal on July 10, 2023, and the deal closed that October. On May 7, 2025, the appeals court upheld that ruling.

Kroger and Albertsons

On December 10, 2024, the court blocked the deal, and Albertsons ended the agreement that day.

A duty to litigate means the buyer fights the suit, but it doesn't promise a win.

It doesn't extend the outside date by itself. And the deal can't close while a court blocks it.

Without a duty to litigate, the buyer may let the deal end when a regulator sues. Some agreements then make it pay the target a reverse termination fee. It goes to the target company, not directly to its holders.

The third protection dot. It reads Yes when the agreement says the buyer must contest a regulator's suit to block the deal, even without the word litigate. It reads No when the agreement says the buyer need not.