FTC & DOJ Call For Updates For More Efficient Merger Review

The Federal Trade Commission has suggested revisions to the premerger notification form and notification regulations that enforce the Hart-Scott-Rodino Act, which mandates that firms report sizeable transactions to the FTC and Justice Department for antitrust examination.

The process of complying with the HSR Act and its regulations for mergers and acquisitions requires the completion of HSR Forms and a waiting period prior to finalizing the transaction.

The proposed changes to the HSR would improve the ability of agencies to screen transactions for potential competition issues during the 30-day waiting period. The FTC considers this competition review important for identifying deals that may violate antitrust laws and taking appropriate action.

Related: The DOJ and FTC RFI on Merger Enforcement: Commentary on Labor Market and Non-Price Effects

“Much has changed in the 45 years since the HSR Act was passed. Deal volume, for example, has soared. The House Report for the HSR Act estimated that the statute would ‘require advance notice’ for approximately ‘the largest 150 mergers annually,’” FTC Chair Lina Khan said in a June 27 statement on the proposed changes. “Today, the agencies often receive more than 150 filings each month. Transactions are increasingly complex, in both deal structure and potential competitive impact. Investment vehicles have also changed, alongside major transformations in how firms do business.”

Key changes in the proposal include:

– Providing details about transaction rationale and surrounding investment vehicles or corporate relationships.

– Provision of information related to products or services in horizontal products and services and non-horizontal business relationships, such as supply agreements.

– Providing projected revenue streams, transactional analyses and internal documents describing market conditions, and structure of entities involved such as private equity investments.

– Provision of details regarding previous acquisitions.

– Disclosure of information that screens for labor market issues by classifying employees based on the Bureau of Labor Statistics’ Standard Occupational Classification System categories.

The notice is scheduled to be published in the Federal Register this week, and comments will be accepted for 60 days following publication.