DealLawyers.com Blog

FTC Chairman Andrew Ferguson recently said the Commission is considering whether “acquihiring” is just a clever deal structure to inappropriately skirt HSR notification and pre-merger review. We noted back in September that “acquihires” are getting more popular in tech with Microsoft, Amazon, Alphabet, and Meta all having used them. This WilmerHale alert says:

Remarks from top FTC officials signal that enforcers seemingly have both procedural and substantive concerns with acquihires: first, whether such agreements are used to evade reporting obligations under the HSR Act—for instance by structuring acquihires as hiring or nonexclusive licensing agreements (for intellectual property) rather than traditional acquisitions of assets, voting securities or noncorporate interests that confer control, as contemplated by HSR —and second, as to substance, whether acquihires are an anticompetitive means to buy nascent competitors that may otherwise compete against the incumbent purchaser. Ultimately, both whether an acquihire is reportable or whether it raises substantive competitive concerns will depend on deal-specific facts.

It says companies need to consider the antitrust risks of these acquihires and work with counsel to:

– Structure any acquihire or similar transactions to account for antitrust risk, and consider documenting a decision not to report under HSR a deal that would meet the notification thresholds if it were deemed an asset acquisition.

– Prepare for potential engagement with antitrust authorities for any acquihire deals (consummated or unconsummated) that antitrust enforcers might scrutinize. This is particularly important for any newly signed or recently completed substantial transactions where an antitrust authority might investigate whether an acquihire should have been reported under HSR or a non-US notification scheme or had the effect of killing or marginalizing an incipient rival. In some circumstances, companies may be well advised to prepare for advocacy if necessary.

– Closely monitor enforcement and policy updates. Given FTC Chairman Ferguson’s recent statements that FTC guidance on acquihires may be forthcoming, companies should consider whether they are interested in making a submission during any notice and comment period that may precede formal agency guidance.

– Take compliance steps to ensure that HSR and non-US notifications are not missed for any transactions, regardless of their structure. Companies should consider whether an antitrust authority might deem a transaction structure a mechanism to avoid notification.

– Meredith Ervine