United States: Hart-Scott-Rodino Annual Report For Fiscal Year 2018: Decreases In Second Requests But Increased Likelihood Of Challenged Deal Where Second Request Issued

Last Updated: September 24 2019
Article by Joel Mitnick and Ngoc Hulbig

On September 16, 2019, the Federal Trade Commission (“FTC”) and the Antitrust Division of the U.S. Department of Justice (“DOJ”) released the agencies’ 41st Annual Hart-Scott-Rodino Report, which summarizes FTC and DOJ actions conducted under the Hart-Scott-Rodino Antitrust Improvements Act (“HSR Act”) during fiscal year 2018, covering October 1, 2017, to September 30, 2018.

Key statistical findings of the report include:

  • Increase in HSR filings. The total number of HSR filings increased 2.9% in fiscal year 2018 (2,111 transactions reported) compared to fiscal year 2017 (2,052 transactions reported). The percentage of transactions investigated slightly increased from 13.9 percent in fiscal year 2017 to 14.1 percent in fiscal year 2018.
  • Decrease in Second Requests. The overall number of merger investigations in which Second Requests were issued in fiscal year 2018 decreased compared to the previous year. Second Requests were issued in 45 merger investigations in fiscal year 2018 (26 issued by the FTC and 19 issued by DOJ) compared to 51 in fiscal year 2017 (33 issued by the FTC and 18 issued by DOJ). The overall percentage of transactions in which a Second Request was issued decreased from 2.6 percent in fiscal year 2017 to 2.2 percent in fiscal year 2018.
    • In fiscal year 2018, DOJ issued a higher percentage of Second Requests than the FTC, issuing Second Requests in 24.4 percent of the transactions in which DOJ initiated a preliminary investigation. The FTC issued Second Requests in 12.5% of the transactions in which it opened an initial investigation.
  • Increase in Second Requests leading to challenged transaction. Where Second Requests were issued, however, there was an increase in the number of transactions which resulted in a challenge by either the FTC or DOJ. In fiscal year 2018, the agencies challenged 86.7 percent (39 challenges resulting from 45 transactions in which Second Requests were issued) compared to 80.4 percent (41 challenges resulting from 51 transactions in which Second Requests were issued) in fiscal year 2017.
    • The FTC brought 22 merger enforcement actions in fiscal year 2018, including five mergers that the Commission voted to block through litigation. In five other matters, the parties abandoned or restructured their transaction due to the Commission’s antitrust concerns. Competition concerns were resolved with regard to the remaining 12 transactions through consent orders.
    • During fiscal year 2018, DOJ challenged 17 merger transactions. The Division resolved eight cases by filing a complaint and proposed settlement simultaneously in U.S. district court, and the Division litigated to enjoin one transaction. Of the remaining eight challenges, in four the parties abandoned the proposed the transaction, and in the remaining four the parties restructured the transaction to resolve DOJ’s concerns.
    • DOJ challenged more transactions in which it issued a Second Request compared to the FTC. In fiscal year 2018, DOJ challenged 89.5 percent of the transactions in which it issued Second Requests, and the FTC challenged 67 percent.
  • Decrease in early terminations. The percentage of transactions in which early termination was requested decreased slightly; early termination was requested in 74.0 percent of transactions in fiscal year 2018 as compared to 77.9 percent in fiscal year 2017. The percentage of requests granted out of the total decreased slightly (78.6 percent in fiscal year 2017 to 78.0 percent in fiscal year 2018).
  • Decrease in corrective filings and related enforcement actions. During fiscal year 2018, 33 post-consummation “corrective” filings were received (compared to 50 corrective filings received in fiscal year 2017), and the agencies brought no enforcement actions (compared to four brought in fiscal year 2017).

The chart below summarizes the operation of the premerger notification program during the last five fiscal years. The antitrust agencies continue to grant early termination in the majority of transactions in which early termination was requested (78.0%) and to issue Second Requests in only a small number of reportable transactions (2.2%). As in previous years, the vast majority of transactions received no further scrutiny from regulators (85.9%).

Merger Enforcement Trends during Fiscal Years 2014-2018

 

2014

2015

2016

2017

2018

Total Transactions Reported

1,663

1,801

1,832

2,052

2,111

Adjusted Transactions in Which Second Request Could Have Been Issued1

1,618

1,754

1,772

1,992

2,028

Percentage of Transactions Receiving No Further Scrutiny

83.1%

85.3%

86.6%

86.1%

85.9%

Percentage of Transactions in Which Clearance Received to Conduct Preliminary Investigation

16.9%

14.7%

13.4%

13.9%

14.1%

Percentage of Preliminary Investigations Leading to Second Requests

18.7%

18.2%

22.8%

18.4%

15.7%

Percentage of Second Requests Leading to Challenged Transaction

64.7%

89.4%

87.0%

80.4%

86.7%

Overall Percentage of Reportable Transactions in Which Second Requests Were Issued

3.2%

2.7%

3.1%

2.6%

2.2%

Overall Percentage of Reportable Transactions That Were Challenged

2.0%

2.4%

2.7%

2.0%

1.9%

Transactions Involving a Request for Early Termination
Percentage Granted
Percentage Not Granted

1,274

80.0%
20.0%

1,366

79.5%
20.5%

1,374

80.2%
19.8%

1,552

78.6%
21.4%

1,500

78.0%
22.0%

Footnotes


1
The adjustments exclude the following types of transactions: (1) transactions reported under Section 7A(c)(6) and (c)(8) (transactions involving certain regulated industries and financial businesses); (2) transactions deemed non-reportable; (3) incomplete transactions (only one party in each transaction filed a compliant notification); and (4) transactions withdrawn before the waiting period began. The adjusted number does not exclude competing offers or multiple HSR transactions resulting from a single business transaction (where there are multiple acquiring persons or acquired persons).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Cadwalader, Wickersham & Taft LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Cadwalader, Wickersham & Taft LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions