Premerger Notification; Reporting and Waiting Period Requirements, 89216-89414 [2024-25024]
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Federal Register / Vol. 89, No. 218 / Tuesday, November 12, 2024 / Rules and Regulations
FEDERAL TRADE COMMISSION
16 CFR Parts 801 and 803
RIN 3084–AB46
Premerger Notification; Reporting and
Waiting Period Requirements
Federal Trade Commission.
Final rule.
AGENCY:
ACTION:
The Federal Trade
Commission (‘‘FTC’’ or ‘‘Commission’’),
with the concurrence of the Assistant
Attorney General, Antitrust Division,
Department of Justice (‘‘Assistant
Attorney General’’ or ‘‘Antitrust
Division’’) (together the ‘‘Agencies’’), is
issuing this final rule and Statement of
Basis and Purpose (‘‘SBP’’) to amend the
Premerger Notification Rules (the
‘‘Rules’’) that implement the Hart-ScottRodino Antitrust Improvement Act
(‘‘the HSR Act’’ or ‘‘HSR’’), including
the Premerger Notification and Report
Form for Certain Mergers and
Acquisitions (‘‘Form’’) and Instructions
to the Notification and Report Form for
Certain Mergers and Acquisitions
(‘‘Instructions’’). The final rule requires
parties to transactions that are
reportable under the HSR Act to provide
documentary material and information
that are necessary and appropriate for
the Agencies to efficiently and
effectively conduct an initial assessment
to determine whether the transaction
may violate the antitrust laws and
whether to issue a Request for
Additional Information (‘‘Second
Request’’) as provided by the HSR Act.
In addition, the final rule implements
certain requirements of the Merger
Filing Fee Modernization Act of 2022
(‘‘Merger Modernization Act’’) and
ministerial changes to the Rules as well
as the necessary amendments to the
Instructions to effect the final changes.
DATES: This rule is effective on February
10, 2025.
FOR FURTHER INFORMATION CONTACT:
Robert Jones, Assistant Director,
Premerger Notification Office, Bureau of
Competition, Federal Trade
Commission, 400 7th Street SW,
Washington, DC 20024, or by telephone
at (202) 326–3100.
SUPPLEMENTARY INFORMATION:
SUMMARY:
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I. Executive Summary
The Commission is amending and
reorganizing the documentary material
and information requirements for
premerger notification required by the
HSR Act, 15 U.S.C. 18a, (‘‘notification’’
or ‘‘HSR Filing’’ or ‘‘Filing’’) to improve
the efficiency and effectiveness of
premerger review and to implement
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changes mandated by the Merger
Modernization Act, 15 U.S.C. 18b. The
Act and the Rules require parties to
certain mergers and acquisitions to
submit a notification to the Agencies
and to wait a short period of time before
consummating the reported transaction.
The reporting and waiting period
requirements of the HSR Act are
intended to enable the Agencies to
determine whether a proposed merger
or acquisition may violate the antitrust
laws, including section 7 of the Clayton
Act, 15 U.S.C. 18, if consummated and,
when appropriate, to take appropriate
law enforcement action prior to
consummation to prevent a violation of
the antitrust laws.
To advance the Clayton Act’s goal of
preventing undue consolidation or
stopping it in its incipiency,1 Congress
passed the HSR Act to require
mandatory premerger notification of
some acquisitions. In particular, it
charged the Agencies with reviewing
the details of those proposed
transactions in advance of
consummation. The Agencies rely on
information submitted in an HSR Filing
to conduct a premerger antitrust risk
assessment and to identify those
transactions that require additional
investigation to determine if they may
harm competition, and thus violate the
antitrust laws if consummated. The HSR
Act requires that the parties not
consummate their planned transaction
while the Agencies conduct this
assessment until the expiration of the
statutory waiting period, which for most
transactions is 30 days (15 days in the
case of a cash tender offer or certain
bankruptcy sales). During that short
period of time, referred to as the initial
waiting period, the Agencies review the
information submitted in the parties’
HSR Filings to identify those
transactions that require a closer look,
including through the collection of
additional information from the
acquiring and acquired persons or from
third parties. If either agency determines
during the initial waiting period to
conduct an in-depth investigation of the
transaction, section 7A(e) of the Clayton
Act, 15 U.S.C. 18a(e), authorizes the
Agencies to request additional
information or documents from each
party, which is referred to as a Second
Request.2 Issuing Second Requests
1 See,
e.g., Brown Shoe Co. v. United States, 370
U.S. 294, 318 n.32 (1962).
2 The FTC and DOJ share responsibility to enforce
the antitrust laws and have established a protocol
to clear the investigation of a transaction to one
agency to avoid confusion and conserve public
resources. The agency that receives clearance
conducts the investigation and determines whether
to issue Second Requests.
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extends the waiting period under the
HSR Act for another 30 days (ten days
in the case of a cash tender offer or
certain bankruptcy sales) after the
parties have substantially complied
with the Second Requests. During this
second waiting period, if the reviewing
agency believes that a proposed
transaction may violate the antitrust
laws, it may seek an injunction in
Federal district court to prohibit
consummation of the transaction.
The Commission has administered the
HSR Act’s premerger notification
program for over forty-five years, issuing
an initial set of HSR Rules that took
effect on September 5, 1978.3 Since
then, it has regularly updated these
rules, with the concurrence of the
Assistant Attorney General, pursuant to
its mandate under 15 U.S.C. 18a(d), to
require a premerger notification for each
reportable acquisition that contains
documentary material and information
necessary and appropriate to enable the
Agencies to determine whether the
transaction is one that may violate the
antitrust laws and proceed to an indepth investigation through the
issuance of Second Requests. In this
rulemaking, the Commission is
responding to several factors that make
today’s economic reality more
challenging for conducting a premerger
assessment with the limited information
required by the current rules. Simply
put, the economy of 2024 is different
than it was in 1978 or 2000 and, in the
Agencies’ experience, the HSR Form has
not kept pace with the realities of how
businesses compete today. There is a
higher degree of interconnectivity of
businesses along the supply chain as
well as with other companies that
provide ancillary services. The focus of
competitive interaction is not as obvious
when companies that supply goods or
services also generate revenues from
other sources, such as data sales, and
when even businesses in traditional
sectors such as manufacturing generate
significant revenues from the sale of
associated services. The changing nature
of competition makes it more difficult
for the Agencies to identify existing
business relationships that might be
affected by the acquisition, including
through non-price effects such as
innovation competition, and that are not
3 The Commission commenced notice-andcomment rulemaking soon after the passage of the
HSR Act and made extensive revisions to its
proposed rules before issuing a final rule nearly two
years later. See 41 FR 55488 (Dec. 20, 1976), 42 FR
39040 (Aug. 1, 1977), 43 FR 33450 (July 31, 1978),
43 FR 34443 (Aug. 4, 1978), 43 FR 36053 (Aug. 15,
1978). See Fed. Trade Comm’n & U.S. Dep’t of
Justice, Second Hart-Scott-Rodino Annual Report
(FY 1978).
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apparent from simply focusing on sales
in output markets. In addition, changes
in mergers and acquisition (‘‘M&A’’)
activity, corporate structures, and
investment strategies have rendered the
current Form’s focus on traditional
corporate structures outdated, and often
the Agencies are unable to determine
which entities or individuals will be
making competitive decisions postmerger.
These profound changes that have
occurred over time have created or
exposed significant gaps in the
information generated for premerger
review under the current HSR Rules.
These gaps curtail the Agencies’ ability
to efficiently and effectively detect
transactions that may violate the
antitrust laws. To fill in these gaps and
to directly respond to the passage of the
Merger Modernization Act, the
Commission relied on its experience
and expertise to identify specific
information that is necessary and
appropriate to conduct effective
premerger screening.
To initiate this rulemaking, the
Agencies conducted a comprehensive
review of the premerger notification
process, relied on their experience
collecting and reviewing data and
documents during antitrust
investigations, and considered the
cumulative effects of changes in deal
structure, investment strategies, and the
competitive dynamics of the modern
economy explained in more detail
below. From this review, the
Commission identified several
information deficiencies in the current
HSR Filing that prevent the Agencies
from efficiently and effectively
conducting a premerger assessment of
reportable transactions to identify
which ones may violate the antitrust
laws. The Agencies compared
documentary material and information
they have received over the years during
in-depth merger investigations with the
information collected in HSR Filings
and assessed whether having certain
types of documentary material and
information at the beginning of an
investigation would have changed the
Agencies’ decision whether and how to
investigate reportable transactions.
These specific categories of information
and documents, which are readily
available to the merging parties, are not
required by the current Rules, but
would be highly probative to the initial
antitrust screening of a transaction
during the initial waiting period and
thus are necessary and appropriate for
that review. The information identified
and required by this final rule will
enable the Agencies to detect
transactions that may violate the law in
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light of modern commercial realities
and in furtherance of the statutory
mandate to arrest trends toward
concentration in their incipiency. The
final rule also will allow the Agencies
to identify potentially unlawful
transactions more quickly and with
greater accuracy, narrowing the scope of
their investigations in some cases, and
in others, reducing the need to conduct
a more burdensome in-depth
investigation by issuing Second
Requests.
In June 2023, the Commission
proposed amendments to address the
information deficiencies under the
existing HSR Rules in a Notice of
Proposed Rulemaking (‘‘NPRM’’).4 The
Commission received approximately
721 comments.5 The majority of
commenters were individuals who
expressed general support for the
rulemaking or for more vigorous
antitrust enforcement more broadly.
Others opposed certain aspects of the
proposed rule and some questioned the
Commission’s authority to make any
adjustments. After careful consideration
of the comments and as discussed in
more detail below, the Commission has
substantially narrowed the information
requirements proposed in the NPRM. In
the final rule, the Commission is not
adopting several proposed requirements
outright, including those related to:
• a timeline of key dates for closing
the proposed transaction;
• creating organization charts for the
purpose of filing a notification;
• information about other interest
holders;
• drafts of submitted documents;
• information about employees;
• information about board observers;
• geolocation information;
• prior acquisitions involving entities
with less than $10 million in sales or
revenues, or consummated more than 5
years prior to filing; and
4 On June 29, 2023, the Commission published a
Notice of Proposed Rulemaking, Premerger
Notification; Reporting and Waiting Period
Requirements, 88 FR 42178 (June 29, 2023)
(hereinafter NPRM). On August 10, 2023, the
Commission extended the comment period to
receive public comments through September 27,
2023. 88 FR 54256. The comments on the NPRM
(Doc. No. FTC–2023–0040) are available at https://
www.regulations.gov/docket/FTC-2023-0040/
comments.
5 The Commission does not rely on any particular
individual comment submission for its findings, but
rather provides here (and throughout this final rule)
examples of comments that were illustrative of
themes that spanned many comments. The
Commission’s findings are based on consideration
of the totality of the evidence, including its review
of the empirical literature, its review of the full
comment record, and its expertise and experience
in identifying mergers that violate the antitrust
laws.
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• information about steps taken to
preserve documents or use of messaging
systems.
For other proposals, the Commission
has substantially modified its proposals
to minimize where possible the costs to
filers and third parties, yet still provide
the Agencies with information that is
necessary and appropriate for effective
and efficient premerger review. Overall,
these modifications significantly reduce
the effort required to comply with the
final rule as compared to the proposed
rule and include:
• Creating a new category of ‘‘select
801.30 transactions’’ for which the cost
of complying with the information
requirements has been limited because
of the low risk that the transaction may
violate the antitrust laws;
• Eliminating several document
requirements to reduce costs;
• Limiting some requirements to
materials that already exist;
• Excusing the seller 6 from certain
information requests if it would be
duplicative of information received
from the buyer;
• Limiting some requirements to
cover only recent information;
• Providing definitions or
clarifications to reduce uncertainty and
improve filer compliance;
• Creating de minimis exceptions to
reduce the costs of generating
information that has little economic
impact; and
• Making the provision of certain
information contingent on the
identification of a significant business
relationship between the filing persons
that is critical to assessing whether the
transaction may violate the antitrust
laws.
As modified, the final rule introduces
necessary and appropriate updates to
HSR information requirements to allow
the Agencies to understand the reported
transaction and conduct an initial
antitrust assessment within the statutory
timeframe and does so in a manner that
aligns the associated costs with the
likelihood that the transaction is one
that presents antitrust risk. With more
complete information that is targeted to
disclose existing business relationships
between the parties, the Agencies can
determine whether and how to deploy
their resources to further investigate
potentially anticompetitive acquisitions
prior to consummation. The final rule
will also provide transparency for those
contemplating a reportable transaction
by describing the information the
6 References to ‘‘seller’’ throughout refer to the
acquired person, as defined in 16 CFR 801.2,
regardless of whether or not the acquired person is
actually a party to the transaction.
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Agencies rely on to conduct their initial
assessment of whether a transaction
may violate the antitrust laws. The
amendments will also reduce the
current burden on third parties (such as
customers and competitors of the
merging parties) on whom the Agencies
often rely to fill in many of the
information gaps during the initial
review period because of inadequacies
in the current Rules.
With this rulemaking the Commission
has closely tailored the burden of
complying with the HSR Act to align as
much as practicable with the risks of a
law violation presented by the
particular transaction. This alignment is
consistent with the statutory purpose of
premerger review, which is for the
Agencies to determine which reported
transactions may violate the antitrust
laws during the brief period provided by
the Act for an initial antitrust
assessment. As a result, the final rule
achieves the benefits associated with
mandatory premerger review with an
overall burden that is reasonable and
consistent with the legislative purpose
of the HSR Act.
II. Background
A. Premerger Review and the
Implications for Merger Enforcement
Section 7 of the Clayton Act is, by its
terms, forward-looking and predictive,
focused on acquisitions whose effect
‘‘may be substantially to lessen
competition, or to tend to create a
monopoly.’’ 7 To better effectuate the
Clayton Act’s goal of preventing undue
consolidation or stopping it in its
incipiency, Congress passed the HSR
Act to require mandatory premerger
notification of some acquisitions, and
charged the Agencies with reviewing
the details of those proposed
transactions in advance of
consummation to determine whether
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7 15 U.S.C. 18. See Brown Shoe v. United States,
370 U.S. 294, 317–18 (1962) (Congress provided
authority for arresting mergers at a time when the
trend to a lessening of competition in a line of
commerce was still in its incipiency and assure
courts had the power to brake the process of
concentration at its outset and before it gathered
momentum).
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they may violate the antitrust laws. In
doing so, Congress fundamentally
changed the way the Agencies enforce
the nation’s antitrust laws to prevent
harmful consolidation.8
Congress specifically charged that the
Commission engage in rulemaking to
require information in the HSR Filing
that is necessary and appropriate to
detect acquisitions that may violate the
antitrust laws. Section 18a(d)(1) of the
HSR Act states that the Commission, by
rule and in accordance with the
Administrative Procedures Act, shall
require that the notification contain
such documentary material and
information to determine whether the
acquisition may, if consummated,
violate the antitrust laws.9 Relying on
this explicit rulemaking authority, the
Commission has adjusted those
requirements over time to carry out the
purposes of the Act.
In passing the HSR Act, Congress
imposed mandatory premerger review
only for certain large transactions, in
part to ‘‘improve and modernize
antitrust investigation and enforcement
mechanisms,’’ 10 ‘‘ease burdens on the
courts by forestalling interminable postconsummation divestiture trials . . . [,
and] advance the legitimate interests of
the business community in planning
and predictability.’’ 11 The robust
legislative history of the HSR Act makes
plain that premerger review should
focus on the likelihood that a reported
transaction may violate the antitrust
8 See Peter W. Rodino, Jr., Statement on the 25th
Anniversary of Hart-Scott-Rodino (2001), https://
www.ftc.gov/enforcement/premerger-notificationprogram/hsr-resources/pno-news-archive/
statement-peter-w-rodino (‘‘Hart-Scott-Rodino was
intended to give the anti-trust agencies two things:
critical information about a proposed merger and
time to analyze that information and prepare a case,
if necessary. From what I hear, the legislation
absolutely has transformed merger enforcement.
Competition, as well as the consumer, has
benefitted.’’).
9 15 U.S.C. 18a(d)(1).
10 S. Rep. No. 94–803, at 1 (1976).
11 H.R. Rep. No. 94–1373, at 11 (1976). The HSR
Act applies to acquisitions that met the statutory
thresholds whether they are properly styled
‘‘mergers’’ and even if they do not result in a change
of control. The terms ‘‘mergers,’’ ‘‘acquisitions,’’
and ‘‘transactions’’ are used interchangeably to refer
to transactions for which an HSR filing is required.
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laws and that the Commission shall
collect information to make that
determination prior to consummation.12
Consistent with Congressional mandate,
the Agencies rely on notifications under
the HSR Act to target their enforcement
efforts to their best use in preventing
undue consolidation by seeking to
prohibit the consummation of
acquisitions that violate the antitrust
laws.
To focus the Agencies’ screening and
potential enforcement efforts on the
mergers that are most likely to harm
competition and consumers, Congress
required notice in advance for the
largest mergers and tasked the Agencies
with conducting an assessment of the
risk that the proposed acquisition may
violate the antitrust laws. To perform
this task, the Agencies must review
thousands of filings each year and
identify which ones should be targeted
for an intensive investigation of their
potential to violate the antitrust laws.
This is a fact-intensive endeavor that
requires a deep understanding of
precedent and economic analysis. The
Agencies employ lawyers, economists,
technologists, accountants, and support
staff to conduct premerger analyses of
reported transactions in order to
perform this critical task on behalf of
the American public.
Nonetheless, transactions reported
under the HSR Act are a small fraction
of the total number of mergers and
acquisitions that occur each year in the
United States. Relying on commercial
data on M&A activity and data from the
Agencies’ annual HSR reports, Table 1
shows that during the five-year period
of FY 2018 to 2022, HSR filings
represented a small percentage of
overall deal activity in the United
States, on average 16.5 percent a year.13
12 15
U.S.C. 18a(d)(1).
different commercially available data,
the U.S. Government Accountability Office recently
estimated that HSR filings during this same time
frame averaged 15 percent of overall M&A activity.
See U.S. Gov’t Accountability Office, Defense
Industrial Base: DOD Needs Better Insight into
Risks from Mergers and Acquisitions 8 Fig. 1 (Oct.
2023) (GAO–24–106129), https://www.gao.gov/
assets/d24106129.pdf (using Bloomberg data).
13 Using
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Table 1: M&A Transactions 2018 - 2022
2018
Total Number ofTransactions"
2022
Average
13.366 13.696 12.828 19.099 15.734
14,945
Number ofReported Tnmsactioas6
Percentage
2.111
2019
2.089
2020
2021
1,.637 3.520 3.152
2,502
15.8% 15.3% 12.8% 18.4% 20.00/4
16.5%
"Source: MagerStat Fact Set R.e\,iew. M&AAmlomcemmts.
b Source:HSR.AmlualR.eportsforFiscal Yem2018-l022. Figure 1.
While the Agencies investigate and
ultimately seek to block only a small
subset of reportable mergers each year,
the challenges of administering
mandatory premerger review have
expanded and accelerated over time due
to the changes in the nature of M&A
activity discussed in detail below.
Figure 1: HSR Merger Transactions Reported Fiscal Years 2014 - 2023
2014
2016
2015
2017
2018
2019
2020
2021
2022
2023
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resources to prevent those acquisitions
most likely to cause widespread harm.14
14 Contrary to suggestions from some
commenters, it is not practical for the Agencies to
identify specific illegal transactions that they
‘‘missed’’ during their premerger review, nor is the
Commission required to establish that as a predicate
for invoking its statutory rulemaking authority
under the HSR Act. See Pharm. Rsch. & Mfrs. Am.
v. FTC, 790 F.3d 198, 199, 206 (D.C. Cir. 2015)
(hereinafter PhRMA). Doing so would require a
redirection of resources to investigate consummated
mergers and away from resources devoted to
premerger review. Instead, it is imperative that the
Agencies ensure that they have the right
information to address deficiencies that have
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The Commission is mindful of recent
economic research that underscores the
importance of adequate detection for
effective merger enforcement. For
instance, researchers posit that some
firms appear to be employing strategies
to avoid antitrust scrutiny of their
anticompetitive deals, deliberately
negotiating and structuring their deals
to avoid premerger review (so-called
emerged to undermine premerger review as an
effective tool for detecting which transactions may
violate the nation’s antitrust laws.
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As depicted in Figure 1, there was a
recent spike in HSR-reportable
transactions: in FY 2021, the Agencies
reviewed HSR Filings for 3,520
transactions, over twice the number of
the prior year’s filings. In FY 2022, the
Agencies reviewed 3,152 transactions.
Although the pace of HSR Filings has
recently moderated somewhat, the
recent period of intense merger activity
highlighted significant inefficiencies
and deficiencies in current notification
requirements that must be addressed so
that the Agencies can direct their scarce
ER12NO24.032</GPH>
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Fiscal Year
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stealth acquisitions),15 or identifying
acquisition targets at a nascent stage to
buy them before they are valuable
enough to require premerger review,
sometimes solely for the purpose of
preempting future competition (socalled ‘‘killer acquisitions’’).16 One
researcher concludes that merger
enforcement falls by about 90 percent
when transactions are not subject to
premerger review.17 Because most
mergers are not subjected to premerger
review, these strategies have contributed
to a rise in aggregate concentration by
stimulating mergers between
competitors, with attendant negative
effects on markups, private investment,
and the share of output going toward
profits.18
These studies support Congress’
determination that premerger review is
essential to effective enforcement of the
antitrust laws and that without effective
premerger review, there is inadequate
detection of mergers that violate the law
and cause harm.19 While the Agencies
can and do challenge acquisitions that
are not reported under the HSR Act as
well as consummated reported mergers
that have caused harm, unwinding an
illegal merger post-consummation still
requires a significant investment of time
and resources, and results in significant
harm to market participants until
unwound.20 Even after the Agency
15 John Kepler et al., ‘‘Stealth Acquisitions and
Product Market Competition,’’ 78 J. Fin. 2837
(2023); John M. Barrios & Thomas G. Wollmann, ‘‘A
New Era of Midnight Mergers: Antitrust Risk and
Investor Disclosures’’ (Nat’l Bureau of Econ. Rsch.,
Working Paper No. 29655, Jan. 2022), https://
www.nber.org/papers/w29655; see also Colleen
Cunningham et al., ‘‘Killer acquisitions,’’ 129 J.
Political Econ. 649, 653 (2021) (killer acquisitions
of overlapping targets bunch just below HSR
threshold while there is no such pattern for nonoverlapping acquisitions).
16 Cunningham et al., supra note 15, at 653.
17 See Comment of Thomas Wollmann, Doc. No.
FTC–2023–0040–0680 at 1 n.2 (citing to Thomas G.
Wollmann, ‘‘Stealth Consolidation: Evidence from
an Amendment to the Hart-Scott-Rodino Act,’’ 1
a.m. Econ. Rev.: Insights 77–94 (2019) and Thomas
G. Wollman, ‘‘How to Get Away with Merger:
Stealth Consolidation and Its Real Effects on US
Healthcare’’ (Nat’l Bureau of Econ. Rsch., Working
Paper No. 27274, 2021)).
18 Thomas G. Wollmann, ‘‘Stealth Consolidation:
Evidence from an Amendment to the Hart-ScottRodino Act,’’ 1 a.m. Econ. Rev.: Insights 77–78
(2019) (hereinafter ‘‘Stealth Consolidation’’).
19 See id. at 77 (post-2000, enforcement against
newly exempt transactions dropped to nearly zero
while mergers between competitors rose sharply,
reflecting an endogenous response to reduced
premerger scrutiny).
20 In a recent example, the Commission ordered
the unwinding of an illegal merger three years and
two months after consummation. In December 2020,
the Commission approved Otto Bock’s divestiture of
the assets of Freedom Innovations to another
company to resurrect competition in the market for
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succeeds in establishing a law violation,
it may be difficult or impossible to
restore the premerger state of
competition, especially if the parties
have commingled, sold, or closed assets,
shared confidential information, or
terminated key employees.21 Moreover,
the decision to pursue these timeconsuming investigations involves
opportunity costs, pitting the costs and
benefits of challenging a consummated
merger against devoting those
enforcement resources to investigations
into other potential antitrust violations,
including investigations that may arise
from HSR Filings.
To fulfill the Agencies’ mandate to
conduct quick yet effective premerger
review of reported transactions, the
Commission must make the best use of
the tools Congress gave the Agencies to
detect and prevent harmful acquisitions,
including by requiring that the
notification contain the documents and
information that are necessary and
appropriate for screening reportable
mergers prior to consummation.
Because premerger review is critically
important to effective merger
enforcement, the information contained
in an HSR Filing must be fit for the
purpose of determining whether a
reported transaction may violate the
antitrust laws in light of current market
realities. Having the information
necessary to make that assessment
allows the Agencies to decide when and
how to expend public resources to
investigate and potentially challenge
mergers. The final rule will enable the
Agencies to engage in efficient and
effective detection of illegal mergers that
are subject to the HSR Act and thus is
microprocessor prosthetic knees. In re Otto Bock
HealthCare N. Am., Inc., No. 9378 (F.T.C. Dec. 1,
2020). The Commission’s effort to unwind
Polypore’s illegal acquisition of rival battery
separator manufacturer Microporous required five
years, during which an Eleventh Circuit decision
upheld the Commission’s divestiture order. See
Press Release, Fed. Trade Comm’n, ‘‘FTC Approves
Polypore International’s Application to Sell
Microporous to Seven Mile Capital Partners; Sale
Will Unwind Illegal 2008 Acquisition’’ (Dec. 18,
2013), https://www.ftc.gov/news-events/news/pressreleases/2013/12/ftc-approves-polyporeinternationals-application-sell-microporous-sevenmile-capital-partners-sale. See also Debbie
Feinstein, ‘‘Un-consummated merger,’’ Fed. Trade
Comm’n Competition Matters blog (Dec. 18, 2013),
https://www.ftc.gov/enforcement/competitionmatters/2013/12/un-consummated-merger.
21 Fed. Trade Comm’n, The FTC’s Merger
Remedies 2006–2012, 18–19 (2017) (report of the
Bureaus of Competition and Economics) (less than
one-quarter of consummated merger remedies
successfully restored competition), https://
www.ftc.gov/system/files/documents/reports/ftcsmerger-remedies-2006-2012-report-bureauscompetition-economics/p143100_ftc_merger_
remedies_2006-2012.pdf.
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a reasonable exercise of the
Commission’s rulemaking authority
under the HSR Act.
B. The Need for the Final Rule
The purpose of this rulemaking is to
modernize the premerger review process
in light of changing market dynamics,
making adjustments that are necessary
and appropriate to allow the Agencies to
detect and prevent illegal mergers prior
to consummation. The final rule also
makes the process more efficient for
filers, third parties, and the Agencies,
shifting some of the burden of
information collection and reporting to
the merging parties (and away from
third parties) and requiring the
information needed for a preliminary
antitrust assessment to be contained in
the HSR Filing so that the Agencies
have the full statutory review period to
assess and confirm the information.
