Streamlining Premerger Notification: The Impact of the FTC’s Proposed Changes to HSR Filing Requirements

The Federal Trade Commission, in collaboration with the Assistant Attorney General of the Antitrust Division of the U.S. Department of Justice, is suggesting modifications to the premerger notification form and rules implementing the Hart-Scott-Rodino (HSR) Act.

Under the HSR Act, certain mergers and acquisitions require the parties involved to submit premerger notification forms to the FTC and the Antitrust Division, followed by a waiting period before completing the transaction.

The proposed changes to the HSR Form and instructions aim to improve the screening process for potential competition concerns during the initial waiting period, typically lasting 30 days. This initial review is crucial for identifying transactions that necessitate a more detailed investigation. During such investigations, the agencies determine if the proposed transaction violates antitrust laws and, if so, take action to block the transaction and safeguard the interests of the American public.

The biggest changes proposed by the FTC are as follows:

1. Expanded Transaction Details: The requirement to provide comprehensive information about the rationale behind the transaction and specific details regarding investment vehicles or corporate relationships.
2. Comprehensive Product and Service Information: The inclusion of information related to both horizontal products and services, as well as non-horizontal business relationships like supply agreements.
3. Financial and Market Analysis: The provision of projected revenue streams, transactional analyses, and internal documents describing market conditions. Additionally, the changes focus on capturing the structure of entities involved, including private equity investments.
4. Enhanced Acquisition History: The need to disclose details about previous acquisitions to provide a more comprehensive understanding of the parties involved.
5. Labor Market Considerations: The inclusion of disclosure requirements that screen for labor market issues by categorizing employees based on the current Standard Occupational Classification system categories.

Impact on Businesses

If the agency’s proposed changes are adopted, the new HSR filing would require more information and documentation. A straightforward filing takes about five to ten days to prepare. However, a new filing may take weeks or longer if the transaction is complex or involves substantive issues. Parties involved in transactions subject to the new HSR filing requirements would greatly benefit from engaging antitrust counsel to navigate the process. It is important for filing parties to engage counsel at the start of the deal process to start planning for HSR filings so that transactions can occur in a timely manner without hesitation from the parties involved. 

Companies should also evaluate the impact of these changes on their deal documents, specifically the antitrust provisions. Adjustments may be needed to account for the additional time required to prepare HSR filings. By staying vigilant, complying with the revised requirements, and addressing any necessary changes in deal documents, companies can navigate the regulatory landscape effectively and mitigate potential risks and delays associated with HSR filings.

As always, if you have any questions about this topic, please contact your Stall Legal Attorney.