U.S. antitrust regulators make major changes to notification rules
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The FTC has unanimously approved major changes to the pre-merger filing process, albeit fewer than originally proposed.
Why it matters: The FTC and Justice Department in June 2023 said that HSR needed to be modernized and streamlined, in order for them to more quickly and effectively determine when in-depth investigations are warranted.
- Their proposal was broad, and would have required parties to submit internal draft documents, detailed employee data, and longer lookback periods for past acquisitions.
- What followed was more than a year of comments and cutting, including all of the aforementioned provisions, resulting in a final rule that becomes effective in January.
The big changes: Parties will be required to provide new information on supply relationships and overlapping customer relationships, translate foreign language documents, provide documentation from the supervisory team lead, and more information on ownership structures (including private equity).
- The FTC also will allow the return of early termination requests, after having "temporarily"suspended them for past three-plus years.
- In short, consult your lawyers.
By the numbers: There were 1,805 transactions reported under the HSR Act in fiscal 2023, nearly one-quarter of which were valued at $1 billion or more.
What to watch: Separate litigation between DOJ and private equity giant KKR, over allegations that some of KKR's HSR filings in 2021 and 2022 weren't entirely accurate or complete.
- DOJ reportedly wants any settlement to include a requirement that all of the firm's HSR filings be signed by one of its co-CEOs, but the firm has pushed back hard because it believes such a stipulation would open up its co-CEOs to personal liability.
- If DOJ were to prevail, it could create a new precedent for private equity that's more consequential than even the new HSR rules.
The bottom line: The changes will increase time and costs for parties in deals valued at more than $119 million, adding an estimated 68 hours to the response process, and are the most significant changes to the Hart-Scott-Rodino antitrust act since it became law more than 40 years ago.
