FTC and DOJ Propose Major Changes to HSR Form and Disclosure

On June 27, 2023, the U.S. Federal Trade Commission (“FTC”) and Antitrust Division of the U.S. Department of Justice (“DOJ”) announced a Notice of Proposed Rulemaking regarding the Hart-Scott-Rodino (“HSR”) Premerger Notification Form (“HSR Form”) and Instructions that, if implemented, will dramatically revise the information required for an HSR filing and, as a result, significantly increase the associated burden and time to make such filings.¹ Citing soaring deal volume and the increased complexity of modern M&A transactions, both with respect to deal structure and potential competition issues raised by deals, the three sitting Commissioners of the FTC announced the proposed rulemaking as the first “top-to bottom review” of the HSR Form in 45 years.²

The proposed rulemaking includes, among others, the following significant additions to merger parties’ HSR filings: 

• details about the transaction rationale and information on investment vehicles, including on the structure of private equity investors or other corporate relationships, as well as previous acquisitions;
• information on the relevant overlapping products or services and other non-horizontal business relationships, such as supply agreements;
• data on projected revenue streams as well as any transactional analyses or other internal documents addressing market conditions;
• information relating to the proposed transaction’s impact on labor markets;
• information on foreign subsidies from certain foreign governments or entities as mandated by the Merger Filing Fee Modernization Act of 2022.

Materially broadening the scope of information required with the HSR Form, the proposed rulemaking applies to both the technical information in the HSR Form as well as the transaction-related documents (commonly know as “Item 4 documents”) that are submitted with the Form.  These developments would place the HSR Form closer to merger control filings required in other jurisdictions, such as the European Union.  Thus, we expect a substantial additional burden relating to the process of gathering and maintaining the information required for HSR filings. In addition, we anticipate that the increased disclosure requirements in the proposed rulemaking will significantly increase preparation time for most HSR filers with the effect of prolonging transaction timelines.

The proposed rulemaking will be published in the Federal Register, expected later this week, after which a 60-day public comment period will follow.  The nature and full scope of the final revisions following the public comment period remains to be seen, but we anticipate that these new disclosure requirements will come into force by the end of this year.

^[1] FTC and DOJ Propose Changes to HSR Form for More Effective, Efficient Merger Review | Federal Trade Commission (https://www.ftc.gov/news-events/news/press-releases/2023/06/ftc-doj-propose-changes-hsr-form-more-effective-efficient-merger-review).
^[2]Statement of Chair Lina M. Khan Joined by Commissioner Rebecca Kelly Slaughter and Commissioner Alvaro M. Bedoya Regarding Proposed Amendments to the Premerger Notification and the Hart-Scott-Rodino Rules Commission File No. P239300 (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)