DOJ Signals Less Extensive Overhaul of Hart-Scott-Rodino Filing Process

The Justice Department has indicated a scaled-back revision to the Hart-Scott-Rodino (HSR) filing notification program, particularly affecting companies seeking to merge. This decision, reported by Bloomberg, suggests that the finalized rule will impose fewer burdens on merging parties, likely resulting in reduced disclosure requirements.

The move comes in the wake of resistance from prominent law firms such as Wachtell, Lipton, Rosen & Katz, renowned for their mergers and acquisitions expertise, along with Dechert, Foley & Lardner, and Axinn Veltrop & Harkrider, a Washington-based firm specializing in antitrust matters. Additionally, various business groups have voiced their discontent with the proposed changes, per Bloomberg Law.

Michael Keeley, the antitrust practice leader at Axinn, emphasized the significance of this development, stating, “A win for clients is a win for us.” Axinn, which handles a substantial number of HSR filings annually, highlighted the financial constraints that companies face in executing transactions.

The HSR notification filings, mandated for mergers exceeding $119.5 million in value, serve as a preliminary screening mechanism for antitrust concerns before a deal is finalized.

Andrew Forman, a deputy assistant attorney general in the DOJ’s antitrust division, announced that the Department, along with the Federal Trade Commission, is poised to unveil a final rule updating the filing process in the coming weeks. Forman indicated that the regulation will incorporate “material differences” from the initial proposal, aiming to alleviate the burden on merging parties.

The proposed overhaul, part of the Biden administration’s broader efforts to curb anti-competitive mergers, initially called for increased disclosures spanning labor market issues to a company’s prior acquisitions. Advocates of the overhaul argued that enhanced disclosure would provide regulators with deeper insights into complex mergers while appropriately shifting responsibilities from under-resourced agencies to merging entities.

Estimates from the Federal Trade Commission suggested that the proposed changes would add an average of 107 hours per filing, representing a significant increase from the existing 37 to 144 hours. A report by the Chamber of Commerce projected additional costs exceeding $1 billion, primarily borne by legal expenses.

Source: News Bloomerg Law