Merger review by the numbers

Today the FTC and DOJ released the 36th Annual Hart-Scott-Rodino Report, a document full of interesting data about federal merger review. The report covers transactions in which the merging parties filed HSR notification between Oct. 1, 2012 to Sept. 30, 2013, and federal merger enforcement actions during the same time period. Here are some notable numbers from the report:

1,326 transactions reported under the HSR Act in FY 2013, down slightly from 1,429 transactions the year before.

1,286 adjusted transactions, that is, those acquisitions for which the agencies could request additional information. When FTC staff talk about merger enforcement activity, we typically refer to adjusted transactions because this number excludes transactions that are not subject to the merger review procedures contained in the HSR Act. Adjusted transactions exclude (1) incomplete filings, where only one party filed notice; (2) transactions that are noticed to the agencies but reviewed by others, such as the Federal Reserve Board; (3) transactions that were later determined not to require an HSR filing; and (4) transactions withdrawn before the waiting period began. We also exclude transactions for which a party filed more than one notification in the same year to acquire the voting securities of the same corporation, such as filing at more than one threshold. (All of this is explained in footnote 2 of Appendix A for those who are following along in the report.)

217 adjusted transactions cleared to an agency for review. This means roughly one in six transactions raised questions warranting further inquiry based on an initial review of information contained in the HSR filings. Obtaining clearance allows staff to discuss information about market facts not contained in the HSR filing with the parties and others to learn more about whether the proposed acquisition is likely to substantially lessen competition.

47 Second Requests issued by the FTC and DOJ. This is the number of transactions that present competitive concerns warranting more investigation, including the collection of data and production of business documents from the parties to the transaction. Issuing a Second Request extends the HSR waiting period for a period of time after the parties comply with the request for additional information. Note that staff is able to resolve initial concerns within the first 30 day waiting period in about three-quarters of cleared matters.

38 merger enforcement actions brought by the FTC and DOJ. This number includes transactions that were not reported to the agencies under the HSR Act. Most merger challenges were settled by agreement with the parties. Negotiated settlements allow the non-problematic parts of the merger to proceed subject to some relief—typically an asset divestiture—that prevents any post-merger harm. These settlements can occur at any time in the investigative process, and represent a highly efficient and effective outcome for a merger investigation.

6 merger cases filed in federal court seeking a permanent or preliminary injunction. This includes high-profile merger cases such as US Airways/American Airlines, Ardagh/Saint-Gobain, and Anheuser-Busch InBev/Grupo Modelo, which were settled prior to trial with significant divestitures. In addition, both agencies obtained important litigation wins, in FTC v. St Luke’s Health System and United States v. Bazaarvoice.

3.7 percent of adjusted transactions resulted in a Second Request. As shown in Figure 2 in the report, in every year for the last ten years, this number has been less than 5 percent. That means that over 95 percent of mergers reported to the federal government are free to close within the first waiting period. Well over half receive early termination of this waiting period, allowing the deals to close sooner.

2 civil penalty actions for violations of the HSR statute or Rules. These are actions involving failure to file or failure. Enforcement of the HSR Rules ensures that every company or individual with filing obligations is subject to the same requirements.

In this data-driven world, numbers can take on great importance, but numbers alone are not the story. The goal of merger review is not a number but rather a proven approach: effective and efficient antitrust investigations that lead to law enforcement, when necessary, to prevent or stop harm to competition or consumers without impeding procompetitive or benign acquisitions. It’s hard to put a number on that.

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