By Jeffrey May, J.D.
The federal antitrust agencies have proposed “a redesign of the premerger notification process through both a reorganization of the information currently required and the addition of new information and document requirements.” The FTC announced on June 27 proposed amendments to the Hart-Scott-Rodino Antitrust Improvements Act (HSR) premerger notification rules and to the Premerger Notification and Report Form and Instructions. Comments on the 133-page notice of proposed rulemaking must be made online at https://www.regulations.gov within 60 days of official publication in the Federal Register. Acknowledging that the proposed changes require a significant amount of additional information, the agencies seek input on ways to lessen the burden of collecting the information.
The proposed changes would require HSR filers to submit additional information about a proposed transaction in an effort to give the FTC and Department of Justice Antitrust Division staff a more complete picture of the deal’s competitive impact. According to a statement released by FTC Chair Lina Khan, and joined by the other two FTC members—Rebecca Kelly Slaughter and Alvaro M. Bedoya—it is difficult for agency staff to make a determination within the initial 30-day review period about whether a proposed deal might be anticompetitive based on the information currently collected by the HSR form.
New information to be collected. The FTC explained that the proposal will require filers to provide additional information, including: information about the terms of the transaction, horizontal product or service overlaps, company investors, and employees; additional transaction and strategic documents, as well as ordinary-course business documents that discuss competition in the markets affected by the transaction; English translation of foreign-language documents; and information about other jurisdictions that will review the transaction, including a voluntary waiver option to permit sharing of information submitted in the HSR process.
Disclosure of foreign subsidies. Among the new information to be collected is information required under the Merger Filing Fee Modernization Act of 2022. The Act, among other things, mandates that filers disclose subsidies received from countries or entities that are strategic or economic threats to the United States. Under proposed §801.1(r)(1)(ii), filers would be required to report subsidies received from governments (and their agencies) of foreign countries that are covered nations under 42 U.S.C. 18741(a)(5)(C), which defines a foreign entity of concern. Filers also would be required to the provide information to assist the agencies’ evaluation of the impact of proposed transactions on competition for workers in labor markets.
Information already collected by other jurisdictions. The commissioners pointed out that much of what would be required in the updated HSR form will be familiar to market participants and their counsel as the information is already collected by other competition authorities. For instance, competition enforcers in other jurisdictions already require firms to provide narrative responses with information about business lines, the transaction’s structure and rationale, business overlaps, and vertical and other relationships, it was noted.
According to the commissioners, the proposed revisions seek to fill key gaps that agency staff most routinely encounter. “Information contained in the HSR Filing should be sufficient to allow the Agencies to conduct a thorough but quick evaluation of whether the proposed transaction is one that requires more in-depth investigation through the issuance of Second Requests,” the notice states.
The proposed rulemaking is the result of the first top-to-bottom review of the information in the HSR form since it was implemented nearly 45 years ago.