Overall, the final rule addresses
significant information gaps and
asymmetries that have grown over time
and undermined the Agencies’ ability to
conduct premerger review. In addition,
this rulemaking implements
requirements Congress imposed by
passing the Merger Modernization Act,
which broadened the scope of
information the Agencies must collect
as part of premerger review, including
by requiring the collection of
information about subsidies from
foreign entities and governments of
concern.
Due to changing commercial realities
referenced above, the existing
requirements for an HSR Filing leave
significant gaps in the information
available to the Agencies for conducting
this assessment. Many of these gaps can
be filled by information that the filing
parties already have and often use in
their own assessment of the transaction.
Certain deficiencies in the existing
reporting requirements prevent the
Agencies from spotting problem areas
that would justify a more in-depth
investigation or, alternatively, from
readily obtaining the facts needed to
conclude that the transaction does not
merit in-depth review prior to
consummation. The rulemaking
addresses these problems as well.
Based on the Agencies’ extensive
experience reviewing HSR Filings,
transactions that present certain
attributes are more likely to violate the
antitrust laws and deserve further
investigation. For instance, a merger of
two firms that compete (or will soon
compete) to provide goods or services to
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the same set of customers, or a merger
involving a manufacturer and its main
distributor that also distributes the
products of competing manufacturers,
may warrant closer scrutiny. On the
other hand, if the Agencies can
determine from review of an HSR Filing
that a transaction does not present such
attributes, the Agencies can more
quickly and confidently determine that
the transaction does not require a more
in-depth review and may proceed to
consummation.22 However, the
Agencies cannot make these
determinations with confidence in the
initial 15- or 30-day waiting period
when the HSR Filings lack sufficient
information about relevant premerger
competitive relationships between the
parties. By requiring the submission of
such information, the final rule enables
effective Agency decision-making
during the initial 15- or 30-day waiting
period.23 The intention of the final rule
is to make it possible for the Agencies
to identify the most concerning
transactions for more in-depth review,
including through the issuance of
Second Requests, and also to more
quickly and confidently complete the
review of those transactions that do not
merit additional investigation and can
proceed to closing at the end of the
statutory waiting period.
The consequences of inadequate
detection are revealed in a recent
analysis of hospital mergers that were
reported to the Agencies for premerger
review co-authored by two economists
from the Commission’s Bureau of
22 Until 2020, the Agencies routinely granted
early termination of the initial waiting period for
certain transactions that did not warrant further
action pursuant to 15 U.S.C. 18a(b)(2). In March
2020, in order to transition filers to an e-filing
system that permitted the Agencies to continue to
process filings during the COVID–19 pandemic, the
Agencies temporarily suspended the discretionary
granting of early termination. In February 2021, the
Agencies once again suspended the granting of
early termination in response to an unprecedented
volume of transactions. See Press Release, Fed.
Trade Comm’n, ‘‘FTC, DOJ Temporarily Suspend
Discretionary Practice of Early Termination’’ (Feb.
4, 2021), https://www.ftc.gov/news-events/news/
press-releases/2021/02/ftc-doj-temporarilysuspend-discretionary-practice-early-termination.
23 The HSR Act provides for a shortened 15-day
initial waiting period for reportable acquisitions by
means of a cash tender offer or acquisitions subject
to certain Federal bankruptcy provisions. 15 U.S.C.
18a(b)(1)(B); 11 U.S.C. 363(b)(2), as amended
(1994). For these transactions, the second waiting
period is also shorter, 10 days (as compared to 30
days for most transactions) after appropriate
certification of substantial compliance with the
Second Request. 15 U.S.C. 18a(e)(2). For
convenience, this rulemaking refers to the standard
30-day initial waiting period that applies to most
transactions even though the Agencies have even
less time to review information provided in the
HSR Filing for cash tender or certain bankruptcy
transactions.
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Economics.24 The paper examined a set
of consummated hospital mergers and
measured the effect of each merger on
prices. The study concluded that
mergers not reportable under the HSR
Act did not result in larger price
increases than reportable mergers. In
contrast, the authors found different
outcomes among mergers that were
subject to premerger review based on
how much review the transaction
received. Of the mergers reported to the
Agencies, the largest average percentage
price increase occurred for those
mergers that received early termination
of the initial waiting period. This
suggests that the HSR Filings failed to
provide sufficient information to trigger
additional investigations that could
have blocked these harmful mergers
before they were consummated; instead,
the filings resulted in early termination
of the waiting period. While the study
was not designed to test the impact of
this rulemaking, the study supports the
Commission’s belief that there are
information deficiencies with the
current HSR Rules that prevent the
Agencies from identifying mergers that
may violate the antitrust laws.25
Hundreds of individuals submitted
public comments to describe their own
experiences in the aftermath of mergers
and urge the antitrust agencies to do
more to prevent the harmful effects of
consolidation, including collecting more
information in the HSR Filing.
Examples of supportive comments from
these individuals include the following:
• I was an employee at a mobile
gaming company. . . . We went through
acquisition after acquisition, to finally
end up in a subsidiary of a big gaming
multinational company. . . . There was
a hiring freeze, there were layoffs in
another subsidiary we had been
affiliated with and then a month ago
they cancelled our project and laid off
all California employees. . . . Before the
final acquisition, our company had 2
profitable games and was developing a
third. After the acquisition there were
harsh [Key Performance Indicators] for
the new game and investment was cut
24 Keith Brand et al., ‘‘In the Shadow of Antitrust
Enforcement: Price Effects of Hospital Mergers from
2009–2016,’’ 66 J. L. Econ. 639 (2023).
25 One commenter suggests that this study proves
the opposite and provides evidence that the current
HSR Form provides Agency staff with sufficient
information to identify potentially anticompetitive
mergers. See Comment of U.S. Chamber of Com.,
Doc. No. FTC–2023–0040–0684 at 14 n.32. The
Commission disagrees with this assessment of the
results. Indeed, in their study, the authors suggested
that their results should encourage further study of
the process of granting early termination to better
illuminate why mergers that receive truncated
review had higher price effects than those that
received a preliminary review but not a Second
Request. See Brand et al., supra note 24, at 663–64.
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89221
back. Had our company been able to
resist the wave of subsequent
acquisitions, it is likely we would still
be employed in a profitable and vibrant
company that was able to compete on
the marketplace.26
• I am a General Partner at a small
Venture Capital firm. I support this
proposal as I believe it will lead to
increased transparency which benefits
us all. . . . We are facing an oligopoly/
monopoly crisis in this country/the
world and it’s important we strive for
real competition. I believe this proposal
will provide the government more
information with which it can make
sure our industries thrive.27
• As a retired person, I have noticed
prices going up much more where a
small group of suppliers have most of
the market share. I see companies using
near-monopoly power to stop
employees from having unions. The
only way the antitrust laws can be
adequately enforced, is to insist that
anyone proposing a merger provide full
accurate information on what they are
doing.28
• I work as a cybersecurity engineer.
Leaving aside the economic concerns of
monopolies, I want to bring up the
security concerns of allowing
unchecked mergers. Haphazard, rushed
mergers increase the security risk across
companies, as the engineering teams
must stitch together the environments
for disparate organizations quickly. . . .
I look forward to these reporting
requirements and I hope they cause
companies to slow down and think of
the knock-on effects of the mergers
beyond the influx of cash and increased
market power.29
• As an investor and financial
advisor, I approve of the changes
requiring more disclosure about the
nature of mergers. The impacts of
industry consolidation are important.
. . . A thorough understanding of the
purpose of mergers should help ensure
that deals are not anti-competitive.30
• As a retired CPA and former
business professor, I support these
proposed changes to the HSR form. The
government needs the additional
information and greater clarity in order
to carry out its responsibility to oversee
and evaluate proposed mergers and
acquisitions with a view to protecting
26 Anonymous Comment, Doc. No. FTC–2023–
0040–0134.
27 Anonymous Comment, Doc. No. FTC–2023–
0040–0203.
28 Comment of Joan Friedman, Doc. No. FTC–
2023–0040–0237.
29 Comment of Cybersecurity Engineer, Doc. No.
FTC–2023–0040–0238.
30 Comment of Joseph Cook, Doc. No. FTC–2023–
0040–0244.
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the common good and promoting
competition within and across
industries.31
• Capitalism can only work with a
robust system of competition, and we
are lo[]sing that at an ever-increasing
rate. I am in an agricultural business.
There is virtually no competition for the
dollars I spend, and an equal lack of
competition for what I produce. This is
stunningly true when looked at over the
40 years I have been in business.32
• Businesses certainly have a right to
pursue mergers and acquisitions as a
means of improving their market
positions, but the public also has a right
to know the ‘‘five W’s’’ driving these
decisions: Who is funding the HSR
Action; What are the specifics of the
proposed action; When are the HSR
Actions taking place; Where are the
affected communities/localities; and
Why are the stakeholders pursuing the
HSR Action (or, what is their business
goal)? Another key piece of information
that the public has a right to know, is
WHO will be affected by the proposed
merger or acquisition? The issues at
stake here are National Security, fair
market competition, supply chain
disruptions, and negative impacts on
labor markets. . . . I hope the FTC
sticks to their plan and implements
these common-sense and much needed
reporting requirements.33
• I am a 25-year veteran in an
industry (publishing) that has seen both
jobs and innovation suffer due to
unchecked consolidation by large
players. It is very possible some of this
consolidation might have been
prevented, or at least steered in a
direction that encouraged innovation
and growth, if regulators had this kind
of information available beforehand.34
• I am a private, sole-practitioner
entrepreneur with a vested interest in a
diversified economic ecology that
supports and sustains vibrant, fair
competition. . . . From my perspective,
the requirements for getting approval for
large mergers should include gathering
enough information about the
companies involved that the FTC can
make a best and rational assessment of
the effects of the maneuver on the
industries, labor markets, consumer
pricing, industry trends, trading
31 Comment of Sue Ravenscroft, Doc. No. FTC–
2023–0040–0259.
32 Comment of Jeffrey Bender, Doc. No. FTC–
2023–0040–0267.
33 Comment of Thomas Newman, Doc. No. FTC–
2023–0040–0325.
34 Anonymous Comment, Doc. No. FTC–2023–
0040–0332.
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markets, etc, that they (mergers) will
potentially affect.35
On the other hand, several
commenters stated that the Agencies
have not provided any evidence that
current information requirements are
insufficient, or identified transactions
they did not challenge due to
shortcomings in the current premerger
review process. One commenter
suggested that if the Commission
intends to expand the information
requirements for the HSR Filing, it
should lay a stronger legal and
evidentiary foundation that would
justify its need for the additional
information. Another commenter urged
the Commission to consider how best to
balance the need to determine whether
further investigation is warranted
against the burden to filing parties.
In response to the comments and to
explain further the need for this
rulemaking, the Commission discusses
below the gaps that exist in current HSR
information requirements relating
directly to potential violations of the
antitrust laws, and identifies the new
information requirements in the final
rule that will provide a factual basis for
the Agencies to determine whether to
conduct a more searching review of a
transaction based on these concerns.
The gaps described below are intended
to be illustrative and not exhaustive.
1. Disclosure of Entities and Individuals
Within the Acquiring Person
In reviewing a transaction filed under
the HSR Act, the Agencies must quickly
understand the scope and nature of the
buyer’s business and business
relationships to determine whether the
acquisition may harm competition and
thus violate the antitrust laws,36 which
include section 7 of the Clayton Act.
The scope of section 7 is broad: it
prohibits any acquisition whose effect
may be substantially to lessen
competition or to tend to create a
monopoly, including those that result in
a small ownership stake.37 In many
acquisitions, the buyer gains control of
the acquired entities or assets and
directs the decision-making at the
combined firm post-merger. In addition,
if the buyer has a complex corporate or
governance structure, an acquisition can
bring together individuals or investors
35 Comment of Marla McFadin, Doc. No. FTC–
2023–0040–0377.
36 15 U.S.C. 12(a).
37 15 U.S.C. 18. See United States v. E.I. du Pont
de Nemours & Co., 353 U.S. 586, 592 (1957) (any
acquisition is within the reach of section 7
whenever the reasonable likelihood appears that the
acquisition will result in a restraint of commerce or
the creation of a monopoly in any line of
commerce).
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within the buyer that control or
influence decision-making at a
competitively significant business, such
as a competitor of the target 38 of the
filed-for transaction.39 Indeed, holdings
of entities within the acquiring person
that do not result in control under the
HSR Rules nevertheless can result in the
ability to influence competitively
important decisions of the acquiring
entity, and thus affect the analysis of
whether the acquisition of the target
may harm competition.40
The HSR Act states that, unless
exempt, no person shall acquire,
directly or indirectly, any voting
securities or assets of any other person
without first filing a notification with
the Agencies and waiting for the
statutory period to expire.41 The HSR
Rules require notification of the
transaction from the entity that,
pursuant to the Rules, controls the
buyer (or seller), which the Commission
has defined as the Ultimate Parent
Entity or ‘‘UPE.’’ 42 But to determine
38 To aid the clarity of the Form and Instructions,
the Commission defines ‘‘target’’ in the Instructions
to include all entities and assets to be acquired by
the acquiring person from the acquired person in
the reported transaction. See section VI.A.1.h.
39 See, e.g., In re Red Ventures Holdco, LP, No.
C–4627 (F.T.C. Nov. 2, 2017) (complaint)
(overlapping limited partnership holdings violated
section 7); In re TC Group, L.L.C., No. C–4183
(F.T.C. Mar. 16, 2006) (complaint) (acquisition
involving minority stake giving two private equity
investors seats on the boards of competitors); In re
Dan L. Duncan, No. C–4173 (F.T.C. Aug. 18, 2006)
(complaint) (acquisition combined general partners
of competing energy storage companies under
common control). Competition concerns about
partial stakes can arise between horizontal
competitors; United States v. Dairy Farmers of Am.,
426 F.3d 850, 860 (6th Cir. 2005), or a supply
relationship, du Pont, 353 U.S. at 602–604 (23%
interest in General Motors, a key supplier, and a
shared board member). Section 7 does not apply to
buyers making an acquisition solely for the purpose
of investment when the buyer does not intend to
use its position to bring about or attempt to bring
about a substantial lessening of competition. United
States v. Tracinda Inv. Corp., 477 F. Supp. 1093,
1100 (C.D. Cal. 1979).
40 See du Pont, 353 U.S. at 607 n.36 (finding the
influence of du Pont’s 23% stock interest to be
greater, due to diffusion of remaining shares);
Denver & Rio Grande W. R.R. Co. v. United States,
387 U.S. 485, 504 (1967) (identifying section 7
concerns with a 20% investment). See also Dairy
Farmers of Am., Inc., 426 F.3d at 862 (no voting
interest but leverage via its position as financier to
control or influence competitor’s decisions).
41 15 U.S.C. 18a(a). Congress rejected a proposal
to limit covered acquisitions to those made by
corporations, using the term ‘‘person’’ instead
because the anticompetitive nature of a merger is
not dependent upon the legal form of the acquiring
entity. 122 Cong. Rec. 30876 (1976).
42 One of the many initial challenges that the
Commission faced in implementing the HSR Act
was how to define ‘‘control’’ for the purposes of
determining reportability of transactions. The
Commission immediately understood that no set
percentage of ownership dictated whether an
individual or entity had functional control of or
significant influence over a company, which is
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whether the transaction may violate the
antitrust laws, the Agencies need to
understand the nature of the buyer’s
holdings pre- and post-merger, as well
as the identities of others who have
holdings in the buyer and thus may
have influence, including possible veto
power, over the buyer’s decisionmaking, since that ability affects the
evaluation of the competitive effects of
the acquisition of the target.
Increasingly, this includes individuals
and entities with significant
management rights that give them a
‘‘seat at the table’’ when the buyer is
making competitively important
decisions.
Today, the mechanisms of influence
are not limited to equity stakes; the
ability to influence corporate decisionmaking arises from a variety of interests
beyond voting rights.43 It may arise from
sharing key decision-makers, such as
executives or members of their
respective boards of directors, or from a
combination of a significant minority
stake and rights to appoint or nominate
members of the board.44 The power of
key decision-makers of one competitor
to place members on the board of
another competitor or veto financial
decisions can result in substantial
influence over the buyer, and thus the
target after the transaction is
consummated, rendering an acquisition
critical to the analysis of the competitive effects of
a transaction. In 1976, the Commission originally
proposed that ‘‘control’’ would include not only
ownership of 50% or more of the voting securities
of an entity, but also the power to influence through
a minority stake. 41 FR 55488, 55490 (Dec. 20,
1976). Commenters objected to such a subjective
test for control. See 42 FR 39040, 39043 (Aug. 1,
1977). So, the Commission proposed to include the
contractual power to designate a majority of the
directors or trustees of an entity. Id. This proposal
was also criticized for being overly broad and
subjective. In the end, in setting up the premerger
notification program, the Commission adopted the
simple 50% or more threshold for control to give
prospective filers certainty as to their reporting
obligations. But in doing so, the Commission did
not dismiss the significance of understanding who
has actual or working control of the filing parties.
43 FR 33450, 33457–58 (July 31, 1978). This
definition limited the number of transactions
subject to the filing requirements of the HSR Act,
but the Commission did not minimize the
importance of examining who may have significant
influence over the acquiring person while assessing
antitrust risk arising from the transaction.
43 Gabriel V. Rauterberg, ‘‘The Separation of
Voting and Control: The Role of Contract in
Corporate Governance,’’ 38 Yale J. Reg. 1124, 1148–
54 (2021) (documenting trend of public companies
being subject to stockholder agreements that
provide various species of control rights to favored
investors); Jill E. Fisch, ‘‘Stealth Governance:
Shareholder Agreements and Private Ordering,’’ 99
Wash. U. L. Rev. 913, 930–33, 946–53 (2021)
(discussing similar trend in private companies).
44 E.g., United States v. U.S. West, Inc., No. 96–
002529, 1997 WL 269482 (D.D.C. Feb. 28, 1997)
(acquired firm had 20% stake plus board seats in
a competitor of acquiring firm).
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of a related target potentially illegal
under section 7.45 A merger might also
violate the law if it gives individuals
and entities of one competitor access to
officers, directors, or employees of
another competitor.46 Similarly, the
existence of subsidies, among other
means, may subject the buyer to
additional pressures from individuals or
entities not directly a party to the
reportable transaction.47 Beyond voting
rights, these interest holders can have
similar influence as holders of minority
and non-corporate interests.
a. Trends in Private Investment
Understanding the operations of the
buyer has become more challenging due
to vast changes in M&A activity since
the promulgation of the HSR Rules in
1978. One notable recent trend in M&A
activity is that the role of private
investors, including private equity, has
become more pronounced.48 In the
45 E.g., United States v. Univision Commc’ns.,
Inc., No. 1:03–cv–00758, 2003 WL 23192527 (D.D.C.
Dec. 22, 2003) (buyer held substantial equity stake
plus ability to influence certain strategic decisions
through issuance of equity or debt or veto of future
acquisitions). See also Dairy Farmers of Am., 426
F.3d at 862 (buyer had influence due to role as
financier, so that acquired firm is ‘‘locked in’’ to a
relationship with the buyer, which could lead to
anticompetitive effects).
46 E.g., In re Time Warner Inc., No. C–3709 (F.T.C.
Sept. 12, 1996) (analysis to aid public comment)
(walling off two individuals and one entity to
prevent them from influencing officer, directors,
and employees of competitor and its day-to-day
operations).
47 As discussed elsewhere, Congress has directed
the Commission to require the reporting of
subsidies received from foreign countries or foreign
entities of concern due to concerns that these
entanglements can distort the competitive process
by enabling the subsidized firm to submit a bid
higher than other firms in the market, or otherwise
change the incentives of the firm in ways that
undermine competition following an acquisition.
Merger Filing Fee Modernization Act of 2022, 15
U.S.C. 18b. Congress also enacted the Foreign
Investment Risk Review Modernization Act of 2018
(FIRRMA) to expand the jurisdiction of the
Committee on Foreign Investment in the United
States (CFIUS) over certain non-controlling
investments and real estate transactions involving
foreign persons that may be a threat to national
security. Public Law 115–232, 132 Stat. 2173, Title
XVII, Subtitle A (2018). For certain foreign
investments in U.S. businesses operating critical
technologies or infrastructure, or that collect
sensitive personal data of U.S. citizens, FIRRMA
regulations require notification of non-controlling
investments, direct or indirect, that afford the
foreign investor (1) access to material non-public
technical information; (2) membership or observer
rights on the board directors (or similar) or the right
to nominate an individual to that board; or (3) any
involvement, other than through voting of shares,
in substantive decision-making of the U.S. business.
31 CFR 800.211. Such relationships are deemed a
non-controlling interest in a U.S. business that
afford a foreign investor access to information or
involvement in substantive decision-making. See 85
FR 3112 (Jan. 17, 2020).
48 Elisabeth de Fontenay, ‘‘The Deregulation of
Private Capital and the Decline of the Public
Company,’’ 68 Hastings L. J. 445, 447 (2017). Private
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89223
Agencies’ experience, these private
investors often utilize complicated
structures of ownership and managerial
control. They also frequently take either
majority or minority stakes in many
different operating companies (which
may have competitively significant
relationships) and can exercise
significant influence over management
and strategic decision-making. In
particular, the percentage of equity
interest is often not a good indicator of
the extent to which investors can direct
the strategic decisions of the business.49
Investors can participate in the
management of companies by serving on
the company’s board, selecting or
monitoring the management team,
having veto rights, acting as sounding
boards for CEOs, or stepping into
management roles themselves.50
When these private investors take
active positions in a wide variety of
companies, such holdings can create
direct links between competitors or
other competitively relevant firms, such
as critical suppliers or distributors.
Economic research has shown that
transactions that lead to crossownership of horizontal competitors or
other firms in a competitively
significant business relationship can
create similar incentives and cause
similar anticompetitive effects as a full
merger.51 But when these relationships
are not well known or easy to identify,
the risk that anticompetitive harm from
an unlawful acquisition will go
equity has accounted for an increasing share of all
merger activity over time, although private equity
activity is highly cyclical. See Michael Mauboussin
& Dan Callahan, ‘‘Public to Private Equity in the
United States: A Long-Term Look,’’ Morgan Stanley
Inv. Mgmt., Counterpoint Global Insights 1 (Aug. 2,
2020), https://www.morganstanley.com/im/
publication/insights/articles/articles_
publictoprivateequityintheusalongtermlook_us.pdf.
Recent estimates suggest that private equity firms
managed about 20% of U.S. corporate equity and
that private equity deal-making has accounted for
40% or more of domestic M&A activity. Rogé
Karma, ‘‘The Secretive Industry Devouring the U.S.
Economy,’’ Atlantic (Oct. 30, 2023). See also Steven
A. Cohen, et al., ‘‘Private Equity in 2023—A Year
(Not) to Remember,’’ Harv. L. Sch. Forum on Corp.
Governance (Jan. 13, 2024), https://
corpgov.law.harvard.edu/2024/01/13/privateequity-in-2023-a-year-not-to-remember/ (private
equity deal volume declined in 2023 and
increasingly focused on smaller deals and minority
investments).
49 See generally Bob Zider, ‘‘How Venture Capital
Works,’’ Harv. Bus. Rev. (Nov.-Dec. 1998), https://
hbr.org/1998/11/how-venture-capital-works;
Thomas Hellman, ‘‘The allocation of control rights
in venture capital contracts,’’ 29 RAND J. Econ. 57
(1998).
50 See, e.g., Sec. Exch. Comm’n, ‘‘Private Equity
Funds,’’ Investor.gov (last visited Sept. 10, 2024),
https://www.investor.gov/introduction-investing/
investing-basics/investment-products/privateinvestment-funds/private-equity.
51 Timothy Bresnahan & Steven C. Salop,
‘‘Quantifying the competitive effects of production
joint ventures,’’ 4 Int’l J. Indus. Org. 155 (1986).
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undetected is greatly increased.52 This
includes the risk of collusive 53 or
coordinated behavior,54 or the risk that
cross-ownership of the combined firm
will lead to foreclosure of rivals.55
The increasing role of private capital
is reflected in the shifting mix of
reportable transactions. Using data from
the Agencies’ Annual HSR Reports for
the past 20 years, Figure 2 shows that
the number of transactions for which
the name of the Ultimate Parent Entity
of the acquiring person included ‘‘fund’’
or some variation of ‘‘L.P.’’ has
increased from approximately ten
percent to nearly 40 percent of all
reportable transactions.56 The acquiring
person for these transactions can be
shell companies that have been created
by an investment group in order to make
a particular acquisition, or an entity that
owns a variety of other operating
entities (often referred to as ‘‘portfolio
companies’’). In either scenario, the
entity is part of the structure of a larger
investment company or group.
Figure 2: Acquisitions Involving Funds and Limited Partnerships
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Year
Transactions: ■ Private Investment ■ Other
Since the beginning of the premerger
program, the Commission has required
filers to report certain entities that hold
minority interests in the filing parties to
alert the Agencies to situations in which
the potential antitrust impact of the
reported transaction does not result
solely or directly from the acquisition,
but may arise from direct or indirect
shareholder relationships between the
parties to the transaction.57 As
explained in the NPRM, reporting
requirements regarding the
identification of certain minority
holders of the filing persons have been
adjusted over time to reflect market
realities, including changes in
investment activity and the growing role
of these intermediaries.58 Nonetheless,
changes in the investment landscape
discussed above have created
meaningful gaps in the reporting
requirements for a growing number and
type of minority holders that have the
ability to influence competitive
decision-making and to harm
competition via acquisitions that violate
the antitrust laws.
52 Daniel P. O’Brien & Steven C. Salop,
‘‘Competitive Effects of Partial Ownership:
Financial Interest and Corporate Control,’’ 67
Antitrust L. J. 559, 570 (1999) (overview of the
complex corporate financial and governance
structures of modern corporations, including
different types of shareholding and the
relationships to the boards of directors).
53 Robert J. Reynolds & Bruce R. Snapp, ‘‘The
competitive effects of partial equity interests and
joint ventures,’’ 4 Int’l J. Indus. Org. 141 (1986);
David Flath, ‘‘When is it rational for firms to
acquire silent interests in rivals?,’’ 9 Int’l J. Indus.
Org. 573 (1991); David Reitman, ‘‘Partial Ownership
Arrangements and the Potential for Collusion,’’ 42
J. Indus. Econ. 313 (1994); Sandro Shelegia & Yossi
Spiegel, ‘‘Bertrand competition when firms hold
passive ownership stakes in one another,’’ 114
Econ. Letters 136 (2012).
54 Rune Stenbacka & Geert Van Moer, ‘‘Cross
ownership and divestment incentives,’’ 201 Econ.
Letters 109748 (2021).
55 Nadav Levy et al., ‘‘Partial Vertical Integration,
Ownership Structure, and Foreclosure,’’ 10 a.m.
Econ. J.: Microeconomics 132 (2018).
