The Federal Trade Commission (FTC) has unanimously approved changes to the premerger notification form and related instructions under the Hart-Scott-Rodino (HSR) Act. These modifications aim to enhance the FTC's and the U.S. Department of Justice's Antitrust Division's ability to identify illegal mergers before they are finalized.
The new rule requires additional information to determine which transactions necessitate an in-depth antitrust investigation, including Second Requests. This change addresses gaps in corporate structure and deal-making that have hindered thorough antitrust assessments. It also aims to reduce the burden on third parties, such as small businesses, who provide information for these reviews.
"Premerger review is a critical task for the antitrust agencies and to do it well, we need information about each deal’s potential antitrust risk," said Shaoul Sussman, Associate Director for Litigation of the FTC’s Bureau of Competition. "This rulemaking is a much needed update to address changes in the marketplace that have undermined the agencies’ ability to detect and prevent illegal mergers, while at the same time creating a more efficient review process."
Under the HSR Act, certain mergers require premerger notification forms disclosing specific details about proposed deals. The agencies use this data for quick premerger assessments within a typical 30-day window.
For over 45 years, the HSR form has been essential in screening proposed mergers. However, identified gaps have limited its effectiveness in detecting potentially unlawful mergers. The final rule mandates filers provide readily available business operation information to aid agency evaluations.
Public feedback on proposed rulemaking was incorporated into these updates. The final rule now includes disclosure requirements on subsidies from foreign governments deemed strategic or economic threats by Congress under the Merger Filing Fee Modernization Act of 2022.
Key reforms include:
- Additional transaction documents from merging parties' supervisors and high-level business plans.
- Descriptions of each filer's business lines.
- Disclosure of investors with management rights in buyers.
The rule will take effect 90 days post-publication in the Federal Register. The FTC’s Premerger Notification Office will offer compliance guidance before this date.
The Commission's vote was unanimous at 5-0. Statements were issued by Chair Lina M. Khan alongside Commissioners Rebecca Kelly Slaughter and Alvaro M. Bedoya, with separate statements from Commissioners Melissa Holyoak and Andrew N. Ferguson.
Additionally, a new online portal will allow stakeholders and public members to submit comments on transactions under FTC review.
Once fully implemented, these rules will lift suspensions on early termination filings under the HSR Act by providing necessary information for antitrust assessments.
The FTC continues its mission to promote competition while protecting consumers without demanding money or making threats.
