Related Professionals
This white paper details the significant differences between the Federal Trade Commission’s Proposed Rule and recently issued Final Rule with respect to various premerger reporting requirements under the Hart-Scott-Rodino Act.
On Oct. 10, 2024, the Federal Trade Commission (Commission), with the concurrence of the Antitrust Division of the Justice Department (the Agencies), issued its long-awaited Final Rule making major changes to the premerger notification rules that implement the Hart-Scott-Rodino Act (HSR Act), including the Premerger Notification and Report Form (HSR Form) and accompanying instructions. The rulemaking changes will take effect 90 days from the date the Final Rule is published in the Federal Register.
Much like the proposed rule issued in June 2023, the Final Rule requires parties to transactions that are reportable under the HSR Act to provide in the filing of the HSR Form much more extensive and detailed information and materials than has been the case. This will undoubtedly result in the parties expending significantly more time in preparing the form. In fact, the Commission estimates the range at 10 to 121 additional hours, or approximately an additional $5,830 to $70,500 per filing with the highest costs borne by the acquiring person in a transaction with overlapping products or supply relationships in the target’s industry.
The Agencies have explained that this is necessary for them to effectively conduct their initial assessment (the 30-day review) to determine whether a transaction may violate the law and whether to issue a request for additional information commonly known as a Second Request[1].
In issuing the Final Rule, the Commission explains that, while it has administered the HSR Act’s premerger notification program for over 45 years and has regularly updated the rules, in making these comprehensive changes, it is responding to factors that make today’s economic reality more challenging for conducting a premerger assessment with only limited information especially during the condensed 30-day review period.
Upon the issuance of the proposed rule, the Commission solicited comments from the public, and prior to the issuance of the Final Rule received more than 700 comments.
The Final Rule with commentary runs to more than 400 pages and provides a detailed discussion of the manner in which it differs from the proposed rule.
For the detailed description of some of the significant differences between the proposed rule and the Final Rule, read the full white paper.
[1] The HSR Act and its implementing rules require the parties to certain mergers and acquisitions to submit premerger notification to the Agencies, which involves completing and filing the HSR Form, and then waiting a specified period of time (generally 30 days) before consummating their transaction. There has been a process whereby parties can request an early termination, which process has been suspended but will resume once the Final Rule takes effect.
If the 30-day waiting period expires or is terminated, the parties are free to close their transaction. If the Commission determines that it needs more information to assess the transaction, it sends both parties a Second Request and this extends the waiting period.