56 See Fed. Trade Comm’n & U.S. Dep’t of Justice,
Hart-Scott-Rodino Annual Report, Fiscal Year 2010
appendix A (FY 2010) (reporting Adjusted
Transactions in which a Second Request could have
been issued from years 2001–2010); Fed. Trade
Comm’n & U.S. Dep’t of Justice, Hart-Scott-Rodino
Annual Report, Fiscal Year 2013 appendix A (FY
2013) (reporting Adjusted Transactions in which a
Second Request could have been issued from years
2004–2013); Fed. Trade Comm’n & U.S. Dep’t of
Justice, Hart-Scott-Rodino Annual Report, Fiscal
Year 2022 appendix A (FY 2022) (reporting
Adjusted Transactions in which a Second Request
could have been issued from years 2013–2022). See
also Fed. Trade Comm’n Annual Reports to
Congress Pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, https://
www.ftc.gov/policy/reports/annual-competitionreports (collecting reports). The Total Number of
Adjusted Transactions omits from the total number
of transactions reported all transactions for which
the agencies were not authorized to request
additional information. These include (1)
incomplete transactions (only one party filed a
complete notification); (2) transactions reported
pursuant to the exemption provisions of sections
7A(c)(6) and 7A(c)(8) of the Act; (3) transactions
which were found to be non-reportable; and (4)
transactions withdrawn before the waiting period
began. In addition, where a party filed more than
one notification in the same year to acquire voting
securities of the same corporation, e.g., filing for
one threshold and later filing for a higher threshold,
only a single consolidated transaction has been
counted because as a practical matter the agencies
do not issue more than one Second Request in such
a case. These statistics also omit from the total
number of transactions reported secondary
acquisitions filed pursuant to § 801.4 of the
Premerger Notification rules. Secondary
acquisitions have been deducted in order to be
consistent with the statistics presented in most of
the prior annual reports.
57 43 FR 33450, 33531 (July 31, 1978).
58 NPRM at 42188.
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b. Corporate Structure Changes
Several commenters supported the
need for additional information that
would identify entities holding minority
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positions. One commenter stated that
investors have shifted strategies since
the 1980s, when portfolios consisted of
unrelated companies and investors
mainly focused on optimizing capital
structures and improving corporate
governance.59 Another commenter
stated that without a full picture of the
entire corporate structure of the merging
parties, it can be difficult or impossible
to untangle or understand the potential
anticompetitive impacts of a
transaction. Several commenters
supported the need to adjust
information requirements to have a
broader view that reflects how firms are
organized today. One commenter
supported the collection of more
comprehensive information related to
the merging entities, arguing that a more
holistic and systems-level approach
would examine the networks of firms
involved in a market, which could
expose companies that can operate as
bottlenecks or supply key resources to
other market participants. A group of
State antitrust enforcers supported the
collection of more information related to
corporate control or the degree of
financial interest so the Agencies can
quickly assess how the resulting
ownership structure may change the
parties’ incentives to compete, enhance
the acquirer’s ability to influence
decision-making through changes in
voting interests or governance rights, or
facilitate the sharing of competitively
sensitive information between rivals.
Another development that has caused
the Commission to reassess its rules is
that the particular corporate structure of
an entity is now less indicative of its
market behavior, and thus distinctions
made on that basis may no longer be
sound. The decision to form as a
corporation, limited liability company,
or limited partnership is often
influenced more by risk, liability, and
tax considerations than by the entity’s
business operations. Now more than
ever, distinctions made based on
corporate form have little impact on an
assessment of whether and how firms
compete. Moreover, corporate
governance literature highlights the
changing nature of decision-making
within even standard organizational
structures, such as corporations.
Corporate law provides sufficient
59 See also Aslihan Asil et al., ‘‘Misaligned
Measures of Control: Private Equity’s Antitrust
Loophole,’’ 18 Va. L. & Bus. Rev. 51 (2023). Asil et
al. argue that the complicated structure of
ownership in the typical private equity acquisition
may make some anticompetitive deals technically
non-reportable under the HSR act, because the
investment structure under-represents the
proportion of control actually conferred by the
transaction. Id. at 53.
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flexibility to alter traditional roles,
including the rights of shareholders and
the scope of director liability, by
contract 60 or through modification of
bylaws or certificates of incorporation.61
The rise of shareholder agreements—
private contracts by and among
shareholders—has affected who has the
ability to direct decisions of the
company, separating voting and control,
especially for those given veto rights via
contract.62 These forms of ‘stealth
governance’ have implications for how
decisions are made within the firm,
making it difficult for investors to know
who is exercising control within the
company.63
After careful consideration of these
points and others raised by commenters,
the Commission has determined that the
requirements of the current Form and
Instructions have not kept pace with
market realities and the accompanying
changes in ownership structures. In
light of these shifts in corporate
formation and governance, the current
requirements do not provide the
Agencies with sufficient information
that allow them to understand how
decisions are made at the respective
companies, let alone whether the
acquiring person may have
competitively relevant premerger
entanglements with the target’s industry
and minority holders that may have
significant rights to direct the acquiring
entity’s actions.
To keep pace with prior changes in
corporate form, the Commission has
adjusted the disclosure requirements for
minority investors over time and in light
of its experience reviewing thousands of
filings each year, balancing the need to
surface competitively relevant
relationships without burdening filers to
provide information that would not
change the Agencies’ premerger
screening decisions. Under the current
rules, it has become increasingly
difficult to screen transactions because
deal structures often have minority
investors with significant rights that are
not disclosed. See Figures 4 through 8
60 See Jill E. Fisch, ‘‘Governance by Contract: The
Implications for Corporate Bylaws,’’ 106 Cal. L. Rev.
373, 379 (2018).
61 Megan Wischmeier Shaner, ‘‘Interpreting
Organizational ‘Contracts’ and the Private Ordering
of Public Company Governance,’’ 60 Wm. & Mary
L. Rev. 985, 988 (2019) (the charter and bylaws of
public corporations are being used as tools for
restructuring key aspects of corporate governance).
62 Rauterberg, supra note 43.
63 Jill E. Fisch, ‘‘Stealth Governance: Shareholder
Agreements and Private Ordering,’’ 99 Wash. U. L.
Rev. 913, 947 (2021) (One investor’s capacity to
monitor may be limited by an agreement to support
director candidates chosen by another investor, or
an ownership structure that appears to involve
shared power may be undermined by the
contractual formation of a control group).
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below, section VI.D.1.d.ii. This includes
situations where an investor group is,
for practical purposes, making the
acquisition (or otherwise significantly
involved), but the HSR Filing does not
alert the Agencies to their role in the
acquisition. These relationships are not
currently disclosed if the minority
investment is not in the UPE or
acquiring entity, but rather in an entity
(often a shell entity) that sits between
these two in the structure of the
acquiring person. Even if the minority
investment is made in the UPE, if the
UPE is an LP, only the name of the
general partner is disclosed. For
situations where the current information
on the HSR Filing is unrelated to the
public-facing name of the entity that
controls the acquiring person, the HSR
Filing does not alert the Agencies to the
premerger relationships that exist solely
due to that investor’s relationship with
and role in the buyer.64
To close this information gap, the
Commission has determined that the
Agencies need additional information
about entities in between the UPE and
the acquiring entity. If any of these
entities or individuals has a minority
stake or other rights that give them the
ability to influence decision-making
post-merger, then they are functionally
‘‘in the deal’’ and their existing business
relationships are relevant to a thorough
premerger antitrust assessment of the
transaction. As explained in more detail
in section VI.D.1.d.ii.a., this information
was required of all corporate entities
within the acquiring person prior to a
rule change in 2011 that limited the
requirement in order to exclude entities
not related to the transaction. However,
as transaction structures have become
more complex, application of the 2011
change has eliminated the requirement
to provide information about minority
entities that are related to the acquiring
entity. The final rule addresses this gap
in information so that the Agencies can
identify existing relationships among
individuals and entities that have
interests in (1) the acquiring entity (and
any entities it controls or are controlled
by it) and (2) other entities within the
UPE that have competitive relationships
64 For example, a fund that operates as Alpha
Capital Partners could create an entity named
123ABC, LP to effectuate an acquisition. 123ABC,
LP could be its own UPE because Alpha Fund I and
Alpha Fund II each hold 49.9% of the 123ABC, LP,
with the general partner, 123ABC GP, LP, holding
0.2%. Currently, the Form only requires 123ABC,
LP to disclose that 123ABC GP, LP is its general
partner. The issue is compounded if Alpha Capital
Partners is co-investing with Beta Capital Partners
and 123ABC, LP is held 49.9% by Alpha and 49.9%
by Beta (or if Beta invests in an entity that is not
the UPE or acquiring entity). Disclosure of these
relationships are not currently required.
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with the target. These minority holders
are competitively relevant because they
may have the ability to influence
decision-making and operations of the
target post-merger 65 but it is difficult for
the Agencies to detect these
relationships based on information
available the current Form.
As discussed below in section
VI.D.1.d. and VI.D.3.c., the final rule
requires additional information for
Minority Shareholders or Interest
Holders as well as Officers and Directors
from the acquiring person. Information
about other individuals or entities
holding a minority position or rights to
serve or appoint members of the
governing board will fill an existing gap
that has created a blind spot for the
Agencies that prevents a thorough
premerger screening, especially for
transactions involving complex
corporate structures and investment
vehicles. This information is most
relevant from the entity that will be
making decisions post-consummation,
and so the final rule does not seek this
information from the seller, other than
the identification of minority interest
holders that will ‘‘roll over’’ their
investments post-consummation.66 This
information is necessary to identify
additional areas of competitive concern
created by minority stakeholders or
other influential decision-makers (i.e.,
officers and directors) that may have a
relationship with entities related to the
target of the acquisition.
However, in light of concerns raised
by commenters about the burden and
relevancy of providing this information
with respect to limited partners, the
Commission has modified these
requirements to focus only on those
limited partners that also have
management rights, such as the right to
appoint members to the board.
Moreover, the final rule does not adopt
certain proposed requirements to
identify board observers, or creditors,
holders of non-voting securities, or
entities with management agreements.
The Commission has determined not to
require this information at this time but
will continue to monitor market activity
as it implements the final rule.
65 See United States v. Dairy Farmers of Am., Inc.,
426 F.3d 850, 860 (6th Cir. 2005) (district court
erred in focusing on control which ignored the
possibility that there may be a mechanism that
causes anticompetitive behavior other than control,
such as leveraging position as financier).
66 In many transactions, the acquired firm ceases
to exist post-consummation. Even when some entity
continues to generate revenues, possibly in
competition with some aspects of the buyer’s
business, the Commission has determined to collect
additional information about entities within the
UPE only from the acquiring person at this time.
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Similarly, new document
requirements contained in the final rule
are aimed at providing a more in-depth
understanding of the motivation and
purpose of the transaction, and how the
combined company will be operated
post-consummation. In particular,
additional transaction-related
documents will provide a more
complete picture of the buyer’s reason
for pursuing the transaction, and for
companies with complex investment
structures, these documents may reveal
whether there are other individuals or
entities who will be participating in
competitive decisions post-merger. The
final rule also requires a small set of
business plans and reports shared at the
highest level of management that
discuss market shares, competition,
competitors, or markets of any product
or service that is provided by both the
acquiring person and acquired entity.
Together, these documents may reveal
whether there are significant investors
in either party that also have
investments in businesses that compete
with the target or if there are any other
planned investments in competitively
relevant businesses, such as competitors
or suppliers, that would impact the
Agencies’ assessment of whether the
transaction may violate the antitrust
laws.
2. Identifying Potential Labor Market
Effects
The Clayton Act’s prohibition on
acquisitions that may substantially
lessen competition or tend to create a
monopoly applies to acquisitions that
have these effects on competition to
purchase inputs that firms use to
produce goods and services just as it
does to acquisitions that threaten
competition in downstream markets for
goods and services themselves,67 and
the antitrust laws protect competition in
markets for labor services.68 As
67 See United States v. Bertlesmann SE & Co., 646
F.Supp.3d 1 (D.D.C. 2022) (violation of section 7
where merger likely to substantially lessen
competition in market for publishing rights to
anticipated top-selling books due to harm to
targeted sellers—authors of top-selling books);
Boardman v. Pac. Seafood Grp., 822 F.3d 1011,
1022 (9th Cir. 2016) (acquisition may violate section
7 by substantially lessening competition in multiple
seafood input markets). See also Mandeville Island
Farms, Inc., v. Am. Crystal Sugar Co., 334 U.S. 219,
235–36 (1948) (antitrust laws protects not just
consumers, purchasers, competitors or sellers but
all victims of illegal practices); Weyerhaeuser Co. v.
Ross-Simmons Hardwood Lumber Co., 549 U.S.
312, 321–22 (2007); United States v. Syufy
Enterprises, 903 F.2d 659, 663 n.4 (9th Cir. 1990);
In re Grifols, S.A., No. C–4654 (F.T.C. Aug. 1, 2018)
(order requiring divestitures to prevent monopsony
in three local markets for the collection of plasma).
68 NCAA v. Alston, 594 U.S. 69, 86–87 (2021)
(plaintiff student-athletes need not show harm in
seller-side market as well as buyer-side labor
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evidence of decreasing competition for
labor continues to mount,69 the
Agencies have increasingly recognized
the importance of evaluating the effect
of mergers and acquisitions on labor
markets and have stepped up efforts to
identify and investigate potential labor
market effects arising from reportable
transactions. The Agencies have
challenged a few transactions that may
result in labor market harms,70 and
consent agreements have included
provisions that stop the use of certain
non-compete clauses that limit the
ability of potential market entrants to
hire key employees.71
As stated in the NPRM, current
notification requirements under the
HSR Act do not require any specific
information about employees. And yet
virtually every firm competes for labor
in at least one labor market and, more
commonly, in multiple labor markets,
and transactions that involve two firms
market); Anderson v. Shipowners Ass’n of the Pac.
Coast, 272 U.S. 359, 365 (1926) (Sherman Act
protects competition for labor).
69 See e.g., Anna Stansbury & Lawrence H.
Summers, ‘‘The Declining Worker Power
Hypothesis: An Explanation for the Recent
Evolution of the American Economy’’ (Nat’l Bureau
of Econ. Rsch., Working Paper No. 27193, 2020),
https://www.nber.org/papers/w27193; Orley
Ashenfelter et al., ‘‘Labor Market Monopsony,’’ 28
J. Lab. Econ. 203 (2010); V. Bhaskar et al.,
‘‘Oligopsony and Monopsonistic Competition in
Labor Markets,’’ 16 J. Econ. Perspectives 155 (2002);
William M. Boal & Michael R. Ransom,
‘‘Monopsony in the Labor Market,’’ 35 J. Econ. Lit.
86 (1997); Alan B. Krueger, Luncheon Address at
Kansas City Federal Reserve Bank, Reflections on
Dwindling Worker Bargaining Power and Monetary
Policy (Aug. 24, 2018), https://
www.kansascityfed.org/documents/6984/Lunch_
JH2018.pdf; Brianna L. Alderman et al.,
‘‘Monopsony, wage discrimination, and public
policy,’’ 61 Econ. Inquiry 572 (2022); David Berger
et al., ‘‘Labor Market Power,’’ 112 a.m. Econ. Rev.
1147 (2022); Chen Yeh at al., ‘‘Monopsony in the
US Labor Market,’’ 112 a.m. Econ. Rev. 2099 (2022);
José Azar et al., ‘‘Labor Market Concentration,’’ 57
J. Hum. Resources S167 (2022).
70 Press Release, Fed. Trade Comm’n, ‘‘FTC
Challenges Kroger’s Acquisition of Albertsons’’
(Feb. 26, 2024), https://www.ftc.gov/news-events/
news/press-releases/2024/02/ftc-challenges-krogersacquisition-albertsons; United States v. Anthem et
al., 1:16–cv–01493 ¶ 71 (D.D.C. filed July 21, 2016)
(complaint); United States v. Aetna, et al., 3–99–CV
1398 ¶ 27 (N.D. Tex. filed June 21, 1999)
(complaint). See also Concurring Statement of
Commissioner Slaughter and Chair Khan Regarding
FTC and State of Rhode Island v. Lifespan
Corporation and Care New England 1–2 (Feb. 17,
2022), https://www.ftc.gov/system/files/ftc_gov/pdf/
public_statement_of_commr_slaughter_chair_khan_
re_lifespan-cne_redacted.pdf (recommending
including a count in the complaint that the
proposed merger would have violated section 7 of
the Clayton Act in a relevant labor market).
71 Press Release, Fed. Trade Comm’n, ‘‘FTC
Imposes Strict Limits on DaVita, Inc.’s Future
Mergers Following Proposed Acquisition of Utah
Dialysis Clinics’’ (Oct. 25, 2021), https://
www.ftc.gov/news-events/news/press-releases/2021/
10/ftc-imposes-strict-limits-davita-incs-futuremergers-following-proposed-acquisition-utahdialysis.
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that purchase labor from the same labor
market(s) may substantially lessen
competition between employers for
labor services. Merging parties may
compete in the same labor market even
when they do not compete in the same
product market.
The Commission received hundreds
of comments from individuals, many of
whom are in the entertainment industry,
who supported the need for the
Agencies to conduct a robust search for
potential labor market effects before the
acquisition is consummated. Several
dozen recounted the effects that prior
mergers have had on them. Examples of
comments supportive of reviewing
transactions for labor market effects
include the following:
• I’m a working TV writer at the
beginning of my career. I’m afraid for
the future—the consolidation of the
media companies in this town and their
vertical integration has made things so
much harder and less competitive, even
in the time that I’ve been in LA and
worked within the system. Now that
there are so few ‘‘shops’’ in town,
salaries are depressed and it’s become
incredibly difficult to not only demand
fair pay, but treatment as well. They
know that they don’t have to negotiate
or budge on whatever terms they set
because there are increasingly few
alternatives to them.72
• My background includes Strategy
consulting for major transnational
Mergers. I think the new rules are very
good as they demand greater clarity
from the firms before the transaction
starts. I have seen a lot of waste and
backtracking as executives struggle
between their ego and the analytics that
do not tell them the story that they want
about why the transaction will succeed.
And the new labor and financing
provisions offer much needed
transparency—layoffs are a knee jerk
habit and are not really helpful for the
firm or the industry.73
• Please collect data on labor markets.
I’ve been affected by the monopolies in
the entertainment industry and likely
will lose my livelihood as well as that
of my staff due to unchecked mergers
within the next month. After starting a
successful business 23 years ago, it’s
heartbreaking to lose it and will be
costly to our economy as more and more
of us lose our businesses due to these
unchecked mergers and the power they
wield to save them money.74
72 Anonymous Comment, Doc. No. FTC–2023–
0040–0511.
73 Comment of Punya Upadhyaya, Doc. No. FTC–
2023–0040–0283.
74 Comment of Karen Wood, Doc. No. FTC–2023–
0040–0271.
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• I work in a small accounting firm
and I have seen the effects of mergers on
consumer satisfaction and worker
wellbeing personally. . . . [M]any of
the job-searching or hiring firms we’d
contract with to seek additional workers
are worried about raising the ire of the
large firm in the region, as it comprises
so much of their client base now[.] . . .
As a result, we’re forced to go with
larger, national firms for hiring, and
become part of the problem of sectoral
concentration.75
• As a lifelong union member I also
believe the requirement for detailing
merger effects on workers and unions to
be a vital necessity. Those of us outside
the C suites, boardrooms and
stockholder meetings are stakeholders
too, and our livelihoods and well being
should be considerations.76
• I personally know many folks in
entertainment (writers, crew, actors,
etc.) who have had such a difficult time
surviving in Hollywood that they’ve
simply had to quit or move home. And,
frankly, folks who specifically represent
cultures that are least visible in society
are often the first to go—because they
don’t necessarily have the resources or
didn’t face as many obstacles as other
artists. It’s a terrible cycle, magnified
greatly by vertical mergers.77
Numerous commenters, including
State antitrust enforcers and members of
Congress, expressed general support for
an increasing focus on labor market
competition in merger analysis and
requiring additional labor market
information in the Form to screen for
such issues. Some commenters
highlighted potential efficiencies in the
merger review process from providing
the Agencies with labor market
information in the earlier stages of
review, including a more uniform
process that could result in the
termination of more merger reviews
within the 30-day waiting period and a
more efficient use of Agency resources
where no labor market issues exist.
The Commission disagrees with a
commenter who stated that the analysis
under the Clayton Act requires
consideration of competition issues, but
not labor. Antitrust law, including the
Clayton Act, has always been concerned
with workers and labor markets.78 As
noted by the State antitrust enforcers, in
the congressional debates on the
Clayton Act in 1914, legislators
75 Comment of John Kurpierz, Doc. No. FTC–
2023–0040–0462.
76 Comment of Chas McClelland, Doc. No. FTC–
2023–0040–0273.
77 Comment of Alice Stanley, Doc. No. FTC–
2023–0040–0508.
78 Anderson v. Shipowners Ass’n of the Pac.
Coast, 272 U.S. 359, 365 (1926).
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expressed concerns regarding the
monopsonist’s power to dictate to its
labor the wage it will pay for the only
commodity labor has to sell.79 As
recently as 2021, a unanimous Supreme
Court in NCAA v. Alston affirmed that
the antitrust laws are designed to
prevent harm to competition in labor
markets.80 As noted in the concurring
opinion: ‘‘Price-fixing labor is pricefixing labor. And price-fixing labor is
ordinarily a textbook antitrust problem
because it extinguishes the free market
in which individuals can otherwise
obtain fair compensation for their
work.’’ 81 And there is bipartisan
agreement among current Federal
enforcers and their predecessors that the
Agencies are empowered to enforce the
Clayton Act to prevent competitive
harms in labor markets caused by
mergers.82 Moreover, recent empirical
work demonstrates the impact that
mergers have on competition in labor
markets.83
One commenter stated that requiring
merging parties to provide labor and
employment information is at odds with
the consumer welfare standard. This is
not correct. Judge Easterbrook, writing
for the Seventh Circuit, recently rejected
an employer’s argument that restrictions
on the movement of employees could be
justified because it expanded the output
of consumer products: ‘‘One problem
with this approach is that it treats
benefits to consumers (increased output)
as justifying detriments to workers
(monopsony pricing). That’s not right; it
79 Comment of State Atty’s Gen., Doc. No. FTC–
2023–0040–0695 at 21 n.123 (citing 51 Cong. Rec.
9184 (1914) (statement of Rep. Guy Helvering)). See
also 21 Cong. Rec. 2457 (1890) (statement of Sen.
Sherman asserting trusts command the price of
labor).
80 NCAA v. Alston, 594 U.S. 69 (2021). The
Agencies’ approach to evaluating the potential labor
market effects of mergers is set forth in the Merger
Guidelines. U.S. Dep’t of Justice & Fed Trade
Comm’n, Merger Guidelines 2.10 (2023).
81 Alston, 594 U.S. at 109–110 (Kavanaugh, J.,
concurring).
82 See generally FTC Chairman Joseph J. Simons,
Prepared Keynote Address at American University
Washington College of Law Conference on Themes
of Professor Jonathan Baker’s New Book, The
Antitrust Paradigm: Restoring a Competitive
Economy 9 (Mar. 8, 2019), https://www.ftc.gov/
system/files/documents/public_statements/
1515179/simons_-_jon_baker_speech_3-8-19.pdf;
Assistant Attorney General Makan Delrahim,
Remarks at the Public Workshop on Competition in
Labor Markets 3 (Sept. 23, 2019), https://
www.justice.gov/opa/speech/assistant-attorneygeneral-makan-delrahim-delivers-remarks-publicworkshop-competition.
83 See Elena Prager & Matt Schmitt, ‘‘Employer
Consolidation and Wages: Evidence from
Hospitals,’’ 111 a.m. Econ. Rev. 397 (2021); David
Arnold, ‘‘Mergers and Acquisitions, Local Labor
Market Concentration, and Worker Outcomes’’
(Working Paper, Oct. 27, 2019), https://
papers.ssrn.com/sol3/papers.cfm?abstract_
id=3476369.
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is equivalent to saying that antitrust is
unconcerned with competition in the
markets for inputs, and Alston
establishes otherwise.’’ 84 There is a
clear consensus that the consumer
welfare standard is sufficiently flexible
to encompass antitrust enforcement to
prevent competitive harms to labor
markets.85 Because section 7 reaches
these concerns, it is appropriate for the
Agencies to collect information to
determine if the transaction may violate
the antitrust laws by substantially
lessening competition in any market for
labor. The fact that the Commission has
not previously required this information
to be reported in HSR filings does not
mean that the information is not
necessary and appropriate to enable the
Agencies to determine whether an
acquisition, if consummated, may
violate the antitrust laws. While not
every negative impact on workers
reflects a harm to competition, growing
evidence about the potential for mergers
to cause harm in input markets for labor
in violation of the antitrust laws shows
that the Agencies have a sound basis to
review transactions for potential
competitive impacts on labor markets.
As discussed below in section VI.I.3.,
the final rule does not require filers to
submit specific information about their
employees as suggested in the proposed
rule. Instead, the Agencies will rely on
other information and documentary
materials required in the final rule to
conduct a preliminary assessment of
whether the transaction may violate the
antitrust laws with respect to any
affected labor market. The Agencies
have been gaining experience analyzing
information about employees during
ongoing merger reviews and other
investigations of conduct that may harm
competition for workers, and the
Commission relies on this experience to
determine which documents and
information have been most useful in
identifying those transactions that
warrant an in-depth review of potential
84 Deslandes v. McDonald’s USA, LLC, 81 F.4th
699, 703–04 (7th Cir. 2023).
85 See Herbert Hovenkamp, ‘‘Is Antitrust’s
Consumer Welfare Principle Imperiled?,’’ 45 J.
Corp. L. 65, 78 (2019) (injury that results from the
exercise of monopsony power is technically similar
to the injury caused by monopoly; in both cases the
defendant reduces output); Delrahim, supra note
82, at 3–4 (consumer welfare standard is flexible
enough to take into account harm to competition
that is localized in an upstream labor market, not
just a downstream product market); FTC
Commissioner Christine S. Wilson, Keynote
Address: Welfare Standards Underlying Antitrust
Enforcement: What You Measure Is What You Get
7 (Feb. 15, 2019), https://www.ftc.gov/system/files/
documents/public_statements/1455663/welfare_
standard_speech_-_cmr-wilson.pdf (consumer
welfare standard does address possible monopsony
concerns, and the agencies apply the consumer
welfare standard to labor markets).
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labor market effects through the
issuance of Second Requests.
As discussed below in section VI.I.3.,
the Commission will rely on
information contained in the new
Overlap and Supply Relationships
Descriptions, as well as additional
documents required by the final rule to
conduct a preliminary assessment of
potential labor market effects. In the
Agencies’ experience, those transactions
that are flagged for closer review due to
concerns about effects in output markets
may also require a closer look at
potential impacts in input markets,
including labor markets. Because the
final rule will allow the Agencies to
conduct a more robust screening for
potential effects in output markets, it
will also permit more robust screening
for potential effects in input markets,
including those related to labor services.
In addition, the final rule requires the
submission of certain plans and reports
shared at the highest level of
management that discuss market shares,
competition, competitors, or markets of
any product or service that is provided
by both the acquiring person and
acquired entity. These documents may
also indicate whether the parties view
themselves as employing similar
categories of employees or competing
for certain types of labor services. As a
result, the final rule will enhance the
Agencies’ ability to conduct a premerger
assessment to determine if the
transaction may violate the antitrust
laws with respect to competition for
labor. Although the Commission has
determined not to require specific
information about workers or workplace
safety information in the HSR Filing at
this time, as the Agencies acquire more
experience with conducting competition
analyses of labor markets, the
Commission may revisit the issue in
future rulemakings.
