On November 12, 2024, the final rule issued by the Federal Trade Commission (FTC) amending premerger notification requirements under the Hart-Scott-Rodino (HSR) Antitrust Act was published in the Federal Register. The HSR Act typically requires parties to mergers and acquisitions over a certain size ($119.5 million in 2024) to provide to the FTC and U.S. Department of Justice (DOJ) advance notice of the proposed transaction and observe a 30-day waiting period after providing such notice before closing. The final rule, adopted by the five members of the FTC by a unanimous vote, will take effect 90 days after publication, on February 10, 2025.
Expanded Requirements Under New HSR Rules
The final rule will make substantial changes to the Transmittal Rules (16 CFR Part 803) under the HSR Act, with different forms to be submitted by the acquired and acquiring parties. In addition to the material already required under the current HSR process—i.e. documents prepared by or for the officers and directors concerning the competitive impact of a proposed transaction—the final rule will require parties to submit additional transaction documents from the supervisor of each party's deal team. The amended HSR process will continue to use North American Industry Classification System (NAICS) codes to identify competitive overlap between parties to a proposed transaction, and will require substantially more information from parties where such overlap exists.
In its October 2024 press release announcing the adoption of the final rule, the FTC indicated that it plans to issue compliance guidance in advance of the final rule's effective date. The FTC also announced that after the final rule becomes effective, it plans to lift its categorial suspension of "early termination" of the 30 day waiting period. Finally, the FTC announced the introduction of a new online portal for market participants, interested parties, and the general public to submit comments about proposed transactions.
Some Requirements Remain Unchanged
The final rule makes only minor revisions to HSR Coverage Rules (16 CFR Part 801), with no impact on the determination of the "Ultimate Parent Entity," i.e. the entities responsible for submitting the HSR premerger notification filings for the acquiring and the acquired parties. The final rule also makes no changes to the HSR Exemption Rules (16 CFR Part 802), meaning that all of the statutory and regulatory exemptions from providing advance notice to the agencies of certain proposed transactions remain in full force and effect.
The final rule is substantially pared back from the original Notice of Proposed Rulemaking issued by the FTC in June 2023 by a 3-0 vote. At that time, the FTC had three commissioners appointed by Democrats but two unfilled Republican seats. Since that time, President Biden has named Andrew Ferguson and Melissa Holyoak as commissioners, returning the agency to full strength. In concurring statements issued with the FTC's October 2024 announcement, Commissioner Ferguson and Commissioner Holyoak announced their support for the more modest final rule. The bipartisan support for the final rule suggests that any administrative challenge to the rule is unlikely to be brought and even more unlikely to succeed, and further suggests that the final rule is unlikely to be changed despite the outcome of the recent presidential election.
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