Q and A on the Notice of Proposed Rulemaking for the HSR Filing Process
A: The HSR Act requires premerger notification for transactions that meet certain statutory thresholds, including a minimum size of transaction threshold currently set at $111.4 million (that is, transactions valued at or below $111.4 million do not trigger HSR filing requirements). If required to file, parties may not close their deal until the statutory waiting period (typically 30 days) has passed, or the government has granted early termination of the waiting period. Although the FTC administers the premerger notification program, parties must submit premerger notification to both the FTC and DOJ. Premerger notification involves completing an HSR Form. Both Agencies review the information collected through the HSR Form but only one would conduct any in-depth review of the proposed transaction.
The FTC’s guide to antitrust laws provides a more detailed explanation of the premerger notification and review process.
A: The HSR Form has not been significantly updated since it was originally promulgated almost 45 years ago. The proposed changes stem from a top-to-bottom review of the information collected in the HSR Form by the federal antitrust enforcers at the FTC and the DOJ’s Antitrust Division (the Agencies) to update the information and improve the efficiency and efficacy of premerger review. Additionally, the proposed changes implement mandates as required by the Merger Filing Fee Modernization Act of 2022
The Agencies use information on the form to deploy their limited resources to those transactions most likely to require in-depth review through the issuance of Second Requests. Insufficient information on the HSR Form burdens both the merging parties and the Agencies to collect and confirm basic information not on the form and conduct a rudimentary competition analysis in the initial waiting period, which is typically 30 days.
Over the past several decades, transactions (subject to HSR filing requirements) have become increasingly complex, with the rise of new investment vehicles and changes in corporate acquisition strategies, along with increasing concerns that antitrust review has not sufficiently addressed concerns about transactions between firms that compete in non-horizontal ways, the impact of corporate consolidation on American workers, and growth in the technology and digital platform economies. When the Agencies experienced a surge in HSR filings that more than doubled filings from 2020 to 2021, it became impossible to ignore the changes to the transaction landscape and how much more complicated it has become for agency staff to conduct an initial review of a transaction’s competitive impact. The volume of filings at that time also highlighted the significant limitations of the current HSR Form in understanding a transaction’s competitive impact.
A: The changes proposed in the latest Notice of Proposed Rulemaking represent an expansion and reorganization of the information collected on the form and is the result of the first top-to-bottom review of the information in the HSR Form since it was in 1978.
A: The proposed changes will enable the Agencies to use their limited resources efficiently and effectively to focus primarily on transactions that may harm competition. Currently, the information collected in the HSR Form is not sufficient for the Agencies to fulfill their Congressional mandate, as expressed in the HSR Act: to screen transactions within a short period of time, typically 30 days in order to determine which transactions require an in-depth investigation and, ultimately, which transactions should be challenged to prevent harm to American consumers and workers. These proposed changes aim to provide the Agencies with a more complete picture of a proposed transaction’s impact and enhance the Agencies’ ability to complete the review of a reportable transaction in a limited amount of time.
A: The proposed changes implement mandates as required by the Merger Filing Fee Modernization Act of 2022 that would require filers to provide information on subsidies received from certain foreign government or entities that are strategic or economic threats to the United States.
The proposed changes would also require filers to submit additional information so that the Agencies have a more complete picture of a proposed transaction’s competitive impact and a greater ability to complete the review of a reportable transaction in a short period of time. Some of these additional information requests include: key information about the terms of the transaction, horizontal product or service overlaps, company investors, and employees; additional transaction and strategic documents, as well as ordinary-course business documents that discuss competition in the markets affected by the transaction; English translation of foreign-language documents; and information about other jurisdictions that will review the transaction, including a voluntary waiver option to permit sharing of information submitted in the HSR process. All of the proposed changes would enable the Agencies to more effectively and efficiently identify potential competitive concerns for the reported transaction.
The Agencies acknowledge that the proposed changes require a significant amount of additional information. In the proposed rulemaking, the Agencies have requested input on ways to lessen the burden of collecting this information and have tried to lessen the burden where possible, such as by streamlining and eliminating the collection of certain revenue information. However, the proposed requirement to disclose information on subsidies received from certain foreign governments or entities that are strategic or economic threats to the United States is a Congressionally mandated requirement that the FTC is tasked with implementing.
A: File your comment online at https://www.regulations.gov by following the instructions on the web-based form. If you prefer to file your comment on paper, mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue, NW, Suite CC-5610, (Annex C), Washington, DC 20580, or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street, SW, 5th Floor, Suite 5610, Washington, DC 20024.
Comments must be received 60 days after the publication of the Notice of Proposed Rulemaking in the Federal Register.