3. Identifying Acquisitions That Create
a Risk of Foreclosure
Mergers between firms that are not
direct competitors can still violate the
antitrust laws. As stated in the NPRM,
an acquisition may violate the law if it
creates opportunities for post-merger
foreclosure of rivals arising from vertical
or non-horizontal relationships.86 The
nature and scope of potential nonhorizontal competitive concerns can
often be complex and unique. To fully
account for all the ways in which a
proposed transaction may violate the
antitrust laws, the Agencies need
information to determine whether there
are any existing or emerging business
relationships between the merging
86 NPRM
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parties that would allow the merged
firm to limit access to products or
services that its rivals use to compete,
referred to as ‘‘foreclosure.’’ 87 Current
information requirements in the Rules
do not reveal these existing
relationships, which are well known to
the parties. Even more than in
horizontal mergers, which require an
assessment of whether the merger may
eliminate existing competition between
rivals whose products are viewed as
substitutes, non-horizontal concerns
arise from distinct facts and industry
structure that are not readily available to
the Agencies from other sources.
Various commenters, including
members of Congress, supported new
information requirements targeting nonhorizontal competitive issues. A
comment from State antitrust enforcers
underscored the concern about
foreclosure, noting that because mergers
may change the firms’ incentives or
ability to disadvantage or eliminate
rivals at one or more levels of their
supply chains, one of the
anticompetitive harms that may result
from a merger—particularly nonhorizontal mergers—is the risk of
foreclosure. The comments from a
farmer-led advocacy organization
warned that dominant firms have
expanded across product markets—
primarily through product-extension
and conglomerate mergers—to insulate
against cross-industry competition or to
develop product-tying and other
capacities for entrenchment and
exclusion.
Other commenters maintained that
vertical merger challenges are
uncommon and that antitrust precedent
does not sufficiently support nonhorizontal theories of competitive harm
to warrant the new information
requirements. For example, commenters
stated that the Agencies challenge very
few vertical transactions, and the courts
generally have not been receptive to
those challenges. One commenter stated
that an assessment of potential future
competitors goes well beyond what is
typically relevant because nonhorizontal theories of harm are rare
under section 7. The same commenter
reasoned that when challenging a
vertical merger the antitrust agency
must prove that one party has
substantial market power and that
information regarding the vendorvendee relationship is not required to
assess this threshold question. A tech
industry trade association stated that
87 See Illumina, Inc. v. FTC, 88 F.4th 1036, 1055
(5th Cir. 2023) (violation of section 7 where merger
will result in the potential foreclosure of key input
by the sole supplier). See also Ford Motor Co. v.
United States, 405 U.S. 562 (1972).
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most vertical mergers promote
competition, so filers should not need to
answer detailed questions about vertical
relationships.
While in the past non-horizontal
challenges were less common than those
involving direct competitors, in recent
years the Agencies have brought a
significant number of non-horizontal
merger enforcement actions that have
resulted in merger abandonment and
ordered divestitures,88 and other
mergers were abandoned or restructured
prior to legal action.89 The Commission
also disagrees that potential harm from
foreclosure is uncommon or does not
warrant robust scrutiny. Empirical
economic studies of vertical mergers
find no basis to assume that they are
either procompetitive or anticompetitive
in general. Instead, each transaction
must be examined on its facts and in the
context of the markets served by the
merging parties. A review of twentynine recent studies of vertical
integration reports that fourteen studies
found some evidence of competitive
harm, while fourteen found some
evidence of benefits.90 The same review
also evaluated two frequently cited
surveys of vertical integration and found
that the subjects and methods used limit
any conclusions that can be drawn for
antitrust policy purposes.91
The Agencies have an obligation to
screen transactions for non-horizontal
effects, including the risk of post-merger
foreclosure, because the law clearly
88 Illumina, 88 F.4th at 1048, 1059; FTC v.
Tempur Sealy Int’l, Inc., 4:24–cv–02508 (S.D. Tex.
filed July 2, 2024) (complaint); In re Lockheed
Martin Corp., No. 9405 (F.T.C. Jan. 25, 2022)
(complaint alleging merger would enable missile
systems manufacturer to use control over missile
propulsion systems to harm rival defense prime
contractors) (transaction abandoned); In re Nvidia
Corp., No. 9404 (F.T.C. Dec. 2, 2021) (complaint
alleging merger would give chip manufacturer the
ability and incentive to use control over
microprocessor design technology to undermine
competitors) (transaction abandoned). For a
compilation of the Agencies’ enforcement actions
involving vertical mergers, see Steven C. Salop &
Daniel P. Culley, ‘‘Vertical Merger Enforcement
Actions: 1994–April 2020’’ (Geo. L. Faculty Pub. &
Other Works No. 1529, 2020), https://scholarship.
law.georgetown.edu/facpub/1529/ (reporting 66
vertical matters over 26 years).
89 See, e.g., Press Release, U.S. Dep’t of Justice,
‘‘Antitrust AAG Kanter Statement After Adobe and
Figma Abandon Merger’’ (Dec. 18, 2023), https://
www.justice.gov/opa/pr/antitrust-aag-kanterstatement-after-adobe-and-figma-abandon-merger;
Cat Zakrzewski, ‘‘Amazon ends $1.7B iRobot
acquisition in rare victory for tech regulators,’’
Wash. Post (Jan. 29, 2024), https://www.washington
post.com/technology/2024/01/29/amazon-irobotantitrust-europe/.
90 Marissa Beck & Fiona Scott Morton,
‘‘Evaluating the Evidence on Vertical Mergers,’’ 59
Rev. Indus. Org. 273, 274 (2021) (explaining many
of the studies reviewed were not designed to assess
the net effect of vertical integration on welfare).
91 Id.
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requires it. In 1950, Congress amended
section 7 of the Clayton Act to expressly
reach non-horizontal transactions to
combat ‘‘the rising tide of economic
concentration . . . [providing] authority
for arresting mergers at a time when the
trend to a lessening of competition in a
line of commerce was still in its
incipiency.’’ 92 The Supreme Court
subsequently set forth frameworks for
analyzing vertical 93 and other nonhorizontal 94 mergers to address
concerns about foreclosure.95 Relying
on these precedents, the Agencies bring
enforcement actions against transactions
that create a risk that the merger will
create a firm that may limit access to
products or services rivals use to
compete.96 Several of these enforcement
actions resulted in the parties
abandoning their merger plans in the
face of litigation. Just recently, the U.S.
Court of Appeals for the Fifth Circuit
upheld the Commission’s finding that
Complaint Counsel carried their initial
burden of showing that Illumina’s
acquisition of Grail was likely to
substantially lessen competition in the
U.S. market for research and
development of multi-cancer early
detection tests and that Illumina failed
to establish cognizable efficiencies.97
The decision is significant for its
92 Brown Shoe Co. v. United States, 370 U.S. 294,
317 (1962); Celler-Kefauver Antimerger Act of 1950,
Pub. L. 81–899, 64 Stat. 1125 (1950).
93 Brown Shoe, 370 U.S. 294 (vertical merger
violated section 7); see also Ford Motor Co. v.
United States, 405 U.S. 562 (1972) (same).
94 See FTC v. Procter & Gamble Co., 386 U.S. 568,
577–578 (1967) (product-extension merger violated
section 7). See also Fruehauf Corp. v. FTC, 603 F.2d
345 (2d Cir. 1979); U.S. Steel Corp. v. FTC, 426 F.2d
592, 599 (6th Cir. 1970).
95 The Agencies’ analyses of how vertical and
other non-horizontal transactions may harm
competition are set forth in detail in the recently
revised Merger Guidelines. U.S. Dep’t of Justice &
Fed Trade Comm’n, Merger Guidelines 5 (2023).
96 See, e.g., FTC v. Tempur Sealy Int’l, Inc., 4:24–
cv–02508 (S.D. Tex. filed July 2, 2024) (complaint);
In re Amgen, Inc, No. 9414 (F.T.C. Dec. 13, 2023)
(consent order settling charges that the acquisition
would enable Amgen to leverage its large portfolio
of drugs to pressure insurance companies and PBMs
into favoring Horizon’s monopoly products or
disadvantaging rivals); In re Lockheed Martin Corp.,
No. 9405 (F.T.C. Jan. 25, 2022) (complaint alleging
merger would enable missile systems manufacturer
to use control over missile propulsion systems to
harm rival defense prime contractors) (transaction
abandoned); In re Nvidia Corp., No. 9404 (F.T.C.
Dec. 2, 2021) (complaint alleging merger would give
chip manufacturer the ability and incentive to use
control over microprocessor design technology to
undermine competitors) (transaction abandoned); In
re Microsoft Corp., No. 9412 (F.T.C. Dec. 8, 2022)
(complaint).
97 Illumina, Inc. v. FTC, 88 F.4th 1036, 1048, 1059
(5th Cir. 2023) (remanding to Commission to
consider whether supply agreement offered to rivals
sufficiently mitigated merger’s effect). See also
United States v. AT&T, Inc., 916 F.3d 1029, 1045
(D.C. Cir. 2019) (vertical mergers can create harms
beyond higher prices for consumers, including
decreased product quality and reduced innovation).
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application of vertical theories of harm,
as well as its inclusion of products in
the relevant market based on
precommercial activity.
In the Agencies’ experience, it can be
difficult to detect whether current or
potential rivals of one merging party are
dependent on the other merging party
for a key product, service, or route to
market necessary to compete. The
Agencies currently do not receive
sufficient information in the HSR Filing
to identify candidate ‘‘related products’’
nor to assess the degree to which rivals
may be dependent on the related
product.98 Accordingly, the Agencies
are not well positioned to conduct a
robust initial screen for this significant
mechanism of competitive harm. Being
able to quickly assess whether the
transaction presents a risk of foreclosure
would permit the Agencies to target
their investigative resources most
efficiently on those transactions that are
most likely to raise this competitive
concern.
As discussed in more detail below,
the Commission has determined that
information that reveals existing supply
relationships between the merging
parties or their rivals is necessary to
fully account for the potential that the
transaction may create a firm that could
limit rivals’ access to key products or
services they need to compete in
violation of the antitrust laws. The
Commission previously required
information about vendor-vendee
relationships, but eliminated this
requirement when the reported
information did not provide a sufficient
basis for that analysis such that the
benefit to the Agencies did not outweigh
the burden of providing it.99 The Supply
Relationships Description in the final
rule requires information that is
specifically targeted to identifying
whether rivals may be dependent on the
merged firm for key inputs post-merger.
Thus, the information is more relevant
to the Agencies’ screening for such risks
than prior vendor-vendee information.
Additionally, the final rule also
contains new document requirements
that are intended to reveal any existing
or future non-horizontal business
relationships that could give rise to risks
from foreclosure of rivals. For example,
the buyer must indicate whether it has
existing contracts with the seller in
broad categories that are relevant to an
initial antitrust assessment, such as
leases, licensing agreements, master
service agreements, operating
agreements or supply agreements, or
98 See U.S. Dep’t of Justice & Fed Trade Comm’n,
Merger Guidelines 2.5 (2023).
99 NPRM at 42196–97.
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any noncompete or non-solicitation
agreements that might be affecting
current levels of competition. Filers
with an existing business relationship
also will submit one year’s worth of
plans and reports provided to a Chief
Executive Officer or the Board of
Directors that analyze markets and
competition pertaining to any product
or service both parties supply (including
products or services in development).
Based on the Agencies’ experience,
these types of high-level business
documents can reveal whether and how
the parties interact in the market today
to understand how the merger may
affect market conditions more broadly,
including any risk of foreclosure that
could harm other market participants as
well as competition overall. Finally, the
expanded set of transaction-related
documents ensure that the Agencies
receive key documents that have been
collected for the purposes of the deal
but have not yet been shared with the
board of directors. In the Agencies’
experience, when there is an existing
non-horizontal business relationship
between the parties, these documents
often reference that relationship and
how it might be affected by the
transaction, including whether the
parties believe that there are synergies
or efficiencies that may be gained.
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4. Identifying Potential Law Violations
Involving Innovation Effects, Future
Market Entry, or Nascent Competitive
Threats
In markets where concentration is
already great or trending in that
direction, a merger may be illegal if it
eliminates ongoing innovation efforts or
the possibility that entry or expansion
by one or both firms would have
resulted in new or increased
competition.100 Relatedly, the
acquisition of a firm that represents a
nascent competitive threat—namely, a
firm that could grow into a significant
rival, facilitate other rivals’ growth, or
otherwise spur more robust competition
in the future—may violate the antitrust
laws.101 Concerns that a transaction may
100 United States v. Marine Bancorp, Inc., 418
U.S. 602, 630 (1974).
101 See FTC v. Procter & Gamble, 386 U.S. 568,
577–78 (1967). See also United States v. El Paso
Nat. Gas Co., 376 U.S. 651 (1964); Polypore Int’l v.
FTC, 686 F.3d 1208 (11th Cir. 2012) (acquisitions
that eliminate competitive threats violate section 7).
Like the Clayton Act, the Sherman Act bars a firm
from gaining or maintaining a monopoly position
through anticompetitive conduct, including
acquisitions that exclude nascent or potential
threats to its dominance. See, e.g., United States v.
Grinnell Corp., 384 U.S. 563 (1966) (acquisitions are
among the types of conduct that may violate the
Sherman Act). Acquisitions by monopolists of
nascent competitive threats violate section 2 of the
Sherman Act because they are reasonably capable
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violate the antitrust laws by reducing
innovation efforts 102 or eliminating a
future competitor 103 are core to section
7’s purpose to arrest the anticompetitive
effects of market power in their
incipiency. Established incumbents may
seek to acquire a potential entrant or a
nascent competitive threat in order to
eliminate beneficial future competition,
especially at critical junctures when the
acquired firm is poised to introduce a
disruptive product.104
As noted in the NPRM, there has been
tremendous growth in sectors of the
economy that rely on technology, such
as pharmaceutical, medical device, and
digital markets. Given the dynamic
nature of these markets and the
importance of acquisition strategies to
success as well as market growth and
penetration, mergers and acquisitions in
these markets present a unique
challenge for the Agencies. In particular,
the Agencies must closely examine
mergers in these and other rapidly
evolving markets to account for the
possibility that the merger may violate
the antitrust laws by eliminating a
nascent competitor or potential entrant,
including the acquisition’s effects on
ongoing innovation competition.105
Competition policy debates in
Congress have increasingly focused on
markets that lack sufficient competition,
especially in critical technology
sectors.106 Concerns about the role of
of contributing significantly to the defendant’s
monopoly power. United States v. Microsoft Corp.,
253 F.3d 34, 79 (D.C. Cir. 2001) (en banc) (per
curiam) (Sherman Act does not allow monopolists
free reign to squash nascent, albeit unproven,
competitors at will).
102 For a discussion of how mergers may violate
section 7 by eliminating on-going innovation
competition, see Note by the United States to the
OECD, The Role of Innovation in Enforcement
Cases (Dec. 5, 2023) (DAF/COMP/WD(2023)84),
https://one.oecd.org/document/DAF/COMP/
WD(2023)84/en/pdf.
103 See United States v. Falstaff Brewing Corp.,
410 U.S. 526, 561–62 (1973) (Marshall, J,
concurring). See also United States v. Continental
Can Co., 378 U.S. 441, 465 (1964) (fact that merging
parties were not direct competitors for all end uses
at the time of the merger may actually enhance the
long-run tendency of the merger to lessen
competition).
104 See United States v. Visa Inc., No. 3:20–cv–
07810 (N.D. Cal. Nov. 5, 2020) (complaint)
(transaction abandoned and case dismissed) and
Assoc. Attorney General Vanita Gupta, Remarks at
Georgetown Law’s 15th Annual Global Antitrust
Enforcement Symposium (Sept. 14, 2021), https://
www.justice.gov/opa/speech/associate-attorneygeneral-vanita-gupta-delivers-remarks-georgetownlaw-s-15th-annual. See also supra note 15
(collecting studies).
105 FTC v. PPG Indus., Inc., 798 F.2d 1500, 1505–
06 (D.C. Cir. 1986) (Bork, J.).
106 Majority Staff of H.R. Subcomm. on Antitrust,
Com. & Admin L. of the Comm. On the Judiciary,
116th Cong., Majority Staff Rep. &
Recommendations, Investigation of Competition in
Digital Mkts. 38 (2020), https://democratsjudiciary.house.gov/uploadedfiles/competition_in_
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certain dominant companies have
caused the Agencies to deploy
additional resources to counter the
economic power of these firms,
including through costly and resourceintensive monopolization suits, some of
which focus on the harmful effects of
their prior acquisitions.107 Both
Agencies have hired technologists and
other experts to build their in-house
capacity to keep pace with
developments in dynamic markets that
are reliant on emerging technology.108
The Agencies have also invested in
better understanding how dominant
firms can use strategic acquisitions as
part of an interrelated course of
monopolistic conduct. For example, the
Agencies have brought challenges
alleging that firms have engaged in
‘‘buy-or-bury’’ strategies against actual
or potential rivals.109 The Agencies have
also alleged that firms have attempted to
buy or exercise control of adjacent
products or services that might be used
to steer customers to their other
products or exclude competing
platforms.110 These strategies can be
very hard to detect because merger
activity in these sectors increasingly
involves firms in business lines that
currently may not be related in a clearly
horizontal or vertical way. Without
information that identifies products in
development and the firms’ assessments
of where potential competitive threats
are likely to emerge in the future, the
Agencies have no basis to identify
whether a transaction may eliminate
ongoing innovation competition, a
potential entrant, or a nascent
competitive threat.111
When transactions involve firms
whose premerger relationship is not yet
well established in the marketplace and
is occurring outside the public eye
through ongoing product development
efforts, the Agencies cannot rely on the
reporting of current overlapping
revenues to spot transactions that may
digital_markets.pdf (hereinafter ‘‘Investigation of
Competition in Digital Markets’’).
107 FTC v. Facebook, Inc., 581 F. Supp. 3d 34, 40–
42 (D.D.C. 2022); United States v. Google LLC, No.
1:23–cv–00108 at 31–35, 65–68 (E.D. Va. filed Jan.
24, 2023) (complaint); United States v. Live Nation
Entertainment, Inc., No. 1:24–cv–03973 (S.D.N.Y.
filed May 23, 2024); see also Klein v. Meta
Platforms, Inc., No. 3:20–cv–8570 (N.D. Cal. filed
Dec. 3, 2020).
108 See Note by the United States to the OECD,
Theories of Harm for Digital Mergers (June 16, 2023)
(DAF/COMP/WD(2023)50), https://one.oecd.org/
document/DAF/COMP/WD(2023)50/en/pdf.
109 FTC v. Facebook, Inc., 581 F. Supp. 3d at 54.
110 United States v. Microsoft Corp., 253 F.3d 34,
73–74 (D.C. Cir. 2001).
111 See United States v. Google LLC, No. 20–cv–
3010, 2024 WL 3647498 (D.D.C. Aug. 5, 2024). (loss
of nascent competitors is a clear anticompetitive
effect).
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eliminate areas of emerging or potential
competition.112 The Agencies need a
reliable factual basis for identifying
transactions that create this risk, which
is not provided in the current Form. For
instance, the Agencies need information
about products in development that are
not currently generating revenues, but
that the filer expects will soon. Because
legal precedent makes clear that a
merger that substantially lessens
competition for innovation or research
and development violates the law,113
the Agencies need information that will
identify areas of pre-revenue
investments and competition. The
Agencies also need information that
reveals the rationale for the transaction,
including whether the acquired firm is
considered a nascent competitive threat,
and documents that reflect each firm’s
horizon-scanning for potential
acquisition targets. This information is
known only to the parties and is
relevant to an initial assessment of
whether the transaction may violate the
antitrust laws by eliminating a potential
entrant or nascent competitive threat.
Failure to account for the merger’s
potential impact on ongoing innovation
competition can have meaningful
implications. Consumers and businesses
reap enormous benefits from the
efficiency and convenience brought
about by significant innovations.
According to Nobel Prize winner Robert
Solow: ‘‘Technological progress, very
broadly defined to include
improvements in the human factor, was
necessary to allow long-run growth in
real wages and the standard of
living.’’ 114 Courts, academic literature
and commenters confirm the
importance of innovation to growth in
the economy and as a source of
dynamism that can shake loose
entrenched incumbents.115 Acquisitions
of innovator firms may also deny the
public the benefits of those investments
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112 See
Illumina, Inc. v. FTC, 88 F.4th 1036,
1049–51 (5th Cir. 2023) (antitrust markets not
limited to products that exist but may include those
that are anticipated or expected or encompass
research, development and commercialization of
products in development); FTC v. PPG Indus., Inc.,
798 F.2d, 1500, 1504 (D.C. Cir. 1986) (merging firms
competed in evolving high technology market at the
request-for-proposal stage of product development).
113 See United States v. Anthem, Inc., 855 F.3d
345, 361 (D.C. Cir. 2017) (threat to innovation alone
is anticompetitive effect from acquisition); Illumina,
Inc. v. FTC, 88 F.4th 1036, 1051 (5th Cir. 2023)
(‘‘Antitrust law does not countenance such a
cramped view of competition, particularly in a
research-and-development market.’’).
114 Robert Solow, ‘‘Growth Theory and After,’’ 78
Am. Econ. Rev. 307, 313 (1988).
115 See Giulio Federico et al., ‘‘Antitrust and
Innovation: Welcoming and Protecting Disruption,’’
20 Innovation Pol’y & Econ. 125, 128–29 (2020); C.
Scott Hemphill & Tim Wu, ‘‘Nascent Competitors,’’
168 U. Pa. L. Rev. 1879, 1886 (2020).
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in innovation, including any future
competition those investments may
have unleashed, if the acquirer does not
make use of the discoveries 116 or is able
to crowd out nascent competitors by
foreclosing access to a key input.117 The
stakes are also high for innovators:
startups may find fewer investors and
lower acquisition prices in sectors
where the expectation is that
incumbents will ultimately identify and
acquire any promising innovation.118
Comments from State antitrust
enforcers supported proposals seeking
materials and information regarding
potential or nascent entrants. However,
other commenters stated that the HSR
Filing is not an appropriate vehicle for
advancing novel legal theories such as
nascent competition or research and
development competition, and any
related revisions should be postponed
until those theories are better
established in case law.
The Commission disagrees with
commenters who suggested that
concerns about innovation competition,
potential entrants, and nascent threats
are not well-grounded in existing law
and economic learning. The importance
of scrutinizing mergers for potential
effects on innovation is welldocumented.119 Economic evidence
supports current legal precedent.
Research demonstrates a growing
phenomenon of dominant firms—
buoyed by acquisitions—taking over
industries.120 This is particularly true in
the tech industry, where the markets in
which digital platforms compete share
several characteristics that tend toward
a single dominant firm.121 Sustained
high economic profits suggest that
dominant firms in these concentrated
sectors possess substantial and durable
market power.122 In addition,
insufficient competition and entry result
in harms to investment and
116 See Hemphill & Wu, supra note 115, at 1893.
See also Mark Lemley & Andrew McCreary, ‘‘Exit
Strategy,’’ 101 B.U. L. Rev. 1 (2020).
117 See Illumina v. FTC, 88 F.4th at 1053.
118 Sai Krishna Kamepalli et al., ‘‘Kill Zone’’
(Nat’l Bureau of Econ. Rsch., Working Paper No.
27146, May 2020 rev. June 2022), https://
www.nber.org/papers/w27146.
119 See generally Carl Shapiro, ‘‘Competition and
Innovation: Did Arrow Hit the Bull’s Eye?,’’ in The
Rate and Direction of Econ. Activity Revisited 389–
400 (Josh Lerner & Scott Stern eds., 2012).
120 Carl Shapiro, ‘‘Protecting Competition in the
American Economy: Merger Control, Tech Titans,
Labor Markets,’’ 33 J. Econ. Perspectives 69 (2019).
121 Stigler Comm. On Digital Platforms, Final
Report 7–8 (2019), https://www.chicagobooth.edu//media/research/stigler/pdfs/digital-platformscommittee-report-stigler-center.pdf (explaining
network effects, returns increasing with scale, low
marginal costs, high returns on amassing user data,
and low distribution costs underlie trend toward
monopoly).
122 Shapiro, supra note 120, at 70.
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innovation.123 For these reasons,
economic research supports the current
legal framework, and reflects the need to
carefully scrutinize proposed
transactions involving a dominant
incumbent or monopolist seeking to
acquire a nascent threat or adjacent
complement that could someday
challenge the incumbent’s position.124
Going back many years, the Agencies
have successfully challenged several
mergers that would have eliminated a
potential entrant or nascent competitive
threat. These enforcement actions
include the acquisition of a pipeline
firm or product that, once launched,
would compete directly with the
incumbent merging party,125 as well as
the acquisition of a firm with products
already on the market that, although
small, was poised to add features or
capabilities in the future that could
render it a closer and more formidable
competitor than it is today.126 Other
transactions challenged by the Agencies
involved the acquisition of a firm whose
current market share understated its
future competitive significance because
it did not account for new innovations,
business strategies, or other factors.127
Mergers that impact future competition
between products or services that have
not yet been developed can also violate
the antitrust laws.128
123 Stigler Comm. On Digital Platforms, supra
note 121, at 31.
124 Cunningham et al., supra note 15 (presenting
empirical evidence that pipeline drug program is
less likely to be developed when acquired by firm
with overlapping existing product with significant
market power); Stigler Comm. On Digital Platforms,
supra note 121, at 81, 88; Shapiro, supra note 120,
at 75; Michael L. Katz, ‘‘Big Tech mergers:
Innovation, competition for the market, and the
acquisition of emerging competitors,’’ 54 Info. Econ.
& Policy 100883 (2021).
125 See, e.g., In re Sanofi Corp., No. 9422 (F.T.C.
Dec. 11, 2023) (complaint) (transaction abandoned);
United States v. Visa Inc., No. 3:20–cv–07810 (N.D.
Cal. Nov. 5, 2020) (transaction abandoned); FTC v.
Mallinckrodt ARD Inc. (f/k/a Questcor Pharms.,
Inc.), No. 1:17–cv–120 (D.D.C. Jan. 30, 2017)
(consent decree ordered license and $100 million
equitable monetary relief); United States v.
Westinghouse Air Brake Techs. Corp., No.1:16–cv–
02147 (D.D.C. Oct. 26, 2016) (consent decree
ordered divestiture); In re Thoratec Corp., No. 9339
(F.T.C. July 28, 2009) (transaction abandoned); In re
Inverness Med. Innovations, Inc., No. C–4244
(F.T.C. Dec. 23, 2008) (Commission order requiring
divestiture and other conditions).
126 FTC v. PPG Indus., Inc., 798 F.2d 1500, 1505–
06 (D.C. Cir. 1986) (Bork, J.). See also In re Illumina,
Inc., No. 9387 (F.T.C. Dec. 17, 2019) (complaint)
(transaction abandoned).
