Agenda

DOJ AND FTC – CHANGES IN THE PREMERGER NOTIFICATION FORM USED IN THE MERGER REVIEW

16/10/2024

 

The Justice Department’s Antitrust Division announced on 10th of October 2024  its concurrence with the Federal Trade Commission (FTC)’s unanimous vote to finalize changes to the premerger notification form and associated instructions, as well as to the premerger notification rules implementing the Hart-Scott-Rodino (HSR) Act.

The final rule introduces changes aimed at enhancing the ability of the FTC and the Antitrust Division of the U.S. Department of Justice (DOJ) to identify illegal mergers and acquisitions before they are completed. It requires additional information to help determine which transactions warrant a detailed antitrust review, including the potential issuance of Second Requests. The rule also aims to lessen the burden on third parties, such as small businesses, that the agencies often rely on to provide missing information.

The rule updates the HSR form, which has been used for over 45 years to screen proposed mergers and identify those that may breach antitrust laws. Through years of experience, the agencies recognized key information gaps in the form that have hindered the detection of problematic mergers. The final rule now requires filers to submit readily accessible information about their business operations, enabling the agencies to more effectively and accurately screen reportable transactions before they are finalized.

Under the HSR Act, parties involved in certain mergers and acquisitions must file premerger notification forms that disclose specific details about their proposed deal and business operations. The agencies use this information to conduct a preliminary review within the short period allowed under the HSR Act, typically 30 days, to identify transactions that might violate antitrust laws and thus require further examination.

In addition to revising the HSR form, the Commission has also introduced a new online portal that allows market participants, stakeholders, and the general public to submit comments directly on transactions that may be under review by the FTC.

 

The requests added to the HSR form are as follow:

  • Requiring parties to submit transaction-related documents prepared by or for the supervisory leader of the deal team;
  • Requiring parties to describe their principal categories of products and services as reflected in the parties’ ordinary course business documents;
  • Requiring disclosure of additional information about the buyer’s officers, directors, and investors, including those with management rights over the firm; and
  • Ensuring the Agencies have access to translations of all documents submitted in a language other than English.

 

The final rule differs from the proposed rule in many ways, including among other things, eliminating the requirements to:

  • Submit preliminary drafts of deal-related documents;
  • Collect and produce ordinary course documents from people who report directly to the CEO;
  • Provide information about employees’ commuting zones and occupation classifications;
  • Report prior acquisitions that are more than five years old or involve entities with less than $10 million in sales or revenue; and
  • Certify that the filer took steps to preserve documents.

The final rule will be effective 90 days after it is published in the Federal Register.

 

(DOJ and FTC – 10.10.2024)

 

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