Citing higher deal volume as a motivating factor for the overhaul, FTC and DOJ indicated that changes are meant to help them more “effectively and efficiently” review merger filings during the initial waiting period. In a joint statement, FTC Chair Lina Khan and Commissioners Slaughter and Bedoya also stated that the current form does not provide adequate information to allow agency staff to assess the competitive impact of increasingly complex modern transactions in the limited 30-day waiting period.3
The new requirements include information and disclosures that would typically be requested in a Voluntary Access Letter during the waiting period or as part of a Second Request from the agencies. Some of the most notable proposed amendments include requiring:
- Narrative responses detailing transaction rationale, investment vehicles, corporate relationships and structures
- Narrative responses describing any competitive horizontal overlaps and vertical relationships (such as supplier relationships) between the parties to the transaction, including disclosures of certain customer information
- Additional documents that must accompany the transaction filing, including more transaction-specific and ordinary-course documents
- Expanded disclosures of past acquisitions, including extending the relevant period of time from five years to 10 years, disclosures of acquisitions by both filers, elimination of the threshold for reporting on acquisitions of entities with greater than USD 10 million annual net sales or assets, and the elimination of distinctions between acquisitions of all business assets and voting securities or non-corporate interests
- New disclosures relating to potential effects of the transaction on labor markets, including disclosures regarding worker classifications, geographic market information regarding overlapping employee classifications, and worker and workplace safety information
- New disclosures regarding any subsidies provided to parties by foreign governments or entities (to effectuate requirements of Merger Filing Fee Modernization Act of 2022)
A number of the revisions address existing antitrust enforcement priorities and examination for certain types of businesses. For example, the proposed amendments highlight the Biden Administration’s continued focus on assessing competitive impacts on labor markets. Additionally, new information requirements related to corporate structures and relationships suggest that the agencies will apply greater scrutiny to mergers involving private equity firms and other financial purchasers.4 Similarly, the new proposed requirements relating to previous acquisitions seem targeted at scrutinizing the competitive impact of acquisitions of allegedly nascent competitors.5
The agencies acknowledged that the proposed amendments will significantly increase the burden for many filing parties, including potentially adding an estimated 12 to 222 additional hours to the preparation time for filings depending on the complexity of the transaction and nearly tripling the amount of time required to prepare non-index filings on average.6
The agencies requested input from the public during the notice-and-comment period, specifically regarding:
- Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility
- The accuracy of the agency’s estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used
- Ways to enhance the quality, utility, and clarity of the information to be collected
- Ways to minimize the burden of these information collections on respondent
Those who wish to submit comments will have 60 days after the proposed rule is published in the Federal Register to provide comments electronically or via mail.
1 “FTC and DOJ Propose Changes to HSR Form for More Effective, Efficient Merger Review”, Press Release, Federal Trade Commission (27 June 2023), https://www.ftc.gov/news-events/news/press-releases/2023/06/ftc-doj-propose-changes-hsr-form-more-effective-efficient-merger-review?utm_source=govdelivery.
2 Q and A on the Notice of Proposed Rulemaking for the HSR Filing Process, Federal Trade Commission (27 June 2023), https://www.ftc.gov/legal-library/browse/federal-register-notices/16-cfr-parts-801-803-premerger-notification-reporting-waiting-period-requirements.
3 Statement of Chair Lina M. Khan Joined by Commissioners Slaughter and Bedoya Regarding Proposed Amendments to the Premerger Notification Form and the Hart-Scott-Rodino Rules (27 June 2023), https://www.ftc.gov/legal-library/browse/cases-proceedings/public-statements/statement-chair-lina-m-khan-joined-commissioners-slaughter-bedoya-regarding-proposed-amendments.
4 Statement of Chair Lina M. Khan Joined by Commissioners Slaughter and Bedoya Regarding Proposed Amendments to the Premerger Notification Form and the Hart-Scott-Rodino Rules (27 June 2023), https://www.ftc.gov/legal-library/browse/cases-proceedings/public-statements/statement-chair-lina-m-khan-joined-commissioners-slaughter-bedoya-regarding-proposed-amendments (“The Commission’s recent 6(b) inquiry into unreported acquisitions by Apple, Amazon, Facebook (now Meta), Google, and Microsoft during 2010-2019 also highlighted the importance of collecting more information on the firm’s history of acquisitions, including non-horizontal and small prior acquisitions. The study captured how these firms structured acquisitions, the sectors they had identified as strategically important for acquisitions, and how these acquisitions figured into the companies’ overall business strategies.”).
5 See, e.g., Proposed Text of Federal Register, Proposed Amendments to HSR Rules Form Instructions, Federal Trade Commission (27 June 2023), at 84, https://www.ftc.gov/system/files/ftc_gov/pdf/p239300_proposed_amendments_to_hsr_rules_form_instructions_2023.pdf (“While the Commission recognizes that investors have more limited information regarding entities in which only a minority interest is held, the proposed Instructions would continue to permit filing persons to rely on their knowledge or belief. The Commission believes that filers have done some level of diligence to determine the business lines prior to investing in these entities, and should have some basis to identify overlaps.”).
6 Proposed Text of Federal Register, Proposed Amendments to HSR Rules Form Instructions, Federal Trade Commission (27 June 2023), https://www.ftc.gov/system/files/ftc_gov/pdf/p239300_proposed_amendments_to_hsr_rules_form_instructions_2023.pdf (noting that the average time required to prepare non-index filings will increase from 37 hours to 144 hours).