127 United States v. Novelis, Inc., No. 1:19–cv–
02033 (N.D. Ohio Aug. 26, 2020) (arbitrationordered divestiture); In re The Procter & Gamble
Co., No. 9400 (F.T.C. Dec. 8, 2020) (complaint)
(transaction abandoned); In re CDK Global, Inc., No.
9382 (F.T.C. Mar. 19, 2018) (complaint) (transaction
abandoned).
128 See, e.g., PPG Indus., Inc., 798 F.2d at 1505–
06. See also United States v. Bayer AG, No. 1:18–
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A number of commenters opposed
changes contained in the proposed rule
over concerns that they would
disproportionally impact small
innovation companies and startups,
which rely on venture capital and
acquisitions to sustain their business
model. One commenter stated that
preventing such exit strategies would
make it difficult for startups to obtain
early-stage funding, reducing both the
number and vitality of these innovative
firms. Several cautioned the
Commission to avoid increasing the
burden and risk associated with the
acquisition of startups, which they
stated would damage the dynamic U.S.
tech innovation system. Another stated
that acquisitions that increase
concentration can still be
procompetitive and drive dynamic
efficiency.
As the discussion above clearly
demonstrates, acquisitions involving
nascent or potential competitors as well
as those that impact innovation
competition may violate the antitrust
laws. The Commission disagrees with
commenters that contend that these
types of acquisitions should be
subjected to a more permissive standard
or that the Agencies are singling them
out for closer scrutiny. The Agencies
routinely review acquisitions of and by
innovative companies and apply the
same legal standard to those mergers as
any other acquisition. When the
Agencies challenge these mergers, they
are held to the same liability
requirements necessary to establish a
violation of section 7. However, as
discussed above, there is a gap in the
current information requirements that
undermines the Agencies’ ability to
determine whether a transaction would
eliminate nascent or future competition.
To detect those types of acquisitions
and to assess whether they violate the
antitrust laws, the Agencies need
information regarding these forms of
ongoing or emerging competition, even
if some commenters disagree with the
law as applied by the courts in this area.
The Commission acknowledges that
the sale of a business to an incumbent
may represent a valuable exit strategy
for startups. But when such exits are
effectuated by a dominant firm to absorb
a future or emerging competitor, the
overall effect may be to reduce
cv–01241 (D.D.C. Feb. 8, 2019) (consent decree
ordered divestiture); Press Release, U.S. Dep’t of
Justice, ‘‘Applied Materials Inc. and Tokyo Electron
Ltd. Abandon Merger Plans After Justice
Department Rejected Their Proposed Remedy’’
(Apr. 27, 2015), https://www.justice.gov/opa/pr/
applied-materials-inc-and-tokyo-electron-ltdabandon-merger-plans-after-justice-department; In
re Nielsen Holdings N.V., No. C–4439 (F.T.C. Feb.
28, 2014) (Commission order requiring divestiture).
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innovation and violate the law.129 In
fact, antitrust enforcement can drive
innovation and growth by ensuring that
market outcomes are determined
through competition rather than left to
the decisions of a dominant incumbent
who can on its own determine the fate
of innovative companies and the future
of competition. The history of U.S.
antitrust enforcement contains many
examples of how government action was
required to unleash the forces of
competition and innovation, creating
new opportunities for investments and
startups.130 Recent research suggests
that existing firms may be acquiring
innovative capacity not for the purpose
of advancing those discoveries but
rather to shelve those discoveries,
leading to a reduction in innovative
output and eliminating an independent
source of future competition.131 Two
individual commenters shared their
experiences with acquisitions that have
had that effect:
• I work in the software industry and
despite the constant talk of
‘‘innovation,’’ I have seen many mergers
that eliminate new product
development. Mergers/acquisitions
often consist of a company acquiring a
product and immediately discontinuing
either the acquired product or their own
competing product. Most engineers I
know want to develop new products
and many mergers stop this from
happening.132
• I work in the tech industry for a
large technology firm. It’s disgusting
that our philosophy is now to buy other
companies and never grow organic
products because it is too hard. There’s
no innovation anymore it is simply
make enough money to buy out the
actual innovators in an industry. Any
new startup is now faced with a massive
hill to climb as getting VC money is
paramount, but then the moment you do
well your VC’s will just sell to the
highest bidder. This is stagnating tech,
and you won’t see the effects for some
129 See Lemley & McCreary, supra note 116 (exit
by acquisition leads to concentration in the tech
industry and short-circuits the development of truly
disruptive new technologies that have historically
displaced incumbents in innovative industries).
130 See Giovanna Massarotto, ‘‘Driving Innovation
with Antitrust,’’ Promarket (Apr. 10, 2024) https://
www.promarket.org/2024/04/10/driving-innovationwith-antitrust/.
131 See Cunningham et al., supra note 15. See also
Florian Szücs, ‘‘M&A and R&D: Asymmetric Effects
on acquirers and targets?’’ 43 Rsch. Pol’y 1264
(2014); Carmine Ornaghi, ‘‘Mergers and innovation
in big pharma,’’ 27 Int’l J. Indus. Org. 70 (2009);
Justus Haucap et al., ‘‘How mergers affect
innovation: Theory and evidence,’’ 63 Int’l J. Indus.
Org. 283 (2019) (showing a reduction in innovation
competition post-merger).
132 Comment of Darryl Pretto, Doc. No. FTC–
2023–0040–0434.
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years down the road when 5 tech
companies are left in this country. We
need tighter oversight on mergers
. . . .133
In light of all these considerations, the
Commission believes this rulemaking
strikes the right balance that permits the
Agencies to evaluate transactions for
their potential effects on innovation
while not standing in the way of
acquisitions and other investments that
do not present antitrust risks that need
to be addressed prior to consummation.
The critical task for the Agencies is to
identify which transactions may
substantially lessen competition or tend
to create a monopoly, prior to
consummation and before the
possibility of future competition is
snuffed out.134 The Commission is not
subjecting acquisitions of startups or
innovative firms to heightened scrutiny,
as some commenters suggest. Rather, the
Agencies are modernizing premerger
requirements in light of the changes in
M&A activity for all transactions that
must be reported under the HSR Act,
including those involving innovative
firms.135 However, the final rule has
been adjusted to lessen the burden on
the targets of acquisitions generally.
Moreover, many of the new
requirements focus on increasing
visibility into complex entities and
therefore would not be applicable to the
relatively straightforward structures of
many startup companies.
The Commission notes that many
acquisitions of startups and small
innovator firms are not reportable and
thus are not subject to antitrust scrutiny
prior to consummation. In September
2021, the Commission released its
findings from an inquiry into past
acquisitions by the largest technology
platforms that did not require reporting
under the HSR Act.136 Launched in
133 Anonymous Comment, Doc. No. FTC–2023–
0040–0600.
134 See Cristina Caffarra et al., ‘‘‘How Tech Rolls:’
Potential Competition and ‘Reverse’ Killer
Acquisitions,’’ 2 CPI Antitrust Chron. 13, 15 (May
2020).
135 According to a recent study, investment in
U.S. startups continues to grow each year, reaching
a combined deal value of $165.8 billion for 12,235
such deals in 2020. See Gary Dushnitsky & D.
Daniel Sokol, ‘‘Mergers, Antitrust, and the Interplay
of Entrepreneurial Activity and the Investments
That Fund It,’’ 24 Vand. J. Ent. & Tech. L. 255, 271
Table 1 (2022). The authors note that a case-by-case
analysis of particular deals allows for a more
nuanced approach to address particular potentially
problematic deals in such settings. Id. at 277–78.
See also D. Daniel Sokol, ‘‘Merger Law for Biotech
and Killer Acquisitions,’’ 72 Fla. L. Rev. Forum 1,
8 (2020) (explaining that innovation effect is factdependent).
136 See Press Release, Fed. Trade Comm’n, ‘‘FTC
Staff Presents Report on Nearly a Decade of
Unreported Acquisitions by the Biggest Technology
Companies’’ (Sept. 15, 2021), https://www.ftc.gov/
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February 2020, this inquiry analyzed the
terms, scope, structure, and purpose of
exempted transactions by five large
technology companies: Alphabet, Inc.,
Amazon.com, Inc., Apple Inc.,
Facebook, Inc., and Microsoft Corp. The
study covered ten years of acquisitions
(from January 1, 2010 to December 31,
2019) and found that the companies
collectively made 819 acquisitions that
were not reported under the HSR Act.137
None of these acquisitions was filed
under HSR, although many of them
were concentrated in just a few
categories of technology, such as
mobility, application software, and
internet content and commerce.138
This study provided other insights
into these companies’ practices and
acquisition strategies, including how
they structured acquisitions and how
these acquisitions fit into the
companies’ overall business
strategies.139 For instance, not only were
many of the acquisitions ‘‘small’’ in deal
value (i.e., under the various HSR
reporting thresholds), they were also
‘‘young,’’ with nearly 40 percent of the
acquisitions involving target firms that
were less than five years old.140 Most of
the acquisitions involved the buyer
taking control of the acquired assets or
entity, although there were also a
significant number of investments that
resulted in the large company holding a
minority interest in the target firm.141
Moreover, over three-quarters of the
transactions included non-compete
clauses for founders and key employees
of the acquired entities, with relatively
small variation in the percentage of
transactions with non-compete clauses
across the five respondents. 142
Together, these findings indicate that
during the study period, these five
companies acquired many small,
nascent firms operating in related
news-events/news/press-releases/2021/09/ftc-staffpresents-report-nearly-decade-unreportedacquisitions-biggest-technology-companies.
137 See Fed. Trade Comm’n, Non-HSR Reported
Acquisitions by Select Technology Platforms, 2010–
2019: An FTC Study 10–11 Fig. 1 (2021), https://
www.ftc.gov/system/files/documents/reports/nonhsr-reported-acquisitions-select-technologyplatforms-2010-2019-ftc-study/p201201technology
platformstudy2021.pdf (hereinafter ‘‘Non-HSR
Reported Acquisitions’’). Data supplied by
commenter Engine confirms that the vast majority
of startup acquisitions are valued below $50
million, meaning that they are rarely reported to the
Agencies in advance. See Comment of Engine, Doc.
No. FTC–2023–0040–0681, appendix B at 16.
138 Non-HSR Reported Acquisitions, supra note
137, at 27–35.
139 Other competition enforcement agencies
around the world conducted similar studies
involving acquisitions of digital platform
companies. Id. at 2 n.6.
140 Id. at 23–26.
141 Id. at 15.
142 Id. at 21–22.
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business lines and their founders and
other key employees agreed to refrain
from continuing their own efforts to
innovate outside the company for some
period of time. While the study focused
on transactions that were not reportable
under the HSR Act, the information
collected from these tech companies
provided the Commission with insight
into information that is available to
parties in all types of acquisitions but
that is not required by the current Form
and Instructions.
In light of the benefits to the public
from preventing mergers that violate the
antitrust laws by reducing innovation
competition or eliminating a potential
entrant or nascent threat, the
Commission has determined that the
Agencies need certain additional
information with the HSR Filing to
conduct an initial antitrust assessment
prior to consummation. In the Agencies’
experience, it is necessary to obtain this
type of information directly from the
filing parties because typically their
plans regarding future products or
business lines are not public.
Several new information requirements
in the final rule are aimed at providing
the Agencies with sufficient information
to determine if the transaction is likely
to raise concerns about potential,
emerging, or nascent competition. For
instance, the new Overlap Description
and Supply Relationships Description
directly address the scope of existing
and emerging competition between the
parties. In particular, the Overlap
Description requires filers to identify
their own products and services,
including those that are pre-revenue,
that compete with the products and
services of the other party that are
known to the filer.143 This information
will provide a basis for the Agencies to
know that there are areas of emerging
and direct competition beyond existing
products or services, including
important ongoing innovation
competition. The Overlap Description
also requires filers to produce
measurement information for products
or services not yet generating revenue,
or those whose performance is not
measured by revenue, such as projected
revenue, estimated volume, or any other
applicable performance metric. This
change recognizes the importance of
capturing the competitive significance
of nascent or emerging products and
services.
The final rule also requires the buyer
to indicate whether there are any
existing contracts between the parties,
143 As explained in section VI.I., the parties
should not exchange information for the purpose of
responding to the Competition Descriptions.
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including non-compete, nonsolicitation, or licensing agreements,
which would alert the Agencies to any
limits on future competition that are
created by these agreements, especially
when the buyer is not acquiring all of
the acquired entity. The existence of
non-compete or non-solicitation
agreements can be especially useful in
revealing that the parties consider
themselves to be ‘in competition’ with
one another, now or in the future, such
that there is value in contracting away
the ability to compete for or solicit
business or workers. In addition, the
Supply Relationships Description
requires information for products,
services, or assets (including data) that
the other party or any other business
uses or could use to compete. This
forward-looking assessment, based on
each filer’s business experience, would
reveal whether there are future uses of
either party’s products that could give
rise to concerns about non-horizontal
effects from the transaction. The
inclusion of data as a potentially key
asset is purposeful, given the
competitive significance of data access
for effective competition in so many
modern markets.144
Similarly, new document
requirements contained in the final rule
are aimed at revealing each firm’s
assessment of market conditions and
horizon-scanning for competitive
threats. For instance, the final rule
requires a broader search for documents
that evaluate or analyze the transaction
to include not only those provided to
board members but also to the person
who has primary responsibility for
supervising the deal. These documents,
along with certain ordinary course plans
and reports shared at the highest level
of management described above and in
section VI.G.2., will reveal additional
information about how each filer views
the competitive landscape more
broadly, including in ways that may
impact current or future competition.
Together, these documents may signal
whether either party has identified
emerging threats to competition—from
the other party or from firms not
involved in the transaction—that would
impact the Agencies’ assessment of
whether the transaction may violate the
antitrust laws.
As discussed above in section II.B.1.,
new information contained in the
144 See FTC v. IQVIA Holdings Inc., No. 1:23 Civ.
06188 (S.D.N.Y. Dec. 29, 2023) (order granting
preliminary injunction on horizontal theories of
harm without addressing FTC allegations that the
acquisition would allow IQVIA to foreclose other
industry participants from accessing its data as a
key input for healthcare professional programmatic
advertising).
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Minority Shareholders or Interest
Holders and Officers and Directors
sections will provide a basis for the
Agencies to identify any existing or
potential management relationships
between the acquiring person and target,
including through entities or
individuals who can influence decisionmaking of the acquiring person postmerger. These relationships can be
especially concerning if used to gain
access to non-public information about
future plans or investments in productsin-development when those same
individuals also have interests in
competitively relevant businesses.
Finally, the final rule collects
additional information about the
acquisition rationale of the buyer to
assist the Agencies in understanding the
purpose of the transaction. For example,
the final rule requires the buyer to
describe any rationale for the
transaction and to indicate any
document submitted with the HSR
Filing that confirms or discusses that
rationale. These answers will provide
context for the Agencies’ initial antitrust
assessment through a deeper
understanding of what purpose the
buyer has for engaging in a transaction
that is large enough to require premerger
review. In addition, the final rule for the
first time requires the seller to report
prior acquisitions in the same or related
lines of business, which would provide
a basis for the Agencies to better assess
whether the transaction implicates
emerging, nascent, or potential
competition, especially through the
combined effects of roll-up or serial
acquisition strategies or ‘‘killer’’
acquisitions in which assets were
purchased but not used as a means of
eliminating a competitor.
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5. Disclosing Roll-Up or Serial
Acquisition Strategies
Another trend in M&A activity has
been the rise of serial acquirers, firms
that engage in strategic acquisitions in
the same industry, often ‘‘rolling up’’
many small competitors in the same or
adjacent markets to establish a large,
sometimes dominant, position.145 Serial
acquisition strategies have been subject
to antitrust scrutiny for over 100
years.146 In the seminal merger case,
145 NPRM at 42202 n.62 (citing Gerry Hansell et
al., ‘‘Lessons from Successful Serial Acquirers:
Unlocking Acquisitive Growth,’’ Boston Consulting
Grp. (Oct. 1, 2014), https://www.bcg.com/
publications/2014/mergers-acquisitions-unlockingacquisitive-growth); ‘‘Stealth Consolidation,’’ supra
note 18.
146 See, e.g., United States v. Grinnell Corp., 384
U.S. 563, 576, 578, 580 (1966); Standard Oil Co. v.
United States, 221 U.S. 1, 31–42 (1911); United
States v. Am. Tobacco Co., 221 U.S. 106, 157–60
(1911). See also Note by the United States to the
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United States v. Philadelphia National
Bank, 374 U.S. 321 (1963), the Supreme
Court noted that both the buyer and the
seller had previously acquired many
other independent banks,147 driving a
trend toward concentration that
rendered their merger suspect.148 Given
the popularity and prevalence of these
serial acquisition strategies in recent
years, especially in healthcare and
technology markets, this trend has
attracted the attention of academics and
policymakers alike.149 A pattern or
strategy of buying up smaller
competitors or firms in the same or
related lines of business can lead to
harm of the same magnitude and type as
mergers of larger or established firms,
but serial acquisitions are less likely to
attract the attention of enforcers until
the strategy is identified. A series of
small acquisitions can lead to
consolidation within an industry, often
without ever triggering the obligation to
report these acquisitions under the HSR
Act. This strategy has been particularly
prevalent in healthcare markets
involving private equity buyers.150
Often the Agencies are not able to
detect these strategies until it is too late,
after the serial acquirer has established
a dominant position and is able to
exercise market power to the detriment
of market participants. For instance, in
September 2023, the FTC charged U.S.
Anesthesia Partners, a for-profit
OECD, Serial Acquisitions and Industry Roll-ups
(Dec. 6, 2023) (DAF/COMP/WD(2023)99), https://
one.oecd.org/document/DAF/COMP/WD(2023)99/
en/pdf (discussing the history and roots of antitrust
enforcement against anticompetitive serial
acquisitions). Serial acquisition strategies may also
violate section 2 of the Sherman Act when a firm
with monopoly power relies on acquisitions, among
other conduct, to acquire or maintain its monopoly.
See Credit Bureau Reps., Inc. v. Retail Credit Co.,
358 F. Supp. 780 (S.D. Tex. 1971), aff’d, 476 F.2d
989 (5th Cir. 1973); United States v. Jerrold Elecs.
Corp., 187 F. Supp. 545 (E.D. Pa. 1960).
147 See United States v. Phila. Nat’l Bank, 374
U.S. 321, 331 (1963) (PNB previously acquired nine
independent banks while Girard acquired six).
148 Id. at 367 (evidence of several remaining
competitors insufficient to rebut inherently
anticompetitive tendencies of high post-merger
market shares, in light of strong trend toward
mergers, including those of the defendants).
149 See Investigation of Competition in Digital
Markets, supra note 106, at 24–25.
150 Richard M. Scheffler et al., Am. Antitrust Inst.,
‘‘Soaring Private Equity Investment in the
Healthcare Sector: Consolidation Accelerated,
Competition Undermined, and Patients at Risk’’ 8–
16 (May 18, 2021), https://
publichealth.berkeley.edu/wp-content/uploads/
2021/05/Private-Equity-I-Healthcare-ReportFINAL.pdf. The Commission recently hosted a
public workshop to discuss the growing body of
economic research examining the role of private
equity investment in health care markets. Fed.
Trade Comm’n, Private Capital, Public Impact: An
FTC Workshop on Private Equity in Health Care
(Mar. 5, 2024), https://www.ftc.gov/news-events/
events/2024/03/private-capital-public-impact-ftcworkshop-private-equity-health-care.
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corporation, with a multi-year
anticompetitive scheme to consolidate
anesthesia practices in Texas.151 This
lawsuit, which is pending in Federal
court in Texas, alleges that the company
acquired over a dozen anesthesiology
practices in Texas to eliminate
competition and create a single
dominant provider with the power to
demand higher prices.
The Commission is aware of the
impact of serial acquisitions based on its
experience with the dialysis industry,
which is an area in which economic
research has documented adverse effects
from serial acquisitions. Throughout the
2000s, the Commission reviewed a
series of large acquisitions by DaVita,
the largest U.S. provider of lifesustaining treatments for end stage renal
disease patients. In 2006, in conjunction
with DaVita’s $3.1 billion acquisition of
rival Gambro Healthcare, Inc., the
Commission required DaVita to divest
69 dialysis clinics in 35 markets across
the United States to resolve charges that
the acquisition violated section 7. In
2011, DaVita sought to acquire rival DSI
for $689 million, and the Commission
required divestitures to preserve
competition for dialysis services in 22
local markets. Then in 2017, the
Commission ordered DaVita to divest
seven clinics in New Jersey and Dallas
to proceed with its $358 million
acquisition of Renal Ventures. During
roughly the same period, the
Commission also reviewed a series of
acquisitions by Fresenius, the other
leading U.S. provider of dialysis
services, and required significant
divestitures to maintain competition.152
Notwithstanding these enforcement
actions, the dialysis industry has
experienced growing concentration,
mostly as a result of acquisitions that
were not reportable under the HSR Act.
According to one 2020 study, there were
more than 1,200 acquisitions of
independent dialysis facilities over a 12year period, resulting in DaVita and
Fresenius operating more than 60
percent of all clinics nationwide.153 The
study concluded that these changes in
151 FTC v. U.S. Anesthesia Partners, Inc., No.
4:23cv3560 (S.D. Tex. Sept. 21, 2023) (complaint).
152 See In re Fresenius AG, No. C–4159 (F.T.C.
July 5, 2006) (decision and order requiring
divestiture of ninety-one clinics and financial
interests in twelve more); In re Am. Renal Assocs.
Inc., No. C–4202 (F.T.C. Oct. 23, 2007) (consent
order terminating purchase agreement for five
clinics and closure of three additional clinics); In
re Fresenius Med. Care AG, No. C–4348 (F.T.C. May
25, 2012) (decision and order requiring divestiture
of sixty dialysis clinics).
153 Paul J. Eliason et al., ‘‘How Acquisitions Affect
Firm Behavior and Performance: Evidence from the
Dialysis Industry,’’ 135 Q. J. Econ. 221, 222 (2020)
(from 1990 to 2020, the share of independent
dialysis facilities fell from 86% to 21%).
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ownership resulted in higher prices,
lower levels of service, and worse
outcomes for patients.154 One
commenter stated that, based on his
research, merger enforcement against
reportable acquisitions prevented illegal
consolidation 95 percent of the time,
while the many non-reportable
acquisitions of dialysis clinics were
blocked only 5 percent of the time. He
contended that these ‘stealth’
acquisitions accounted for much of the
increase in within-market
concentration.155
In light of the failure of prior
interventions to stem the adverse
consequences of roll-up acquisitions in
this industry, when DaVita in 2022
sought to buy 18 clinics in a non-HSRreportable transaction, the Commission
unanimously voted to require DaVita
not only to divest three clinics but also
to obtain prior Commission approval
before buying any new ownership
interest in dialysis clinics in Utah.156
The Commission determined that
imposing a prior approval obligation
was appropriate in light of the
company’s history of attempting
anticompetitive transactions that do not
trigger a notification under the HSR
Act.157
The Commission has also imposed
prior notice or prior approval provisions
on another serial acquirer, JAB
Consumer Partners, a private equity firm
that has made several significant
acquisitions in the emergency and
specialty veterinary services markets
across the United States. JAB is the
parent company of two large veterinary
clinic chains, Compassion-First Pet
Hospitals and National Veterinary
Associates Inc., that have been built
through a series of acquisitions. In 2020,
Compassion-First bought NVA for $5
billion, and the Commission required
JAB to divest clinics in three local
markets.158 In June 2022, CompassionFirst/NVA acquired Sage Veterinary
Partners for $1.1 billion, and the
154 Id.
at 223.
Comment of Thomas Wollmann, Doc. No.
FTC–2023–0040–0680 at 1 n.2 (citing to Thomas G.
Wollmann, ‘‘Stealth Consolidation: Evidence from
an Amendment to the Hart-Scott-Rodino Act,’’ 1
a.m. Econ. Rev.: Insights 77–94 (2019) and Thomas
G. Wollman, ‘‘How to Get Away with Merger:
Stealth Consolidation and Its Effects on US
Healthcare’’ (Nat’l Bureau of Econ. Rsch., Working
Paper No. 27274, May 2020 rev. Mar. 2024), https://
www.nber.org/papers/w27274).
156 In re DaVita Inc., No. C–4677 (F.T.C. Oct. 25,
2021) (decision).
157 See Fed. Trade Comm’n, Statement of the
Commission on Use of Prior Approval Provisions in
Merger Orders (Oct. 25, 2021), https://www.ftc.gov/
system/files/documents/public_statements/
1597894/p859900priorapprovalstatement.pdf.
158 In re Agnaten SE, No. C–4707 (F.T.C. Apr. 9,
2020) (decision and order).
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Commission required divestitures in
three additional local markets.159 The
Commission also determined that, in
light of JAB’s ongoing acquisition
strategy, it would require prior approval
and prior notice requirements on JAB’s
future acquisitions of specialty and
emergency veterinary clinics.160 Later in
2022, when JAB also sought to acquire
another veterinary chain with
significant competitive overlap in four
geographic markets, the Commission
again required divestitures and prior
approval requirements in the affected
local markets for emergency and
specialty veterinary services markets.161
But resorting to imposing prior
approval obligations after an industry
has already experienced significant
concentration due to roll-up strategies is
suboptimal. A central purpose of the
HSR Act is to allow the Agencies to
arrest trends toward concentration
through effective premerger review. For
any reportable transaction under the
HSR Act, the Agencies have an
obligation to determine whether the
transaction is one of a series of
acquisitions that could lead to harm in
the affected markets. Information about
each party’s prior acquisitions will
provide a basis for the Agencies to
assess this risk to competition during
their initial antitrust assessment for any
reportable transaction.
Several commenters supported the
need for more information related to
prior acquisitions, including a group of
State antitrust enforcers. One
commenter noted that the private equity
industry pioneered and perfected the
serial ‘roll-up’ acquisitions that were too
small to attract antitrust agency
attention but nonetheless amassed
considerable market power over time.
The same commenter pointed out that
private equity firms use these add-on
buyout deals to purchase multiple
competitors of an existing portfolio
company or expand their geographic
reach to create a much bigger player in
an industry—and that this strategy can
in aggregate substantially lessen
competition or tend to create a
monopoly. Another commenter raised
similar concerns that the business
strategy of making a series of small
159 In re JAB Consumer Partners SCA SICAR, No.
C–4766 (F.T.C. Aug. 2, 2022) (decision and order).
160 The Commission’s order requires JAB to
obtain prior Commission approval before acquiring
a specialty or emergency veterinary clinic within
twenty-five miles of any JAB clinic in California or
Texas, and prior notice to the Commission thirty
days prior to a similar acquisition anywhere in the
United States that is not required to be reported
under the HSR Act. Id. (decision and order).
161 In re JAB Consumer Partners SCA SICAR, No.
C–4770 (F.T.C. Oct. 10, 2022) (decision and final
order).
