Warner Bros. Discovery/Paramount Skydance – the biggest merger arbitrage situation of recent memory – has come to a conclusion, leaving the deal’s patchwork of opponents furious over what they see as political capitulation by state attorneys general on whom they’d pinned their hopes. And they are right.

This week’s settlement agreement appears mostly detached from antitrust concerns and the states’ lawsuit itself, with the circumstances that led to it seeming almost completely politically driven.

Indeed, a credible argument can be made that this was never really about antitrust and should be viewed in a larger framing of: fighting back against Trump; protecting jobs in Hollywood; tax revenue maintenance for California; and naked political pragmatism.

This is largely the same kind of weaponization of the law as Democrats frequently allege the Trump administration of engaging in, and could be viewed as hypocritical. This result discredits future efforts that are likely to emanate from the states, while also legitimizing the Trump administration’s politicization of regulatory powers.

We can take a number of lessons from this ignominious conclusion, some more high-minded than others – but all important in considering pending deals, as well as future M&A strategy.

The state AGs’ effort to quash the transaction was subdued by a package of “goodies” that California AG Rob Bonta can hold up to his constituents as safeguarding jobs and media diversity. He fought against the Trump administration and came back with spoils.

In reality, this pound of flesh wrapped in ephemeral legalese appears to be the product of an ambitious AG yielding to corporate blackmail and political pressure.

As Paramount threatened to relocate the company out of California, Bonta’s political colleagues reportedly engaged in a pressure campaign to force the settlement. It worked. The potential pain was too much to bear, and the goodies enough to attempt to claim victory in defeat.

There are two sides to this development, however.

Firstly, blackmail works. One would expect corporate leaders considering a contentious merger to prepare both “carrot and stick” approaches from here on out.

As state AGs increasingly work to counteract what they see as federal abdication of antitrust, companies will take note that the threat of localized pain may become crucial in their effort to placate authorities mandated to protect only their states’ consumers. Expect companies to learn very quickly how to play one state off the other with threats of relocation and promises of investment and job creation. Even the Supreme Court seems to have at least partially legitimized this strategy.

It is easier to make targeted threats on the state level than it is nationwide, and there are only a few state antirust regimes that have the heft to mount credible challenges to national and global mergers.

Dealmakers should game out pain points for California and New York at the outset. Expect contingency plans to be formed much earlier when considering mergers on the margins.

Conversely, this can also be upheld as a model for the states.

Instead of standing by and letting the Feds take primacy on antitrust – for now, largely through clearance – the state AGs, many of whom see the job as a steppingstone to the governor’s mansion, may now increasingly see a pathway to appear to be protecting consumers while extracting benefits.

And companies are never as vulnerable as when attempting to get a merger cleared, exposing their soft underbelly to regulators that are increasingly displaying the potential to be opportunistic and bloodthirsty.

This is where Paramount’s attempt to force California to put up a USD 1.9bn litigation bond comes into play. The company saw what it perceived as a low-cost effort from the states to quash their merger and demanded the states put actual skin in the game.

The Trump administration seems to be aware of the momentum of the states’ tactics, and the Department of Justice (DOJ) filed a brief in support of the company’s bond demand. This was followed by a remarkably sharp speech from the DOJ’s number three and current antitrust shot caller just last week.

Meanwhile, the lessons learned from the WBD/Paramount matter may have ramifications for pending deals, such as UniFirst/Cintas and Roku/Fox.

If the federal antitrust authorities let either deal clear without conditions, one could plausibly see the states take action, now equipped with a model where they get the credit for standing up to the unpopular Trump administration without ever having to argue the merits of the case – and at little cost to themselves, apart from some legal work.

For UniFirst/Cintas, which this column has characterized as a merger that would not be attempted under any other administration, the threat may be very real, if not as exciting for politically ambitious state AGs.

A preponderance of deal commentators has noted that high market shares in a number of geographies would result in a legal presumption of anticompetitive effects. The Federal Trade Commission (FTC) has initiated a second request investigation but, for a number of reasons, many believe that only fig-leaf remedies, or none at all, will be demanded at the federal level.

On the merits, it would appear that state AGs could prosecute a case against the merger with a higher level of confidence than they reasonably should have had in the WBD/Paramount matter. On the other hand, we are talking about the uniform rental industry which may not stoke the populist fire driving the state AG enforcement revival.

Roku/Fox, also under a second request at the DOJ, does present a more direct, consumer-oriented and anti-Trump opportunity for Democratic state AGs. As a perceived conservative ally of Trump, the temptation to go after Fox and the merger may be stronger, but a potential case significantly weaker, given the more vertical interactions between the companies.

Both deals will be waymarkers towards the new antitrust enforcement environment being carved around us. One shaped more by ambition, shrouded motive and political fiat than technocratic concerns around market share or consumer welfare.

Hell or High Water is a weekly column that offers commentary from our editorial team on the main deals undergoing regulatory reviews as well as the broader enforcement environment. The opinions expressed here are those of the writer only.