Dive Brief:

• Walgreens Boots Alliance is closer than ever to triggering a declaration of “certified compliance” — a shot across the bow to the Federal Trade Commission — which essentially lets regulators know that the drugstore retailer considers the information and actions it has taken to gain approval for its proposed merger with rival Rite Aid to be sufficient and complete, unnamed sources told the New York Post. 

• Such a declaration would force the FTC to take action within the next few months on the merger, which the agency has been pondering since 2015. In order to appease regulators' antitrust worries, Walgreens has made a series of moves — including expanding its divestiture plan, extending its deadline and cutting its merger price.

• Walgreen's rumored move seems to be a bet on an improving regulatory environment. President Donald Trump is considering Republican Utah attorney general Sean Reyes to lead the FTC after his administration’s January firing of Democrat Edith Ramirez, widely seen as a foe of mergers likely to stifle competition, according to the Post.

Dive Insight:

Walgreens Boots CEO Stefano Pessina has been adamant about carrying through with the merger. In an effort to ease the path to approval, Walgreens and Rite Aid sold 865 stores to regional chain Fred’s Pharmacy, subsequently boosted the overall number of stores to be sold to 1,200 and reduced the price for each share of Rite Aid common stock to be paid by Walgreens, which brings the price tag to $6.84 billion, down from the $9.4 billion the chains first announced in late 2015.

If the merger is scuttled, Pessina told analysts in January that the company had "no plan B.” Later that month, at Walgreens' shareholders meeting, he said the organization was “actively engaged in dialogue with the FTC” and declared “We’ll do anything we can to support their work.”

But that attitude may have run its course. Such an ultimatum gives regulators 30 days to decide one way or another, finally capping off a process that has dragged for close to 18 months. But it’s risky, because it could force the FTC to decide against the merger if it believes its antitrust concerns still haven’t been addressed.

While investors are demonstrating patience, some observers aren’t all that sanguine about the deal’s prospects, considering the antipathy the Obama-era FTC has shown against mega-mergers, including deals involving retailers. Last May, for example, regulators halted a proposed $6.3 billion tie-up between Office Depot and Staples, despite Amazon’s entry into the office supplies retail and business contracts spaces. The FTC has just two members post-election, one Democrat and one Republican, so chances for a unanimous decision are murky; that calculation could change with the potential arrival of Reyes.

Concerns about the merger, which would create a drugstore retailer bigger than number one rival CVS Health, include the effect on pharmacy benefit prices in corporate and government drug plans, according to The Wall Street Journal. CVS has reportedly also warned the FTC that the sale to Fred’s isn’t sufficient to ensure competition, comparing the situation to Safeway’s sale of 146 stores to Haggen Holdings in 2015 in order to win antitrust clearance for its merger with Albertsons. Haggen went bankrupt last year, and sold some stores back to Albertsons in the process.