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acquisitions—whether an intentional
tactic to avoid regulatory scrutiny or
not—has become concerningly common
in recent decades and led to many
consolidated industries. An individual
commenter shared their experience with
the broader impact of rollup
acquisitions on local communities:
• As the wife of a small business
owner and member of a community, I’m
dismayed at seeing how many small
local and regional businesses have
disappeared after becoming the target of
mergers and rollups. Those businesses—
funeral homes, hospice care,
newspapers, hardware stores, coffee
shops, veterinarians—were [] an
important part of the community. Now
it is nearly impossible to start local
businesses in those sectors and turn any
sort of profit while competing with PE
backed rollups.162
Other commenters stated that the
proposed changes are unnecessary
because they lack sufficient
justification, are out of step with their
view of case law and market realities,
and do not seem to have a strong factual
basis. One commenter stated that the
proposal to expand the lookback period
for prior acquisitions would invite the
Agencies to scrutinize longconsummated deals, including those
that the HSR Act were never intended
to capture. Some raised concerns that
the proposed changes will substantially
increase the burden of reporting on
prior acquisitions beyond what is
currently required for the HSR Form.
Another stated that the costs of the
proposed changes regarding prior
acquisitions far outweigh the potential
benefit that information about
immaterial prior transactions could
provide to the evaluation of the
transaction. One commenter stated that
requiring disclosure of non-reported
transactions will reduce investments in
startups.
The Commission has determined that,
to detect whether serial or roll-up
acquisition strategies have changed the
market dynamics such that the
transaction under review could have
widespread harmful effects that will be
hard to undo, the Agencies need
additional information about prior
acquisitions, including from the
acquired firm. Knowing each party’s
record of prior acquisitions in the same
business lines will allow the Agencies
to understand the long-term competitive
strategy for the transaction at issue,
including whether it is one in a series
of prior or planned acquisitions in the
same industry and whether the
162 Comment of Nora Johnson, Doc. No. FTC–
2023–0040–0618.
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transaction is a merger of
‘‘consolidators.’’ The additional
information would also permit the
Agencies to better identify transactions
whose effects should not be viewed in
isolation but rather as a pattern of
consolidation.163
The Commission has always required
information about prior acquisitions in
the HSR Filing to help identify
strategies aimed at gaining market share
through acquisitions rather than internal
expansion or more vigorous
competition, and the Commission
disagrees that it is outside its
rulemaking authority under the HSR Act
to require filers (including the target) to
report prior acquisitions in the same or
related business lines even if they were
not previously reported to the Agencies
for premerger review. The final rule
contains modest expansions of this
long-standing requirement, to better
account for the increased number of
firms engaged in roll-up strategies.
Nonetheless, the final rule does not
contain certain expansions suggested in
the proposed rule, such as eliminating
the $10 million exception or expanding
the lookback period from 5 to 10 years
in response to comments that providing
this level of information about prior
acquisitions would be costly and
burdensome. The modest expansion of
this information requirement should
provide the Agencies with a more
complete record of consolidation in the
relevant business lines that has been
driven by the merging parties in order
to identify when a reported transaction
is the latest in a series of acquisitions,
and thus one that may violate the
antitrust laws.
As noted elsewhere, the Agencies
remain committed to identifying
consummated mergers that have
resulted in harm and to take steps to
unwind them as resources permit. But
regardless of the legality or reportability
of any particular prior acquisition, the
fact that it occurred and involved the
same business lines under review is
directly relevant to whether the reported
transaction may violate the antitrust
laws, including through a series of
mergers that ‘‘convert an industry from
one of intense competition among many
enterprises to one in which three or four
large concerns produce the entire
supply.’’ 164 For these reasons, the
Commission has determined there is a
need to collect information about prior
acquisitions from the seller as well as
the buyer. The cost of complying with
163 See Brown Shoe Co. v. United States, 370 U.S.
294, 334 (1962).
164 Id. (quoting S. Rep. 81–1775, at 5 (1950) and
citing H.R. No. Rep. 81–1191, at 8 (1949)).
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this requirement should be minimal
except in instances where the seller has
made many acquisitions in the same or
related business lines, in which case the
information may prove highly relevant
to Agency review.
Other new requirements in the final
rule will also help the Agencies identify
these roll-up strategies. In particular, the
Overlap Description will provide an
alternative basis for identifying product
or service market overlaps for which
prior acquisitions should be reported.
Information about the buyer’s
acquisition rationale will reveal the
purpose of the transaction, including
whether is it part of a strategy of
pursuing transactions in similar
business lines. The new requirement to
submit a small set of business plans and
reports shared with the highest levels of
management that discuss market shares,
competition, competitors, or markets of
any product or service that is provided
by both the acquiring person and
acquired entity may reveal whether
there are other acquisition targets
identified by either the acquiring or
acquired person.
III. Statutory Authority and Economic
Analysis
The HSR Act directs the Commission,
with the concurrence of the Assistant
Attorney General and consistent with
the purposes of the Act, to issue rules
requiring the submission of
documentary material and information
relevant to a proposed acquisition as is
‘‘necessary and appropriate to enable
[the Agencies] to determine whether
such acquisition may, if consummated,
violate the antitrust laws.’’ 165 The HSR
Act was enacted to assist the Agencies
in enforcing other provisions of the
Clayton Act, and to give the FTC and
the Department of Justice a tool—
premerger notification—to identify
problematic mergers and acquisitions
before they are consummated and a
short period of time to complete their
analysis.166 The statute grants the
Commission explicit authority to
require the submission of documents
and information the Agencies determine
are necessary and appropriate to
identify proposed acquisitions that may
result in an antitrust violation.167
In the administrative law context, the
Supreme Court has held that Congress’
use of terms such as ‘‘appropriate’’ or
‘‘reasonable’’ in a statute authorizing
agency rulemaking gives the agency
165 15
U.S.C. 18a(d)(1).
790 F.3d at 199, 206.
167 Id. at 199, 201, 205.
166 PhRMA,
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‘‘flexibility’’ to regulate.168 As the
Supreme Court has explained, ‘‘[o]ne
does not need to open up a dictionary
in order to realize the capaciousness of
this phrase. In particular, ‘appropriate’
is the classic broad and allencompassing term that naturally and
traditionally includes consideration of
all the relevant factors.’’ 169 The phrase
‘‘leaves agencies with flexibility,’’
although ‘‘an agency may not entirely
fail to consider an important aspect of
the problem.’’ 170 In at least some
contexts, courts have held that
‘‘necessary and appropriate’’ requires
consideration of a rule’s costs and
benefits.171
The Commission is not convinced
that Congress intended the words
‘‘necessary and appropriate’’ to require
a cost-benefit analysis in this context.
Had Congress intended to require the
Commission to consider costs and
benefits, it could easily have done so.172
Instead, it gave the Commission broad
authority to establish requirements it
deems necessary and appropriate for
determining whether a proposed
acquisition may violate the antitrust
laws during premerger review, and even
gave the Commission express authority
to define statutory terms. Nonetheless,
in the particular circumstances of this
rule, the Commission has considered
the reasonableness of requiring
additional information in the HSR
Filing in light of the statutory scheme
established by Congress to more
effectively prevent undue consolidation
that violates the antitrust laws,
including the costs and the benefits of
the final rule. The Commission has
evaluated, on the one hand, the benefits
to the Agencies, the parties, third parties
and the public in making premerger
review more efficient and effective by
obtaining information necessary to
properly assess the competitive effects
of proposed acquisitions; and on the
other hand, the need to reduce
unnecessary burden, costs, and delay on
filers and the transactions they hope to
pursue in a manner consistent with the
168 Loper Bright Enterprises v. Raimondo, 144
S.Ct. 2244 (2024).
169 Michigan v. EPA, 576 U.S. 743, 752 (2015)
(citation and internal quotation marks omitted).
170 Id. (citation and internal quotation marks
omitted).
171 See id.; Mex. Gulf Fishing Co. v. U.S. Dep’t of
Commerce, 60 F.4th 956, 965 (5th Cir. 2023)
(finding that the necessary and appropriate
standard at a minimum requires that a rule’s
benefits reasonably outweigh its costs).
172 See Chamber of Com v. Sec. Exch. Comm’n.,
412 F.3d 133, 142 (D.C. Cir. 2005) (statute requires
SEC to consider whether rule will promote
efficiency, competition, and capital formation
which requires a consideration of the costs of the
conditions imposed by the rule).
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mandatory premerger notification
regime of the HSR Act.
In determining what information is
necessary and appropriate to determine
whether a reported transaction merits
the issuance of Second Requests, the
Commission also draws on the
Agencies’ decades of experience
reviewing filings and responding to
informal requests for guidance.173 This
operational experience informs the
Commission’s assessment of the existing
rules’ shortcomings and supports its
decision that it is necessary and
appropriate—and consistent with the
text and purpose of the HSR Act—for
the Agencies to require the merging
parties to provide sufficient information
to enable the Agencies to conduct a
preliminary assessment of the risk that
the filed-for transaction may violate the
antitrust laws, particularly where some
information is available only from the
parties.
After careful consideration of the
public comments as well as the costs
and benefits of the proposed changes,
the Commission has determined to
adopt a modified version of the
information requirements proposed in
the NPRM. As modified, the final rule
will facilitate the provision of relevant
documentary materials and information
that allow the Agencies to assess
whether a proposed acquisition may
violate the law within the statutory
period available for their initial review
while minimizing the cost and burden
of producing such materials as much as
practicable.
The following analysis considers the
potential economic effects that may
result from the final rule consistent with
the Commission’s statutory power to
obtain information necessary and
appropriate to conduct an effective
premerger review, including the benefits
and costs to market participants. In
conducting this assessment, the
Commission has identified existing
costs to filers, the Agencies, and third
parties that could be avoided by
adjusting the information requirements
for HSR Filings. Avoiding such costs
would generate benefits for filers, the
Agencies, and third parties in addition
to broader public benefits of effective
premerger screening to identify
potentially unlawful mergers prior to
consummation.
The Commission believes that the
final rule will improve the efficiency of
the premerger review process and help
the Agencies identify transactions that
173 See PhRMA, 790 F.3d at 210 (the Commission
may provide the factual predicate for a finding
through its cumulative experience and resulting
expertise).
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may violate the antitrust laws along all
parameters of potential harm, but not all
of these benefits can be quantified.
Wherever possible, the Commission
quantifies the likely economic effects of
its final rule. However, some economic
effects are inherently less conducive to
sound quantification either due to the
lack of reliable data or the lack of a wellestablished economic methodology that
would provide estimates or ranges of
costs. For example, producing
quantitative estimates of certain costs
and benefits would require numerous
assumptions to generate a behavioral
forecast of how parties contemplating an
acquisition and other affected third
parties would respond to the rule, and
how those behavioral responses would
in turn affect the overall cost of
compliance and the merger review
process. In addition, some factors
determining certain economic effects of
the rule are transaction-, firm- and
industry-specific and thus inherently
difficult to quantify. Even if it were
possible to calculate a range of potential
quantitative estimates for these effects,
the range would be so wide as to not be
informative about the magnitude of the
associated benefits or costs. Where
sound economic methodology is not
available to measure particular benefits
or costs, the Commission addresses
those qualitatively.174 In sum, to show
the connection between the facts found
and the agency’s decision, the
Commission provides, where feasible
and appropriate, a quantified estimate of
the economic effects of the final rule,
and a qualitative description of the
benefits and costs.
A. Statutory Authority and
Congressional Intent
The HSR Act provides that the
Commission ‘‘shall require’’ that
174 See Chamber of Com v. Sec. Exch. Comm’n.,
85 F.4th 760, 768 (5th Cir. 2023) (quoting Motor
Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut.
Auto. Ins. Co., 463 U.S. 29, 43 (1983)). See also id.
at 773–74 (explaining that securities law provisions
providing rulemaking authority do not require the
agency to conduct a quantitative inquiry to
ascertain the economic effects of a rule, that the
agency could instead rely on a qualitative
assessment of the rule’s economic implications, and
that the agency can determine the analysis that
most effectively reflects the economic consequences
of its rule) (citation omitted); All. For Fair Bd.
Recruitment v. Sec. Exch. Comm’n., 85 F.4th 226,
263 (5th Cir. 2023) (agency’s analysis of
unquantifiable benefits sufficiently supports a rule
as long as it provides an adequate explanation for
its determination, and agency need not support its
analysis with hard data where it reasonably relied
on intangible benefits that were difficult to
quantify) (citations omitted); Mex. Gulf Fishing., 60
F.4th at 965–66 (a necessary-and-appropriate
condition does not require applying a strict costbenefit analysis but simply a showing that expected
benefits are reasonably related to anticipated costs)
(citations omitted).
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premerger notifications be in such form
and contain such documentary material
and information relevant to a proposed
acquisition as is necessary and
appropriate to enable the Agencies to
determine whether such acquisition
may, if consummated, violate the
antitrust laws.175 Thus, the HSR Act
explicitly requires the Commission,
with the concurrence of the Assistant
Attorney General, to determine what
types of documents and information are
required to conduct an initial
assessment of antitrust risk. Mandatory
premerger review strengthens merger
enforcement by giving the Agencies a
fair and reasonable opportunity to
detect and investigate large mergers
before consummation.176 The ability to
spot ‘‘problem areas’’ during the initial
screen is the key feature of the HSR Act
that converts merger enforcement from
ineffective ex-post litigation to
expeditious and effective premerger
proceedings.177
To that end, Congress passed the HSR
Act to provide the Agencies with
advance notice of planned acquisitions
and an opportunity to challenge such
acquisitions as unlawful prior to
consummation. The overall intent was
to avoid lengthy, costly postconsummation enforcement that is
ineffective at preventing undue
concentration and permits an illegal
acquisition to cause harm until
unwound:
The problem this bill cures is startlingly
simple, but it goes to the very foundations of
our merger law. Under present law,
companies need not give advance
notification of a planned merger to the
Federal Trade Commission and the
Department of Justice. But if the merger is
later judged to be anticompetitive, and
divestiture is ordered, that remedy is usually
a costly exercise in futility—untangling the
merged assets and management of the two
firms is like trying to unscramble an
omelet.178
175 15
U.S.C. 18a(d)(1).
Rep. No. 94–1373, at 5 (1976).
177 Id. at 10–11 (chief virtue of the Act is to help
eliminate endless post-merger proceedings and
replace them with far more expeditious and
effective premerger review generating considerable
savings; if the initial notification form reveals
‘problem areas,’ the government can request
additional data during the initial 30-day period).
178 122 Cong. Rec. 25051 (1976) (remarks of Rep.
Rodino). Premerger review was not the only tool
given the Agencies to rectify the inadequacy of
post-consummation merger enforcement. In 1973,
Congress amended the FTC Act to authorize the
Commission to seek injunctions in Federal court in
recognition of the inadequacy of postconsummation divestitures. See FTC v. H.J. Heinz
Co., 246 F.3d 708, 726 (D.C. Cir. 2001) (Section
13(b) of the FTC Act reflects congressional
recognition that divestiture is an inadequate and
unsatisfactory remedy in a merger case, citing 119
Cong. Rec. 36612 (1973)). The inability of the
176 H.R.
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As noted by the Antitrust
Modernization Commission (AMC)—a
special body commissioned by Congress
in 2002 to conduct a comprehensive
review and make recommendations for
revisions to U.S. antitrust laws—the
HSR Act addressed the defects of postconsummation merger enforcement,
which ‘‘could neither fully compensate
society for the interim loss of
competition, nor fully restore a
competitive market structure,
particularly if the companies had
already integrated their productive
assets, or ‘scrambled the eggs.’ ’’ 179
Congress also intended to avoid
deterring or impeding the
consummation of the vast majority of
acquisitions and therefore fashioned a
regime that reflected ‘‘a careful
balancing of the need to detect and
prevent illegal mergers and acquisitions
prior to consummation without unduly
burdening business with unnecessary
paperwork or delays.’’ 180
The Agencies have administered the
premerger notification program required
by the HSR Act for more than 45 years,
and the Commission has engaged in
numerous rulemakings to change the
information requirements for premerger
notification in response to changes in
market realities. Although many
commenters object in whole or in part
to the proposals contained in the NPRM,
several conceded that some updates to
the Rules are reasonable or justified by
increasingly complex markets. Others
commended the Commission for
undertaking a periodic review of its
rules. Even so, some argue that the
Commission lacks the authority to make
any changes to its current process that
would increase the burden or delay
HSR-reportable transactions, asserting
that Congress intended to reduce costs
and delay and to focus the Agencies’
scrutiny on only the largest corporate
transactions. The Commission disagrees
with certain commenters that the
Commission lacks the authority to
adjust information requirements over
time to make premerger review efficient
and effective for the purpose of
detecting potentially illegal mergers in
light of changing market conditions.
Given the number of comments that
assert that the proposed rule violated
the intent of the HSR Act, the
Commission responds first to these
broad objections. The Commission also
responds to assertions that it has failed
to properly weigh the benefits and costs
of changing the notification
requirements in light of the statutory
premerger scheme.
As an initial matter, the Commission
disagrees that avoiding potential cost or
delay to those involved in dealmaking is
the primary focus of the HSR Act. The
legislative history and plain text of the
HSR Act make clear that the goal of
establishing a premerger review regime
was not to minimize the number of
transactions that are reviewed by the
Agencies or to reduce the delay for
reported transactions below the
statutory obligations.181 In fact, it is
clear that Congress explicitly
contemplated that a mandatory
premerger notification regime would
impose burdens on merging parties.
Prior to the passage of the HSR Act,
parties were free to merge without
providing any notification and without
any delay, which led to concerns that
the Agencies were practically unable to
block or unwind illegal transactions.182
Congress determined that new and
meaningful requirements were
necessary to achieve the overarching
Congressional goal of promoting
vigorous and effective enforcement of
the antitrust laws:
Commission to obtain injunctive relief sooner to
prevent widespread harm from mergers was a
widely acknowledged shortcoming of its agency
design. See, e.g., FTC v. Dean Foods Co., 384 U.S.
597, 606 n.5 (1966) (experience shows that the
Commission’s inability to unscramble merged assets
frequently prevents entry of an effective order of
divestiture).
179 Antitrust Modernization Comm’n, Rep. &
Recommendations 155 & n.21 (2007), https://
govinfo.library.unt.edu/amc/report_
recommendation/toc.htm (citing H.R. Rep. No. 94–
1373 at 7–11) (hereinafter ‘‘AMC Report’’). The
Antitrust Modernization Commission was created
pursuant to the Antitrust Modernization
Commission Act of 2002, Pub. L. 107–273, 116 Stat.
1856, Div. C., Title I, Subtitle D (2002). The AMC
was charged with examining whether there was a
need to modernize the antitrust laws and to identify
and study related issues; to solicit views; and to
evaluate proposals for change. The AMC provided
its Report and Recommendations to Congress and
the President on April 2, 2007, and was terminated
on May 31, 2007, having completed its statutory
duties.
180 S. Rep. No. 94–803, at 65 (1976).
Amended Section 7 has failed to achieve
its objectives—not because of its substantive
standards, but because of the lack of an
effective mechanism to detect and prevent
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181 Efforts to require premerger notification date
back to 1908. Leading up to the passage of the HSR
Act, the Commission regularly urged Congress to
pass legislation that would require advance notice
for acquisitions. For a short time, the Commission
relied on its authority under section 6 of the FTC
Act to require merging parties to file special reports
60 days prior to consummation in certain
industries, such as food distribution and cement.
None of these programs required the parties to stay
their merger plans. After passage of the HSR Act,
the Commission discontinued reliance on special
reports for prior notice of pending mergers. See
Kelly Signs, ‘‘Milestones in FTC History: HSR Act
launches effective premerger review,’’ Fed. Trade
Comm’n Competition Matters blog (Mar. 16, 2015),
https://www.ftc.gov/enforcement/competitionmatters/2015/03/milestones-ftc-history-hsr-actlaunches-effective-premerger-review.
182 See S. Rep. No. 94–803, at 64 (1976).
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illegal mergers prior to consummation. . . .
The Committee believes that [premerger
notification] represents a careful balancing of
the need to detect and prevent illegal mergers
and acquisitions prior to consummation
without unduly burdening business with
unnecessary paperwork or delays . . .
Complex mergers or acquisitions of the kind
encompassed within this subsection
generally require a great deal of prior
planning, and this provision will provide the
Government appropriate opportunity to
evaluate the legality of significant business
behavior at the most propitious moment for
all parties, with the least possible
disaccommodation.183
When setting up the premerger
notification program, the Commission
rejected assertions that the term
‘‘notification’’ implies only a minimal
burden for the initial HSR Filing. Some
commenters at the time maintained that
the initial notification should do little
more than inform the Agencies of the
participants to the transaction, the
projected date of consummation, and
other noncontroversial and generally
uninformative data, leaving a fuller
information demand to the Second
Request. The Commission disagreed that
the HSR Act should be read this way,
stating that this position is contrary to
the statutory text and fundamentally
misconceives the amount of information
necessary to make even a tentative
determination whether a transaction
may violate the antitrust laws.184 The
Commission explained that the HSR
Filing should contain information
necessary and appropriate for an
effective premerger notification
program.185 The Commission reasoned
that requiring perfunctory information
in the HSR Filing would not fulfill the
statutory provision and would result in
more Second Requests that would
extend the average waiting period under
the HSR Act.186 Then and now, to fulfill
the purpose of premerger review, there
must be sufficient information provided
in an HSR Filing to determine whether
to issue Second Requests and what
information those requests would seek.
Consistent with Congress’ expectations
that HSR Filings would consist of data
and documents reasonably available to
filing companies, such as the
information and documents they relied
183 Id.
at 63–66. See also id. at 9–10.
FR 33450, 33519–20 (July 31, 1978).
185 Id. The Commission also rejected suggestions
that it make certain burdensome requests optional
for the parties, finding that such an approach would
undermine the usefulness of the second request
mechanism, hinder the Agencies in their efforts to
carry out their congressionally mandated review,
and be administratively unworkable. Id. at 33520.
186 Id. at 33520. See also 42 FR 39040, 39043
(Aug. 1, 1977).
184 43
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on when contemplating the deal,187 the
final rule seeks information that is
readily available to the parties to fill
information gaps that the Agencies have
identified in the current HSR Form.
As discussed above, information
reported in the current HSR Form is not
sufficient due to differences in corporate
structure and investment activity as
well as profound changes in economic
activity. In this rulemaking, the
Commission is responding to these
changes and how they have affected the
Agencies’ ability to conduct premerger
screening in light of today’s market
realities. The Agencies need information
to be able to spot all types of potential
harm and the Commission has
determined that the information
requirements contained in the final rule
are necessary and appropriate to
conduct effective and efficient
premerger screening and avoid even
greater costs associated with collecting
additional information through issuing
more Second Requests. Without
sufficient information available in the
HSR Filing on the first day of the
statutory review period, the Agencies
cannot fulfill their mandate to identify
and prevent illegal mergers or avoid
potentially costly and protracted
investigations.
Several commenters suggested that
because Congress recently authorized
the collection of additional information
relating to foreign subsidies, that is the
only information the Commission has
the authority to collect.188 The
Commission disagrees that in passing
this new requirement, Congress
intended to repeal or in any way limit
the Commission’s statutory authority
under 15 U.S.C. 18a(d) to impose other
reporting requirements that are
necessary and appropriate to determine
whether the transaction may violate the
antitrust laws. Indeed, the Commission
is relying on its section 18a(d) authority
to require the submission of information
related to foreign subsidies in the final
rule. The other changes contained in the
final rule are a reasonable exercise of
the Commission’s rulemaking authority
to require information that is necessary
and appropriate for detecting
problematic mergers during the initial
waiting period of the HSR Act. The final
rule updates the premerger notification
regime based on the Agencies’
experience in reviewing thousands of
HSR Filings each year and in light of
observable changes in market dynamics,
contemporary investor behavior,
187 122 Cong. Rec. 30877 (1976) (remarks of Rep.
Rodino).
188 See Consolidated Appropriations Act, 2023,
Public Law 117–328, 136 Stat. 4459 (2022).
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investment arrangements, and
acquisition strategies, as discussed in
section II.B. above.
Some commenters suggested that the
Commission lacks authority to make
changes to the notification requirements
because doing so increases the
likelihood that the Agencies will subject
more transactions to close scrutiny or
seek to block them as illegal, and that
this increased scrutiny will
disincentivize dealmaking. This line of
argument is contrary to the purpose of
the HSR Act and the final rule.
Congress passed the HSR Act to create
an effective mechanism to detect, deter,
and prevent large transactions that
violate the antitrust laws. The
inadequacy of current notification
requirements may encourage parties to
enter into unlawful transactions due to
the low risk of premerger detection.189
One commenter supporting the need for
change noted that the gaps created by
the existing HSR Form and Instructions
make it possible for anticompetitive
mergers to go through unnoticed. Parties
considering a merger are aware of this,
so under the current system, parties are
likely more willing to consider or
attempt a merger that would be more
obviously unlawful under a more
rigorous disclosure regime. To the
extent that one effect of the final rule
would deter unlawful dealmaking, that
effect is clearly consistent with
Congress’ intent that mandatory
premerger review more effectively
prevent illegal mergers.190 Filing parties
cannot claim an interest in inadequate
detection or in avoiding an in-depth
antitrust investigation that may lead to
a court injunction blocking the merger
because these concerns directly
contravene U.S. law. Based on statutory
text and clear Congressional intent, the
Commission must ensure that HSR
notification requirements enable the
Agencies to detect the potential for
harm before the harm occurs; that is the
purpose of premerger review. When the
Agencies’ ability to detect the violation
is compromised by inadequate
disclosures in the HSR Filing, the
Commission must use the authority
expressly conferred by Congress to
adjust the Agencies’ detection tools to
fulfill the purpose of premerger review.
Other commentors suggested that the
Agencies’ infrequent challenges to
consummated mergers, including those
reported but not challenged prior to
189 See
‘‘Stealth Consolidation,’’ supra note 18.
S. Rep. No. 94–803, at 65 n.28 (the
purposes underlying enactment of section 7 of the
Clayton Act could have been accomplished if
premerger notification had been enacted when
originally proposed, and that if it had the economy
would be less concentrated.).
190 See
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89239
consummation, are proof that the
Agencies are not ‘‘missing deals’’ that
cause harm. But given the significant
effort required to unwind completed
mergers, the frequent lack of
information about the effects of
consummated mergers, and the limited
resources the Agencies have available to
devote to all types of merger
enforcement, in addition to their other
statutory responsibilities,191 the
relatively low number of challenges to
consummated mergers does not indicate
that the current information
requirements for premerger screening
are sufficient to detect illegal deals. The
Agencies must make difficult decisions
about how to use their resources to
address consummated mergers that may
be causing real and ongoing harm while
also working to fulfill their obligations
to conduct a robust premerger screening
of reported transactions. The critical
task of screening reported transactions
for antitrust risks can be especially
challenging during times of peak M&A
activity. See Figure 1.
