The Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice jointly proposed changes to the premerger notification form and associated instructions, as well as the premerger notification rules that implement the Hart-Scott-Rodino (HSR) Act.
These proposed changes are in response to the evolving business landscape and the growing complexity of transactions, according to a June 27 FTC news release. The HSR Act mandates that parties involved in specific mergers and acquisitions must submit premerger notification to the FTC and the Antitrust Division, enabling them to evaluate whether the transaction violates antitrust laws.
"Much has changed in the 45 years since the HSR Act was passed," FTC Chair Lina M. Khan wrote in a statement about the proposed changes.
The statement was written alongside FTC Commissioners Rebecca Kelly Slaughter and Alvaro M. Bedoya.
"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,' Khan added in the statement. "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."
The proposed HSR form revisions focus on enhancing the agencies' ability to identify transactions that require further investigation and possible intervention to safeguard the public, the release reported.
Key proposals include a provision of details about transaction rationale and details surrounding investment vehicles or corporate relationships; a provision of information related to products or services in both horizontal products and services and non-horizontal business relationships including supply agreements; a provision of expected revenue streams, transactional analyses and internal documents describing market conditions and structure of entities involved including private equity investments; a provision of details regarding prior acquisitions; and the disclosure of information screening for labor market issues by classifying employees based on current Standard Occupational Classification system categories, the release said.
The proposed changes also address Congressional concern that subsidies of foreign interests of concern can distort the competitive process or otherwise alter the business strategies of a subsidized firm in ways that undermine competition after an acquisition, according to the release. Under the Merger Filing Fee Modernization Act of 2022, the agencies are required to collect information on subsidies received from certain foreign governments or entities that are considered strategic or economic threats to the U.S.
"This proposal is designed to ensure that we can efficiently and effectively discharge our statutory obligations and faithfully execute on the mandate that Congress has given us," Khan wrote in the statement. "We look forward to the public comments."
