On June 27, 2023, both the Federal Trade Commission (FTC) and U.S. Department of Justice (DOJ) unveiled a 133-page documentation for proposed rule adjustments (dubbed the “HSR Rulemaking”)[^1^]. This documentation sets forth revisions to the premerger notification form and associated guidelines under the Hart-Scott-Rodino Act of 1978 (HSR)[^2^], and introduces alterations to the corresponding regulations. These proposed changes as put forth by Montague Law are not slated for enforcement until a 60-day notice and feedback period concludes on August 28, 2023. If accepted as they currently stand, these updates would represent the first substantial overhaul to the HSR form since the original enactment of the HSR rules 45 years earlier.
The objective of these proposed changes as stated by the agencies is to gain a deeper understanding from the onset of the HSR form submission, looking at the “deal rationale”, “how a particular investment vehicle is structured”, and other “key aspects of competition”[^3^]. The HSR Rulemaking would necessitate that filing parties present an increased level of disclosure on a wide range of competition issues.
The proposed modifications require a more extensive merger filing, paralleling European norms. Subject to FTC and DOJ’s discretion, the proposed HSR alterations could be further modified following the feedback period. These changes include demanding further information about a partnership buyer, the inclusion of a “strategic rationale” for the transaction, and broadening the mandate to provide documents that discuss the competitive landscape.
These modifications would influence various areas, including providing more information about partnerships and transaction details, and broadening the covered custodians’ scope and document production obligations. The suggested amendments include a provision for a new narrative “Competition Analysis”, a change to the current “NAICS” and “NAPCS” revenue disclosure rules, and an expanded mandate to offer basic information for “prior acquisitions”.
The attorneys at Montague Law are equipped to assist clients in drafting feedback on the suggested amendments and aiding clients in navigating these substantial modifications should they be adopted[^4^].
These proposed changes to the HSR rules could significantly influence Mergers and Acquisitions (M&A). They could potentially increase the time and effort required for the completion of an HSR filing, potentially decelerating the transaction process and increasing costs. Companies involved in M&A activities would need to offer a more detailed and comprehensive merger filing that encompasses a broader scope of information. This could reshape how companies approach and strategize for M&A deals, leading to a more meticulous approach towards these transactions. It could also enhance market understanding and transparency, potentially influencing the behavior of industry players.
[^1^]: Premerger Notification; Reporting and Waiting Period Requirements, 88 Fed. Reg. 42178 (June 29, 2023) – https://www.ftc.gov/system/files/ftc_gov/pdf/p239300_proposed_amendments_to_hsr_rules_form_instructions_2023.pdf
[^2^]: Hart-Scott-Rodino Antitrust Improvements Act of 1978, Pub. L. No. 95-511, 92 Stat. 3826 (1978)
[^3^]: FTC, Statement of Chair Lina M. Khan Regarding Proposed Amendments to the Premerger Notification Form and the Hart-Scott-Rodino Rules (June 27, 2023) – https://www.ftc.gov/system/files/ftc_gov/pdf/statement_of_chair_khan_joined_by_commrs_slaughter_and_bedoya_on_the_hsr_form_and_rules_- _final_115p.pdf
[^4^]: Montague Law, https://montague.law/