According to one commenter whose
members have been directly affected by
consolidation in the retail food sector,
third parties sometimes alert the
Agencies to competitive issues, but that
may not occur until after the waiting
period has expired or the deal has been
consummated. This commenter noted
that these untimely scenarios are exactly
the opposite of the HSR Act’s legislative
intent and force the Agencies and courts
into a precarious position to preserve
competition or obtain effective
remedies. Congress certainly did not
provide immunity for reported mergers
that are not challenged prior to
consummation (as most jurisdictions
do) 192 so it is not a binary choice for the
191 In addition to merger enforcement, both
Agencies investigate and challenge anticompetitive
conduct that may violate the antitrust laws. The
Antitrust Division has sole responsibility to
prosecute criminal violations of the antitrust laws,
while the Commission has authority under section
5 of the FTC Act (15 U.S.C. 45) to challenge unfair
methods of competition beyond the scope of the
Sherman or Clayton Acts. In addition, the
Commission’s budget supports its consumer
protection work, which is devoted to stopping
unfair or deceptive acts or practices that violate the
FTC Act as well as enforcement of more than 80
other statutes. See generally Fed. Trade Comm’n,
‘‘Legal Library: Statutes,’’ https://www.ftc.gov/legallibrary/browse/statutes.
192 See The Merger Control Review Preface, x
(Ilene Knable Gotts, ed., 14th ed., 2023) (in most
jurisdictions, a transaction that is not notified is not
subject to review or challenge by the competition
authority), https://www.wlrk.com/webdocs/
wlrknew/AttorneyPubs/WLRK.28469.24.pdf. Canada
recently extended its lookback period from one year
to three years for non-notified transactions but left
unchanged the one-year limitation to challenge
notified transactions. See Competition Bureau
Canada, ‘‘Guide to the June 2024 amendments to
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Agencies to ‘‘act or stand down’’ on a
reported merger. But once a merger is
consummated (whether reported in
advance or not), the Agencies face
decisions about the significant costs of
mounting a merger challenge to unwind
the deal as well as the opportunity costs
of doing so. Given the limited resources
the Agencies have to devote to merger
enforcement, the Agencies will often
focus on enforcement of reported
mergers due to these opportunity
costs.193
The legislative record leading to the
HSR Act is replete with references to the
costs, delays, and ineffectiveness of
relying on post-consummation
enforcement to interdict mergers that
may cause harm in their incipiency.194
In the Agencies’ experience, unwinding
illegal consummated mergers continues
to be a costly exercise, and there remain
significant delays in obtaining effective
relief through unwinding. A merged
firm has strong incentives to delay the
outcome, and Commission orders
requiring divestiture of acquired assets
are often appealed, further deferring
relief.195 Moreover, smaller or
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the Competition Act’’ (June 25, 2024), https://
competition-bureau.canada.ca/how-we-fostercompetition/education-and-outreach/guide-june2024-amendments-competition-act.
193 See Zarek Brot-Goldberg, et al., ‘‘Is There Too
Little Antitrust Enforcement in the US Hospital
Sector?’’ (U. Chi., Becker Friedman Inst. for Econ.
Working Paper No. 2024–59, May 2024)
(forthcoming, Am. Econ. Rev.: Insights), https://
bfi.uchicago.edu/working-paper/is-there-too-littleantitrust-enforcement-in-the-us-hospital-sector/
(FTC is intervening in the most anticompetitive
transactions but not preventing a significant
number of hospital mergers that nonetheless cause
harm).
194 See H.R. Rep. No. 94–1373, at 7–10 (1976).
195 See, e.g., Illumina, Inc. v. FTC, 88 F.4th 1036
(5th Cir. 2023); ProMedica Health Sys., Inc. v. FTC,
749 F.3d 559 (6th Cir. 2014), cert. denied, 575 U.S.
996 (2015); Polypore Int’l, Inc. v. FTC, 686 F.3d
1208 (11th Cir. 2012).
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seemingly inconsequential acquisitions
can later be revealed as potentially
illegal exclusionary conduct when they
are used by firms with dominant market
positions to maintain or extend a
monopoly in violation of section 2.196
There are enormous costs and delays
associated with prosecuting section 2
cases involving the largest companies in
the world to unwind harmful
acquisitions.197
In mandating government review of
acquisitions prior to consummation,
Congress intended for the Agencies to
avoid these types of protracted antitrust
cases when possible. Instead, Congress
envisioned that merger enforcement
would occur mostly through a system of
premerger review, even at the cost of
requiring premerger review for many
mergers that may not ultimately warrant
an in-depth investigation let alone a
challenge in court.198 The Commission
196 See
supra note 107 (collecting cases).
Commission filed its monopolization
complaint against Facebook (now Meta) on
December 9, 2020, and was joined by a coalition of
forty-six States, the District of Columbia and Guam.
See Press Release, Fed. Trade Comm’n, ‘‘FTC Sues
Facebook for Illegal Monopolization’’ (Dec. 9, 2020),
https://www.ftc.gov/news-events/news/pressreleases/2020/12/ftc-sues-facebook-illegalmonopolization. The FTC is seeking a permanent
injunction that would, among other things, require
the divestiture of previously acquired assets. As of
September 27, 2024, the parties have concluded
pretrial discovery; a trial date has not been set.
198 The Agencies can and do challenge reportable
mergers after the expiration of the waiting period.
See, e.g., Chi. Bridge & Iron Co. N.V. v. FTC, 534
F.3d 410 (5th Cir. 2008); United States. v. Parker
Hannifin Corp., No. 17–cv–01354 (D. Del. Sept. 26,
2017) (complaint). See also Note by the United
States to the OECD, Investigations of Consummated
and Non-Notifiable Mergers (Feb. 25, 2014) (DAF/
COMP/WP3/WD(2014)23), https://one.oecd.org/
document/DAF/COMP/WP3/WD(2014)23/En/pdf
(discussing Agencies’ challenges of consummated
mergers); Menesh S. Patel, ‘‘Merger Breakups,’’
2020 Wisc. L. Rev. 975, 990 (2020) (observing that,
since 2001, the Agencies have challenged at least
197 The
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has determined that imposing some
limited additional upfront costs on filers
so that they submit sufficient
information to allow the Agencies to
conduct the mandatory initial antitrust
review fulfills the Agencies’ statutory
responsibilities and should be weighed
against the benefit of avoiding large
expensive antitrust actions required to
unwind illegal acquisitions that were
not detected at the screening phase.
Importantly, the final rule imposes
fewer information requirements on
transactions that are reportable but have
low antitrust risk while seeking the
most information from those
transactions most likely to require indepth review at the screening phase.
Otherwise, the consequences of poor
detection are improperly shifted to
those harmed by illegal consummated
mergers—which is plainly at odds with
the purpose of the HSR Act.
The benefits of stopping an illegal
merger before it happens can be
significant, especially for those who
would bear the consequences of harm
induced by the merger. The chart below
collects estimates of avoided harm due
to likely price changes for affected
products or services in cases litigated by
the Agencies and accepted by Federal
courts as a basis for enjoining illegal
mergers in recent years.
four mergers that previously underwent HSR
review). Because of the confidentiality protections
afforded HSR filings, market participants are often
not aware of the merger or the timing of the
expiration of the statutory waiting periods. See
Comment of Strategic Org. Ctr., Doc. No. FTC–
2023–0040–0708 at 3 (urging public notice of the
date of HSR filings and the identity of the filers so
that interested and affected parties can contact the
Agencies during the initial review period). Many
investigations of consummated mergers, including
reported but not challenged transactions, are
initiated after market participants reach out to the
Agencies about the observed effects of the merger.
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89241
Table 2: Estimates of Harm in Blocked Mergers
Case
Estimate ofHann
U.S. v. JetBtuefSpiritAirlines
$1 billion per yem«
FTCv:IQVIAIPMI
Post-map,:~~ of7.4W
U.S. v.BertelsmannSB&Co.
Post-mesger decmises in advances range from 4% to 11.S0/4<
FfCv. HacJremiack
$31 milliorfpec~
FfC V. Peabody Energy
$1 billion over 10years"
F'I'C v. Wilhelmsen
$14.4 million toS23
FfC v. Sanford
$16 million to $27 million per yearW
·~------~-------
~••~•~•--~••••~,,_,-......,,.---------0--,-~
milllimper yea,;J'
•United States v.JetBlue Airways Corp~ No.1:23-cv-10511 (Dec. lei, 2024) {Findiopofl"actaad Conc1usioas ofLaw) aadPlaintiffsPost-TtialBrief
at 18-1!> (Dec. 13, 2023) (Proposed Acquisition Is Conservatively Projected to Cause Nearly St Billion of Harm Each Year to American Coasumm in
tile RelevantMarftels).
1 FI'C v. IQVIA Holdings Jnc., No. 1:23-cv-06188 at 81-82 (SDN.Y. Jan. 8, 2024) (Op. & Order).
•United States v. Bertelsmaml SE & Co., No.1:21-cv-2886 at 54 (DD.C. Nov. 7, 2022)(Mem. Op.).
4 FI'C v. Hackeasack Meridian Health. Inc., No. 2:20-cv-18140 at 48-4!> & n.26 (DNJ. Aug. 4, 2021). affd, 30 F.4111160, 174 (3d Cir. 2022).
• FI'C v. Peabody Energy Corp. 4!>2 F. Supp.3d 865, 906 (ED. Mo. 2020).
fFI'Cv. Wilh. WllhemsenHoldingASA, 341 F. Supp.3d27,65 (DD.C.2018).
rFrCv. SanfordHealth.No.1:17-cv-00133 at28,2017 WL 10810016 at*13 (D. ND.Dec.1S,2017)(Mem.Decisioll). affd,!>26F.3d!>S!>. (8th Cir.
201!>).
199 United States v. JetBlue Airways Corp., No.
1:23–cv–10511 at 43 (D. Mass., Jan. 16, 2024)
(Findings of Fact and Conclusions of Law).
200 Illumina, Inc. v. FTC, 88 F.4th 1036, 1055 (5th
Cir. 2023).
201 See generally Vivek Bhattacharya et al.,
‘‘Merger Effects and Antitrust Enforcement:
Evidence from US Consumer Packaged Goods’’
(Nat’l Bureau of Econ. Rsch., Working Paper No.
31123, Apr. 2023, rev. June 2024), https://
www.nber.org/papers/w31123 (studying fifty
mergers in the consumer-packaged goods industry
and finding that, on average, these mergers raised
prices by 1.5 percent and decreased quantities sold
by 2.3 percent); Daniel Hosken et al., ‘‘Do Retail
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significant economic costs imposed on
market participants harmed by an illegal
consummated merger, the Agencies will
Mergers Affect Competition? Evidence from Grocery
Retailing,’’ 27 J. Econ. & Mgmt. Strategy 3 (2018)
(finding that the majority of grocery mergers in
highly concentrated markets resulted in price
increases of more than 2 percent); John E. Kwoka,
Jr., Mergers, Merger Control, and Remedies: A
Retrospective Analysis of U.S. Policy 110–11 (2014)
(providing a meta-analysis of retrospective
literature, finding that more than 80 percent of
mergers resulted in price increases and the mean
price increase was 5.88 percent across all studied
transactions); Orley C. Ashenfelter et al., ‘‘Did
Robert Bork Understate the Competitive Impact of
Mergers? Evidence from Consummated Mergers,’’
57 J. L. & Econ. S67 (2014) (reviewing prior
retrospectives and concluding that mergers in
oligopolistic markets can result in economically
meaningful price increases, as 36 of 49 studies
surveyed found evidence of merger-induced price
increases); Leemore Dafny et al., ‘‘Paying a
Premium on Your Premium? Consolidation in the
US Health Insurance Industry,’’ 102 a.m. Econ. Rev.
1161 (2012) (examining healthcare mergers and
finding the mean increase in local market HHI
during the studied period raised premiums by
roughly 7 percent); Orley Ashenfelter & Daniel
Hosken, ‘‘The Effect of Mergers on Consumer
Prices: Evidence from Five Mergers on the
Enforcement Margin,’’ 53 J. L. & Econ. 417 (2010)
(examining a set of mergers that were unchallenged
by the government and finding that the majority
resulted in a significant increase in consumer prices
in the short run); Thomas Koch & Shawn W. Ulrick,
‘‘Price Effects of a Merger: Evidence from a
Physicians’ Market,’’ 59 Econ. Inquiry 790 (2021)
(concluding that a merger of orthopedic physicians’
practices increased prices to some payors by ten to
twenty percent while prices in nearby areas not
affected by the merger remained unchanged); Zack
Cooper et al., ‘‘The Price Ain’t Right? Hospital
Prices and Health Spending on the Privately
Insured,’’ 134 Q. J. Econ. 51 (2019) (examining 366
hospital mergers and finding that prices increased
by over six percent when merging hospitals were
geographically close); Prager & Schmitt, supra note
83 (examining hospital mergers and finding
reduced wage growth when merger significantly
increases concentration).
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continue to challenge consummated
mergers when practical and as resources
permit. But relying on postconsummation merger enforcement to
correct for information deficiencies in
the HSR Form is contrary to
Congressional intent that premerger
review be used to stop illegal mergers
before they occur.
1. Congress Determined Which
Acquisitions Must Bear the Costs
Associated With Premerger Review
Congress determined that the burden
of premerger review should apply,
regardless of antitrust risk, to a small
subset of mergers where that burden
would not be so great in comparison to
the size of the deal and the size of the
parties involved. Because the final rule
does not require reporting for any
additional transactions, it maintains the
balance struck by Congress that only
some mergers be subject to mandatory
premerger review.
Congress incorporated several features
in the HSR Act to lessen the burden on
dealmaking, especially for small
business and small transactions.202 For
instance, the HSR Act as first passed in
1976 contained three specific
requirements that determined
reportability for a planned transaction:
the acquiring person is engaged in
interstate commerce (the commerce
test); one of the parties was worth at
least $10 million and the other worth at
202 The Senate version of the premerger
notification bill would have given the Commission
authority to require reporting from additional
‘‘small’’ mergers, but the House bill and the final
law did not include this provision. 122 Cong. Rec.
30877 (1976).
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In addition to merger-induced price
effects, which can vary widely due to
differences in the economic size of the
relevant markets affected by the merger,
there can also be harm to customers
from the loss of non-price competition.
For example, the court found that
JetBlue’s anticipated reconfiguration of
Spirit’s aircraft would result in a
decrease in the number of seats
available on JetBlue flights of more than
6,100,000 per year.199 These types of
effects reduce output and result in a
welfare loss due to the exercise of
market power. In a vertical merger
context, the Fifth Circuit affirmed the
Commission’s findings that Illumina’s
acquisition of Grail lessened
competition via a different mechanism:
the potential foreclosure of a key input
by the sole supplier would lead to
chilled investment by firms reliant on
those inputs for their own competitive
success.200
Moreover, merger retrospectives
document merger-induced effects such
as increased prices and decreased
product quality or availability across a
range of industries.201 Given the
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least $100 million (the size-of-person
test); and as a result of the transaction,
the acquiring person would hold at least
15 percent or $15 million of the
acquired entity (the size-of-transaction
test). These thresholds were adopted in
response to concerns that requiring
reporting for all mergers would unduly
affect capital markets.203 The size-ofperson test was seen as especially
important to limit the impact of
premerger reporting on small
businesses:
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Approximately the largest 700 U.S.
companies meet the $100 million
jurisdictional requirement. Although $100
million companies account for roughly 40
percent of mergers and acquisitions, Title V’s
dual requirement of (i) a $100 million
acquiring company, and (ii) a $10 million
acquired company would have required such
30-day notification, over the past 5 years, in
less than 100 acquisitions per annum. With
this limitation, the Committee sought to
include within the ambit of the premerger
notification provision primarily those
mergers or acquisitions that were most likely
to have a substantial effect on competition.
That is not to say that smaller mergers may
not run afoul of the Clayton Act. To include
the bulk of the approximately 3,000 mergers
that would have occurred annually in the
course of the past several years would,
however, in the Committee’s judgement,
impose an undue and unnecessary burden on
business.204
Together, these criteria were designed
to focus mandatory premerger review on
the largest transactions and limit the
number of transactions that would have
to be reported to the Agencies. See
Table 1 (on average 16.5% of mergers
reported during FY 2018 to FY 2022).
During the 1990s, several years of
intense M&A activity drove merger
filings ever higher, so that by FY 2000,
the Agencies reviewed over 4,900
reported transactions.205 This dramatic
increase in HSR filings led to calls for
Congress to amend the HSR Act to
reduce its broad sweep, and to
especially address its impact on small
businesses. In response, Congress made
several changes in 2000 to reduce the
number of transactions subject to
reporting: (1) increased the size-oftransaction threshold from $15 million
to $50 million and required the
Commission, starting in 2005, to adjust
the thresholds in the HSR Act annually
based on changes in the gross national
product; (2) eliminated the 15 percent
size-of-transaction threshold, making
203 See
S. Rep. No. 94–803, at 65–66 (1976).
at 66.
205 Fed. Trade Comm’n & U.S. Dep’t of Justice,
Annual Report to Congress Pursuant to Subsection
(j) of Section 7A of the Clayton Act, Hart-ScottRodino Antitrust Improvements Act of 1976 1
(Twenty-Third Report) (FY 2000).
204 Id.
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$50 million (as adjusted) an absolute
floor; and (3) eliminated the size-ofperson test for larger transactions,
making transactions valued in excess of
$200 million (as adjusted) reportable
without regard to the size of the
parties.206 Today, as a result of these
adjustments and with annual indexing,
HSR filings are required for only a small
fraction of overall merger activity in the
United States. See Table 1.
Many commenters pointed out that
the Congress that enacted the HSR Act
envisioned the Agencies reviewing only
150 of the largest mergers.207 In 1976
when the HSR Act was passed, 150
mergers represented approximately 12.8
percent of M&A deal volume, given that
there were 1,171 completed acquisitions
in 1976.208 Overall, the burden imposed
on M&A activity by the HSR Act is not
that different today than in 1976. See
Table 1 (HSR reportable mergers on
average 16.5 percent of M&A from FY
2018 to 2022). At the same time, the size
of the U.S. economy has grown
exponentially: in 1976, the seasonally
adjusted U.S. Gross Domestic Product
was $1.934 trillion; today it is over $28
206 Public Law 106–553, 114 Stat. 2762 (2000)
(codified at 15 U.S.C. 18a(a)). See also 146 Cong.
Rec. S11872 (daily ed. Dec. 15, 2000) (statement of
Sen. Kohl) (exempting small transactions from
premerger review will significantly lessen
regulatory burdens and expenses imposed on small
businesses). This legislation also provided the
Agencies more time to review materials submitted
in response to a Second Request, extending the
second waiting period under the HSR Act from 20
to 30 days after substantial compliance. See 15
U.S.C. 18a(e)(1)(A). See Fed. Trade Comm’n & U.S.
Dep’t of Justice, Annual Report to Congress
Pursuant to Subsection (j) of Section 7A of the
Clayton Act, Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (Twenty-Fifth Report)
appendix A (FY 2002) (from FY 2000 to 2002,
reported transactions dropped from 4,926 to 1,187).
207 The prediction of 150 mergers turned out to
be unrealistic from the start. In just the first three
months of the premerger program, the Agencies
received notifications for 292 transactions, nearly
double the expected amount. See Fed. Trade
Comm’n, Second Annual Report to Congress
pursuant to Section 201 of Hart-Scott-Rodino
Antitrust Improvements Act of 1976 3 (FY 1978).
In the first full year of the HSR program, the
Agencies received filings for 814 transactions. Fed.
Trade Comm’n, Third Annual Report to Congress
pursuant to Section 201 of Hart-Scott-Rodino
Antitrust Improvements Act of 1976 3 n.4 (FY
1979). The Commission moved quickly to amend
the HSR Rules to exempt additional types of
transactions to further reduce the burden of the
premerger reporting program. 44 FR 66781 (Nov. 21,
1979). See also David A. Balto, ‘‘Antitrust
Enforcement in the Clinton Administration,’’ 9
Cornell J. L. & Pub. Pol’y 61, 119–20 (1999)
(discussing two early HSR exemptions which
resulted in approximately 20% and 10% reductions
in filings).
208 See Fed. Trade Comm’n, Statistical Report on
Mergers and Acquisitions 25 Table 10 (1978),
https://www.ftc.gov/system/files/documents/
reports/statistical-report-mergers-acquisitions-1978/
statistical_report_on_mergers_aug1980.pdf. This
number does not include partial acquisitions which
did not confer control on the buyer.
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trillion.209 From these figures, it appears
that M&A activity, and the economy in
general, has not been affected by the
obligations imposed on those pursuing
certain large acquisitions to submit to
mandatory premerger review.
Moreover, Congress enacted several
explicit statutory exemptions to reduce
the burden of reporting,210 and also
authorized the Commission to issue
rules exempting persons and
acquisitions that it deemed at the time
as posing little to no antitrust risk,
which eliminated the burden of
reporting for many additional
transactions.211 The Commission has
also faithfully implemented Congress’
mandate to annually index the HSR
thresholds, which keeps premerger
review limited to those acquisitions
Congress wants the Agencies to review
prior to consummation.212
Some commenters noted that the
current process is inefficient because of
the over-inclusiveness of HSR reporting
standards. They pointed out that of all
reported transactions, the Agencies
issue Second Requests in only 2 to 3
percent per year, suggesting that this is
a reason for the Commission to keep the
status quo and not adopt any
adjustments to current information
requirements.
The Commission believes that the low
percentage of transactions that have
received Second Requests is not a
reliable indicator that the Agencies have
achieved the goals of mandatory
premerger review or that the current
209 U.S. Bureau Econ. Analysis, Gross Domestic
Product (updated Aug. 29, 2024) (retrieved from
FRED, Fed. Reserve Bank of St. Louis), https://
fred.stlouisfed.org/series/GDP.
210 See 15 U.S.C. 18a(c) and 16 CFR part 802.
211 See 15 U.S.C. 18a(d)(2)(B) and 16 CFR part
802. Several commenters urge the Commission to
engage in rulemaking to exempt additional
transactions from HSR filing obligations. These
suggestions are outside the scope of this
rulemaking. Due to deficiencies in the information
currently collected in the Form, as explained
elsewhere in this document, the Commission is not
able to identify any additional types of transactions
that could be exempted at this time. Until the
Commission has sufficient information to provide a
reasonable basis to exempt additional categories of
transactions from HSR reporting requirements, the
Commission is not in a position to reduce the total
number of reported transactions. As discussed in
section VI.A.1.f., the Commission is excusing
certain types of transactions (select 801.30
transactions) from many requirements of the final
rule and has modified the proposed rule in many
places to apply only where certain conditions have
been met.
212 To the extent that commenters suggest that the
NPRM expands reporting requirements for
additional transactions, they are wrong. Nor would
changing the information requirements of the HSR
Filing affect the obligations of public companies to
comply with disclosure requirements of the
Securities and Exchange Commission (‘‘SEC’’). See
Comment of Am. Sec. Ass’n, Doc. No. FTC–2023–
0040–0682 at 2.
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process is efficient in identifying
problematic transactions and effective
in deterring illegal mergers. As
discussed above in section II.B., the
Commission has identified significant
deficiencies in the information provided
in the HSR Filing that prevent the
Agencies from assessing the potential
harm presented by reportable
transactions. In light of these
deficiencies, the number of mergers
investigated through the issuance of
Second Requests is not instructive on
whether the Agencies are fulfilling their
duty to the American public to screen
large mergers in advance of
consummation. The Agencies must
continue to review reportable
transactions to determine which ones
warrant the issuance of Second Requests
regardless of, and despite, fluctuations
in the overall number of filings.
2. Delays Associated With Premerger
Review Depend on Antitrust Risk
Congress also determined how much
delay would be associated with those
transactions subject to mandatory
premerger review, and this rulemaking
attempts to adjust the information
required for premerger screening in light
of legislative intent to avoid delays for
any deal other than those with the
highest antitrust risk. The main
statutory feature of the HSR Act is the
suspensory waiting period, which
requires that the parties not
consummate the proposed acquisition
until the prescribed waiting period has
expired. For all transactions, the statute
limits that delay by keeping the waiting
period short: 30 days for most
transactions and 15 days for those most
at risk of not happening at all due to
delay, such as cash tenders and
acquisitions of assets out of bankruptcy.
Congress determined to hold up cash
tender offers and the purchase of assets
in bankruptcy only briefly due to
heightened concerns over timing. For
cash tender offers, which do not require
consent of the target and can sometimes
be actively opposed by the target,
Congress shortened the suspensory
waiting period to 15 days to balance
premerger notice with the intent of the
securities laws, specifically the
Williams Act, so as not to ‘‘tip the
balance’’ in favor of the incumbent
management of the target firm.213
Similarly, for acquisitions of assets
subject to bankruptcy proceedings,
Congress understood that time is of the
essence to prevent liquidation of
213 122 Cong. Rec. 30877 (1976) (listing a number
of defensive actions the target could take to
undermine the offer if it had enough time,
effectively denying shareholders of the target firm
the choice to accept the offer).
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productive assets and applied the
shortened 15-day initial waiting period
to these transactions as well. Congress
thus recognized that a particular subset
of transactions require especially speedy
review.
At the same time, Congress provided
that the Agencies can extend the waiting
period for any type of reportable
acquisition by requiring the submission
of additional information or
documentary material in response to a
Second Request. The decision to issue
Second Requests has significant
consequences for the transaction
because if that happens, the parties
cannot consummate the transaction
until 30 days after each party has
substantially complied with the Second
Requests.214
The Commission disagrees that the
final rule entails any delay beyond that
which was expressly contemplated in
the HSR Act. First, the final rule does
not extend the statutory waiting periods,
which are established by Congress.215
Second, Congress made clear that the
initial waiting period will commence
once the Agencies have received a
completed Form, or a partially
completed Form with a specific
statement of the reasons for partial noncompliance.216 Third, Congress directed
the Commission to devise and maintain
a mandatory notification program that
would give the Agencies the
information that is necessary and
appropriate to conduct an initial
214 The Agency that issued the Second Requests
can grant early termination of the waiting period,
permitting the parties to consummate their
proposed acquisition, or a Federal court may extend
the waiting period if the Agency applies for
preliminary relief and the court finds that the party
has not substantially complied with the information
requirements of the HSR Act. 15 U.S.C. 18a(g)(2).
215 As discussed in section V.D. below, if the
parties have not executed a definitive agreement,
the final rule requires that they submit a document
with the HSR Filing that contains sufficient details
of the transaction they intend to consummate. This
may be the executed preliminary agreement, or the
agreement may be supplemented by one additional
dated document, such as a term sheet or the latest
draft agreement. While this new requirement may
cause some filers to delay notification compared to
the current rules, the Commission believes this
change is necessary and the delay is appropriate to
avoid wasting the Agencies’ time and attention on
deals that may never occur or are too hypothetical
or lacking material details to assess.
216 122 Cong. Rec. 30876 (1976). The Commission
does not dispute that the HSR Act allows for
substantial compliance with its requirements. In
response to such arguments, the sponsors dropped
the ‘‘automatic stay’’ provisions and adopted a
requirement that filers ‘‘substantially comply’’ with
the Second Request so that arguments that the
parties had not fully complied could not hold up
the deal. Under 15 U.S.C. 18a(g)(2), a district court
may extend the statutory waiting periods of the
HSR Act if filers fail to substantially comply with
the requirements of the HSR Act.
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antitrust assessment during the initial
15- or 30-day waiting period.
