DealLawyers.com Blog

Last Thursday, the FTC & DOJ announced final rules that modify the premerger notification rules, Hart-Scott-Rodino (HSR) Premerger Notification and Report Form and instructions. The changes were proposed by the agencies in June 2023, and the final rules reflect a number of modifications in response to public comment. This Dechert article lists these key changes from the proposed form:

– Narrowing the scope of limited partner disclosures (which the FTC noted was in response to the Comment submitted by Dechert’s antitrust/competition group);
– Limiting the amount of required information to be disclosed regarding directors and officers, and eliminating the proposal to disclose positions held by board observers;
– Removing the requirement to submit the draft forms of documents; and
– Not adopting many of the labor-related requirements.

Dechert suggests the following aspects of the new rules are still expected to significantly increase the burden on merging parties:

– Expanding the relevant custodians for providing transaction-related documents analyzing competition beyond officers and directors, to include the supervisor of each merging party’s deal team;
– Requiring the submission of certain ordinary course documents related to competition, market shares, competitors, or markets for products and services where the filing parties overlap;
– Adding new disclosure obligations relating to products or services that are in development;
– Requiring sellers to disclose prior acquisitions in the same or related lines of business;
– Increasing the amount of required disclosure regarding investors in the buyer and other entities in the same ownership chain, including limited partners with board/management rights;
– Increasing the requirements on filings made off of letters of intent or similar preliminary agreements to now require a draft agreement, term sheet, or other dated document containing certain material terms of the transaction;
– Mandating disclosure of foreign subsidies, as required by Congress pursuant to the Merger Filing Fee Modernization Act of 2022; and
– Requiring the translation of foreign language documents.

The FTC’s announcement also stated that it is lifting its temporary suspension on early termination of filings made under the Hart-Scott-Rodino Act (which has been in place since February 2021) once the final rules come into effect (90 days after publication in the Federal Register) since the rules will help “inform the processes and procedures used to grant early terminations” because it “will provide the agencies with additional information necessary to conduct antitrust assessments.”

The FTC also announced a new online portal for public comment on proposed transactions:

In addition to these updates to the HSR Form, the Commission is also introducing a new online portal for market participants, stakeholders, and the general public to directly submit comments on proposed transactions that may be under review by the FTC. The Commission welcomes information on specific transactions and how they may affect competition from consumers, workers, suppliers, rivals, business partners, advocacy organizations, professional and trade associations, local, state, and federal elected officials, academics, and others.

We’re posting related memos in our “Antitrust” Practice Area.

– Meredith Ervine