That said, the Commission does not
question the need, when appropriate, to
minimize delay for notified
transactions, especially for nonproblematic deals. In fact, the
Commission believes that the final rule
may shorten the overall waiting period
for a significant number of transactions
and perhaps even reduce the overall
number of delayed transactions. As
discussed above, Congress determined
that 30 days was the appropriate delay
for the majority of reportable
transactions (other than cash tenders
and acquisitions in bankruptcy),
regardless of their size or economic
impact. It is a feature of the HSR Act
that an open market stock purchase by
an individual can be subject to the same
30-day initial waiting period as a multibillion-dollar merger of competitors
operating in multiple local markets
throughout the country. Yet these two
transactions present very different
antitrust risks.
In order to quickly dispense with
those transactions that present low risk
of a law violation so as to focus on those
with moderate to high risk, the Agencies
need more information in the HSR
Filing. Any time and effort the Agencies
must spend collecting necessary
information that is not contained in the
HSR Filing is time and effort taken away
from quickly determining which deals
do not warrant an in-depth
investigation. Especially as it relates to
cash tender acquisitions—which are
among some of the largest deals
reviewed by the Agencies over the years
and yet are subject to a 15-day initial
waiting period—the short time given for
the initial antitrust assessment severely
strains the Agencies’ limited resources,
especially during periods of intense
M&A activity. See Figure 1. But the
statutory time limit is absolute and if
the Agencies do not issue Second
Requests before the end of the initial
waiting period, the parties are free to
consummate the transaction.217 This is
as Congress intended, but Congress also
gave the Commission the authority to
determine the necessary and
appropriate information that must be
included in HSR Filings to make the
217 As part of the 2000 amendments to the HSR
Act, Congress made plain that if the end of the
waiting period falls on a Saturday, Sunday, or legal
public holiday, then the waiting period is extended
to the next day that is not one of those days. 15
U.S.C. 18a(k). This change was necessary to
eliminate gamesmanship by parties who timed their
compliance so that the waiting period ended on a
weekend or holiday, effectively shortening the
waiting period to the previous business day. 146
Cong. Rec. S11872 (daily ed. Dec. 15, 2000)
(statement of Sen. Kohl).
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statutory scheme work—not for the
purpose of minimizing delay but for the
purpose of enforcing the antitrust laws
for the benefit of the public. That is the
problem this rulemaking addresses: by
adjusting the amount of information
available to the Agencies on the first day
of the waiting period, the final rule
makes possible quick but thorough
premerger review for all reportable
transactions.
For many years, and mainly due to
the lack of sufficient information
contained in HSR Filings, many filers
and practitioners have become
accustomed to artificially lengthened
waiting periods. In 2013, the
Commission issued a rule that
formalized a previously informal
process that offers filers the option to
withdraw and refile their filings without
paying an additional filing fee. The
option to withdraw-and-refile was
intended to benefit both the parties and
the Agencies by providing an additional
15- or 30-day waiting period for the
Agencies to review the transaction
without issuing Second Requests while
seeking additional relevant information
on a voluntary basis from the merging
parties or from third parties.218
As shown in Table 3 below, the
option to withdraw-and-refile has been
used with some frequency by filers to
give the Agencies more time to conduct
an initial premerger assessment. Based
on the Agencies’ review of their HSRrelated investigations during the five-
year period of FY 2018 to 2022, parties
withdrew their HSR filing and refiled in
a total of 546 transactions. In the
majority of these extended
investigations, the Agencies determined
not to issue a Second Request: nearly
two-thirds of the time, opting to
withdraw and refile resulted in the
transaction closing at the end of the
initial waiting period, thereby avoiding
the cost and burden of a Second Request
investigation. That is, once the filing
parties submitted information beyond
what was submitted with the HSR Form,
the investigating Agency was able to
determine that the transaction did not
warrant Second Requests.
Table 3: Withdrawn & Refiled Transactions Fiscal Years 2018 -2022
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Transactions
Transactions Not Issued Second Request.
Percentage Not Issued Second Request
While the parties can rely on the
option to withdraw and refile as an ad
hoc tactic to avoid the issuance of
Second Requests, the Agencies’
experience illustrates in a very tangible
way the inefficiencies associated with
the current HSR Form. Over the five
years sampled, an average of 73
transactions each year (546 in total)
were delayed by an additional 30 days
and filers were burdened by having to
submit additional materials on a
voluntary basis even though the
investigation did not lead to the
issuance of Second Requests. These
delays impose costs on the parties and
the Agencies, as well as third parties
contacted during the extended initial
review period.
Moreover, getting more time to review
the transaction does not address the
information deficiencies outlined above
and addressed by the final rule. While
serving as an existing work-around to
give the Agencies more time to collect
additional information not contained in
the HSR Filing, the option to withdrawand-refile is a poor substitute for having
the necessary information submitted
with the HSR Filing for several reasons.
First, the current information
requirements leave important gaps, as
218 78
FR 10574, 10576 (Feb. 14, 2013).
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detailed above in section II.B., leading
staff to flag filings for no-action when in
fact they may warrant a closer
review.219 In practical terms, the HSR
Filing must contain sufficient
information from the filers to allow the
Agencies to spot transactions that may
warrant follow up. Merely adding time
on the clock does not fill the
information gaps identified above.
Second, withdraw-and-refile is
optional for filers and thus is not a tool
the Agencies can rely on to collect more
information when needed. While parties
may decide to delay their transaction to
lower the chances of receiving a Second
Request, in many instances the parties
do not withdraw and refile precisely
because they fully expect to receive
Second Requests. When the parties do
withdraw and refile, the Agencies spend
considerable time waiting for answers to
key questions; in any event, having
more time is not the same as having the
information needed to conduct an initial
antitrust assessment. The Agencies’
experience is that these voluntary
submissions are often late or
incomplete. When the information
arrives near the end of the extended
waiting period, there is often not
enough time to review and verify the
information. As a result, investigations
that are extended through a withdrawal
and refile are costly in time and effort
for both Agency staff and the parties:
extra time does not always translate to
collecting the right information to make
the initial determination whether the
transaction should be fully investigated
through the issuance of Second
Requests.
Finally and most importantly, a filer’s
submission of any additional
information beyond what is required for
an HSR Filing is voluntary. Given that
the Agencies have no ability to demand
compliance with voluntary requests,
there is an overwhelming incentive for
filers to prioritize the collection and
submission of information suggesting
that there is no competitive problem,
rather than supplying the necessary
information in an objective and neutral
manner. Thus, while the agency may
receive additional relevant information
on a voluntary basis, it remains
extremely challenging for the Agencies
to both review and verify this
information in whatever short period of
time is available to decide whether to
issue Second Requests.
Expending so many resources on
withdraw-and-refile investigations is
219 See supra note 24 (citing research finding that
consummated hospital mergers that received early
termination resulted in the largest average
percentage price increase).
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5 Year Total
546
365.
67%
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inefficient both for the parties and the
Agencies and is a source of undue
delays for many deals every year,
because having more time is not a
substitute for having sufficient and
reliable information provided on a
mandatory basis on the first day of the
waiting period. The Commission
believes that requiring more information
in the HSR Filing through a final rule
that is focused on surfacing competition
problem areas will reduce the need for
extended withdraw-and-refile
investigations for a significant number
of transactions that do not require
Second Requests.
Expanding the information that filers
are required to provide upfront has
certain benefits for filers and gives full
effect to the purpose of a very short
initial waiting period: because the
information will be available to the
Agencies on the first day of the initial
waiting period, this will reduce delays
for deals that do not receive Second
Requests but nonetheless are delayed
because staff must collect information
from third parties or public sources,
including when the parties withdraw
and refile their HSR Filing. In addition,
having this information upfront may
allow Agency staff to narrow the areas
of focus to only those business lines that
require further investigation.220 Based
on the Commission’s experience, the
additional information will allow the
Agencies to significantly reduce
burdens on filing parties in many
circumstances.
Moreover, the additional information
required by the final rule addresses the
fundamental information asymmetry
that currently exists between what the
parties know about their business and
what information they are required to
reveal to the Agencies in the HSR Filing.
Shifting the burden of information
collection from the Agencies to the
filing parties minimizes the burden on
Agency staff to collect basic business
information about the filers from other
sources, such as their customers or other
market participants, or from public
sources, which may not surface key
confidential business information
known only to the parties. It also
minimizes the burden on those third
parties. This basic business information
is relevant to the Agencies’ antitrust
assessment and often comes in late in
the initial waiting period close to when
the Agencies need to determine whether
to issue Second Requests.
220 As discussed elsewhere, the Commission did
not consider any ‘‘burden’’ associated with better
detection of illegal mergers. Identifying additional
transactions for investigation and possible
challenge is a benefit of effective and efficient
premerger review.
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Moreover, certain information is most
readily and reliably available from the
parties to the transaction. Although
Agency staff collect relevant
information from other sources
including third parties during the initial
waiting period, the benefit of getting
this information from the filing parties
is that it is likely more accurate and upto-date and therefore more reliable for
the purpose of quickly conducting a
premerger assessment of antitrust risk.
Obtaining basic business information
about the operations of the filing parties
secondhand from third parties and
public sources is no substitute for
getting that information directly from
the parties themselves. The parties will
have the most reliable and relevant
information necessary to conduct a
preliminary assessment of the
transaction during the initial waiting
period.
Having reliable and accurate
information directly from the entity
most likely to have it reduces overall
information-collection costs and delays.
That is just good government, according
to some members of Congress:
‘‘Requiring transacting parties to
provide regulators with the information
necessary to examine a proposed merger
is a commonsense way to save taxpayer
dollars and enable antitrust enforcers to
fulfill their congressional mandate and
protect consumers, the economy, and
national security.’’ 221
To further reduce delays for
transactions that pose little or no
antitrust risk based on information
contained in the HSR Filing, the statute
also provides the Agencies with the
discretion to grant an early termination
of the initial waiting period, reducing
the statutory 15- or 30-day delay to
something less.222 For many years, the
Agencies routinely granted early
termination to those filers that requested
it.223 Contrary to the assertions of some
commenters, the Commission reviews
the information provided in every filing
(typically two filings per transaction) 224
to ensure compliance with the
221 Comment of Sen. Elizabeth Warren et al., Doc.
No. FTC–2023–0040–0711 at 5.
222 15 U.S.C. 18a(b)(2).
223 Not all parties request early termination;
whether to request early termination is solely at the
discretion of the filing parties. Because the
Agencies are required to make public grants of early
termination through publication in the Federal
Register, some filers may prefer not to have their
acquisitions made public in this way.
224 As reflected in appendix A of the Annual HSR
Reports, the Agencies typically receive two filings
for each transaction, one from the acquiring person
and one from the acquired person. In FY 2022, the
Agencies reviewed 6,288 filings for 3,152 reported
transactions. Fed. Trade Comm’n & U.S. Dep’t of
Justice, Hart-Scott-Rodino Report, Fiscal Year 2022
appendix A (FY 2022).
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89245
requirements of the HSR Act and to
conduct a preliminary assessment of
antitrust risk. The decision to grant
discretionary termination of the waiting
period prior to the statutory deadline is
the result of staff review of the
information contained in the HSR
Filing, a determination that takes time,
knowledge of the HSR Rules, and often
additional research from public sources
to ensure that there is little to no risk
that the transaction requires additional
investigation prior to consummation.
There is also the additional time spent
coordinating both Agencies’ conclusions
as well as processing the granting of
early termination through publication in
the Federal Register.225
Prioritizing staff resources to reduce
delays through early termination over
the identification of problematic deals
became impractical during the latest
surge in HSR-reportable transactions,
beginning in the fall of 2020 when the
Agencies were faced with an
unprecedented increase in merger
filings.226 As reflected in Figure 1
above, the number of HSR-reportable
transactions spiked in FY 2021,
resulting in more than twice the number
of filings as compared to the prior year.
Given the time and effort required to
collect additional information during
the initial waiting period—information
that is not contained in the current
Form but that bears directly on whether
the Agencies should conduct a more indepth investigation or grant early
termination—the Agencies temporarily
suspended the granting of early
termination, first briefly in order to
adjust to the challenges of processing
premerger filings during the COVID–19
pandemic, and then again due to a surge
in merger filings.227
As an additional measure, the
Commission determined that it would
225 Commission staff take seriously the statutory
obligation not to disclose information about an HSR
Filing. Because the granting of early termination
requires public notice in the Federal Register and
is often the first indication that a proposed
acquisition is in the works, staff must take great
care to avoid mistakes when processing these
requests.
226 Fed. Trade Comm’n & U.S. Dep’t of Justice,
Hart-Scott-Rodino Annual Report, Fiscal Year 2021
appendix B (FY 2021) (reporting monthly HSR
filings for FY 2012 to FY 2021). See Statement of
Chair Lina M. Khan Joined by Commissioner
Rebecca Kelly Slaughter Regarding the FY 2020,
Hart-Scott-Rodino Annual Report for Transmittal to
Congress (Nov. 8, 2021) (‘‘FY 2020 HSR
Statement’’), https://www.ftc.gov/system/files/
documents/public_statements/1598131/statement_
of_chair_lina_m_khan_joined_by_rks_regarding_fy_
2020_hsr_rep_p110014_-_20211101_final_0.pdf.
227 See Press Release, Fed. Trade Comm’n, ‘‘FTC,
DOJ Temporarily Suspend Discretionary Practice of
Early Termination’’ (Feb. 4, 2021), https://
www.ftc.gov/news-events/news/press-releases/2021/
02/ftc-doj-temporarily-suspend-discretionarypractice-early-termination.
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provide notice to filers whose deals
could not be adequately screened during
the initial waiting period, warning them
that although the waiting period had
expired, the transaction remains subject
to antitrust challenge under section 7.228
In the Commission’s view, these preconsummation warning letters are
consistent with the legislative intent
that lack of agency action prior to the
expiration of the initial 15- or 30-day
waiting period does not bar the
Agencies (or other enforcers of the
Clayton Act such as States or private
parties) from later challenging the
notified transaction. That is, premerger
review provides the Agencies with the
opportunity to investigate and challenge
suspect transactions as violative of
section 7; it does not require nor allow
the Agencies to determine that the
merger does not or would never violate
section 7.
These recent adjustments to the
Agencies’ premerger review process
reflect the burdens on Agency staff to
triage filings during the very limited
statutory period allowed for the initial
review, which underscores the need for
additional information at the outset of
the initial waiting period. Even for those
transactions in which the parties give
the Agencies additional time by
withdrawing and refiling their
notification, relying on voluntary
submissions has not been sufficient to
overcome the lack of relevant
information needed to conduct a robust
screening for a significant number of
deals.
As several commentators noted, it is
appropriate that the Agencies, who have
the responsibility to identify which
transactions should be challenged,
address the significant information
asymmetry between the parties and the
Agencies by collecting more information
from the parties upfront. The
Commission agrees. The Commission
has determined that the information
deficiencies of the current reporting
requirements are imposing undue delay
on those transactions that the Agencies
determine do not require intervention
prior to consummation. The final rule
addresses these inefficiencies by
shifting more of the costs of information
acquisition to the merging parties, both
because they are the most reliable and
ready sources for that information and
to reduce the costs and delays
associated with information acquisition
from other sources, including third
parties. The Commission believes that
the final rule represents a reasonable
adjustment to the information
requirements for premerger notification
228 See
FY 2020 HSR Statement, supra note 226.
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that will reduce the number of
transactions that are delayed beyond the
initial review period.
3. The Purpose of the HSR Form Versus
Second Requests
Several commenters asserted that if
the Agencies need more information,
they should issue more Second Requests
as an alternative to issuing this final
rule, because that is the mechanism
Congress gave the agencies to collect
more information. Commenters also
compared the requirements of the
proposed rule to those contained in a
Second Request, asserting that this
rulemaking would inappropriately
convert the HSR Filing into the
equivalent of a Second Request in terms
of scope and burden. As discussed
below, the Commission disagrees with
these commenters. Congress gave the
Agencies a mandate to collect
information that is necessary and
appropriate in the HSR Filing to
determine whether the reported
transaction may violate the antitrust
laws, which would justify the burden
(on both the parties and the Agency)
associated with issuing Second
Requests. The purpose of requiring an
HSR Filing is to give the Agencies time
and information to conduct mandatory
premerger screening. The purpose of
issuing Second Requests is to conduct
an in-depth review of other information
and documentary materials that would
allow the Agency to determine whether
to challenge the transaction prior to
consummation. The Commission has
concluded that the final rule more
appropriately reflects the purpose of the
statutory scheme, which requires the
information from all filers that is
necessary for premerger screening but
requires extensive information in
response to a Second Request (which
today, often represents millions of
documents and terabytes of data) only
from those filers whose transactions
warrant an in-depth antitrust
investigation. Thus the final rule is a
reasonable exercise of the Commission’s
rulemaking authority to address the
information deficiencies identified in
section II.B. rather than rely on the
extraordinarily costly alternative of
using Second Requests to address those
deficiencies.
Commenters point to research that
indicates there is a high probability that
a transaction will be challenged if the
Agencies issue Second Requests and
suggest that this means that Second
Requests are the most reliable tool for
the Agencies to identify potentially
harmful deals. But a close read of the
study cited by commenters reveals that
there are reasons to question the
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conclusions commenters have drawn
from the low number or high throughrates of Second Requests. Billman and
Salop examined the Agencies’
enforcement record and calculated that
for those transactions that receive a
Second Request, 28 percent are cleared
as proposed.229 Billman and Salop also
report that the percentage of Second
Request investigations has fallen over
time, from about 3.49 percent in 2001 to
2.92 percent in 2020. These figures are
consistent with information reported by
the Agencies in annual HSR Reports.230
In their report, Billman and Salop
contend that the reason behind the
falling number of Second Requests is
limited agency resources, not
diminishing antitrust risk due to
mergers:
The agencies issue so few second requests
because they have been budget constrained
during this entire period. Under these
circumstances, the agencies must engage in a
type of triage process. Being limited in the
number of second requests they can issue
and cases that they can afford to litigate in
court, the agencies target only the limited
number of most problematical looking
mergers for second requests. Not
surprisingly, they generally discover
evidence of potential anticompetitive effects.
And not surprisingly, the firms generally
consider the validity of the concerns, and
most are then willing to accept a consent
decree or abandon the transaction. Indeed
about 26% (i.e., 254/969) of the firms that
receive second requests choose to abandon
the transaction even before a complaint is
issued.231
The Commission is well aware of the
challenges of fulfilling its mission to
prevent harmful mergers with existing
resources. Fully resourcing the
Commission’s competition mission—
especially merger review—has been an
ongoing challenge. For instance, the
Commission’s headcount remains well
below what is needed in light of the
volume and complexity of proposed
deals. Over the past ten years, the
absolute number of HSR filings has
nearly doubled, while the number of
FTC employees assigned to competition
work has remained nearly flat. As a
result, the Commission has been forced
to make difficult triage decisions and
forgo potentially worthy
investigations.232 Moreover, funding
229 Logan Billman & Steven C. Salop, ‘‘Merger
Enforcement Statistics: 2001–2020,’’ 85 Antitrust L.
J. 1, 6 (2023).
230 See appendix A of HSR Annual Reports,
available at Fed. Trade Comm’n, Annual Reports to
Congress Pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, supra note 56.
231 Billman & Salop, supra note 229, at 7.
232 See Statement of Chair Lina M. Khan, joined
by Commissioner Rebecca Kelly Slaughter and
Commissioner Alvaro M. Bedoya Regarding the FY
2022 HSR Annual Report to Congress (Dec. 21,
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levels for the antitrust agencies has not
kept pace with the impressive growth of
the U.S. economy: according to one
report, from 2010 to 2019, U.S. GDP
increased 37 percent but appropriations
for the Antitrust Division and the FTC
increased only 3 percent.233
Commenters who supported
expanded information requirements
suggested that limited resources justify
this rulemaking, while those opposed
claimed that resource limitations are the
real source of underenforcement of the
antitrust laws, a problem that will not
be solved by adding burdensome new
information requirements. Whatever the
funding levels, the Agencies must
deploy their resources to be good
stewards of public funds and make
resource allocation decisions to pursue
their mutual mission to enforce the
antitrust laws for the benefit of the
public. The Commission has concluded
that regardless of resource levels, it is
critical to the task of detecting illegal
mergers that the HSR Filing contain
sufficient information for an effective
premerger antitrust assessment of the
transaction rather than relying on
issuing more Second Requests to
compensate for information deficiencies
in the HSR Filing.
The Commission has determined
there are several reasons why issuing
more Second Requests is not a
reasonable alternative to address the
information gaps discussed in section
II.B. above. First, without the additional
information required by the final rule,
the Agencies would continue to struggle
to uncover key facts necessary to
determine whether to issue Second
Requests for reported transactions that
warrant in-depth review. The Agencies
are currently making these assessments
and relying on Second Requests when
necessary, but they are doing so
knowing that there are deficiencies in
the information currently collected on
the HSR Form, resulting in significant
extra effort to generate sufficient
information to make that determination
prior to the expiration of the initial
waiting period. In light of the
deficiencies in the information currently
collected that are discussed in section
II.B., the Commission has determined
that the status quo does not permit the
Agencies to fulfill their statutory
mandate to identify those transactions
2023). https://www.ftc.gov/system/files/ftc_gov/pdf/
StatementofChairKhanJoinedby
Comm%27rSlaughterandComm%27
rBedoyareFY2022HSRAnnualReport.pdf.
233 Michael Kades, ‘‘The state of U.S. federal
antitrust enforcement,’’ Wash. Ctr. Equitable
Growth 22–23 & Fig. 12 (Sept. 17, 2019), https://
equitablegrowth.org/research-paper/the-state-of-u-sfederal-antitrust-enforcement/?longform=true.
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that warrant the issuance of Second
Requests.
Second, issuing more Second
Requests is an extremely costly
alternative to the final rule. The costs,
burdens, and delay associated with
Second Requests—for both the parties
and the Agencies—are well
documented. In 2000, Congress
amended the HSR Act to provide for an
optional internal review process for
Second Request recipients to object to
the breadth and cost of complying with
those requests 234 and requiring the
Agencies to conduct ‘‘an internal review
and implement reforms of the merger
review process in order to eliminate
unnecessary burden, remove costly
duplication, and eliminate undue delay,
in order to achieve a more effective and
more efficient merger review
process.’’ 235 Yet despite Agency reforms
to reduce burdens and costs, 236 the
AMC noted the widespread belief that
complying with a Second Request
imposed significant costs. The AMC
cited a survey conducted by the
Antitrust Section of the American Bar
Association which reported that, on
average, investigations during the
second waiting period took seven
months and resulted in median
compliance costs of $3.3 million.237 A
more recent survey conducted in 2014
by the Mergers & Acquisitions
Committee of the ABA reported that
average cost of compliance with a
Second Request was $4.3 million among
respondents.238 Another study shows
234 15
U.S.C. 18a(e)(1)(B).
sec. 18a(e)(1)(B)(iii).
236 See Prepared Statement of the Fed. Trade
Comm’n Before the Comm. on the Judiciary,
Subcomm. on Antitrust, Competition, and Small
Bus. and Consumer Rights, United States Senate
Concerning An Overview of Fed. Trade Comm’n
Antitrust Activities 3 (Sept. 19, 2002), https://
www.ftc.gov/sites/default/files/documents/public_
statements/prepared-statement-federal-tradecommission-overview-enforcement-antitrust-laws/
020919overviewtestimony.pdf. In 2002, the
Commission’s Bureau of Competition issued
Guidelines on Merger Investigations, which
eliminated some of the more onerous requirements
of compliance. See Debbie Feinstein, ‘‘A fine
balance: toward efficient merger review,’’ Fed.
Trade Comm’n Competition Matters blog (Aug. 4,
2015), https://www.ftc.gov/enforcement/
competition-matters/2015/08/fine-balance-towardefficient-merger-review.
237 AMC Report, supra note 179, at 163. The AMC
noted that the survey’s value was limited due to
reliance on a non-scientific, self-selected sample of
only twenty-three responses, and that the median
values for most measures of cost were much lower
than the means, suggesting the average values were
influenced by a few very high observations. Id.
238 Peter Boberg & Andrew Dick, ‘‘Findings from
the Second Request Compliance Burden Survey,’’
Vol. XIV No. 3 Threshold: Newsletter of the Mergers
& Acquisitions Comm. 26, 37 (Summer 2014)
(A.B.A. Antitrust L. Sec.). In about one-third of
these investigations, parties had withdrawn and
refiled their notification, indicating that the strategy
235 Id.
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that Second Requests impose significant
delays and risks, even for deals that are
ultimately not challenged by the
Agencies, increasing the time required
for premerger review from an average of
98 days (3.3 months) for acquisitions
that do not receive a Second Requests to
237 days (7.9 months) from
announcement to closing.239
The Commission has determined that
the final rule is a better regulatory
alternative than issuing more Second
Requests because the final rule provides
the Agencies with the information
necessary for an efficient and effective
premerger assessment and to determine
which reportable transactions warrant
the issuance of Second Requests. The
Commission considers the costs that
would be associated with issuing more
Second Requests as an alternative to the
final rule to be unnecessary and
unjustified. By relying on only the
information contained in current HSR
requirements and issuing more Second
Requests, the Agencies would be
imposing these significant costs on
deals that are even more ‘‘on the
margin’’ than the ones that are currently
identified for a Second Request
investigation. Issuing more Second
Requests without adjusting the
information in the HSR Filing would
most likely result in significant costs for
additional transactions and undue delay
for even more deals that are not
ultimately challenged in court.
More importantly, without addressing
the information deficiencies outlined in
section II.B., the Agencies would miss
certain transactions that warrant further
review. For these transactions, which
are currently not subject to Second
Requests, the costs of complying with
the additional information requests for
the HSR Filing are justified by the
enhanced ability of the Agencies to
detect the potential for the transaction
to violate the antitrust laws. In other
words, the final rule makes it more
likely that the transactions that present
the most significant risk violating the
antitrust laws, and therefore most
clearly warrant the costs and delays
associated with an in-depth
investigation, are those that will receive
Second Requests.
As an added benefit, the additional
information contained in the HSR Filing
will allow the Agencies to focus their
investigation on those aspects of the
transaction that create antitrust risk, and
was not always effective in avoiding a Second
Request. This is consistent with the Commission’s
assessment of withdraw and refile data, reflected in
Table 3 supra.
239 Jana Fidrmuc et al., ‘‘Antitrust merger review
costs and acquirer lobbying,’’ 51 J. Corp. Fin. 72,
73 (2018).
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minimize ‘‘overly broad’’ Second
Requests, which can also impose
unnecessary costs and delays.
Specifically, the final rule provides the
Agencies with the information that is
necessary to make the critical decision
whether and how to burden the filers
and the Agencies with the costs and
delays associated with an in-depth
investigation of the reported transaction.
Indeed, one goal of this rulemaking is
to reduce the number of Second Request
investigations that do not lead to an
enforcement action. Imposing
substantial costs in addition to undue
delay on transactions that are unlikely
to face a court challenge is the wrong
response to the information deficiencies
outlined in section II.B. The
Commission has determined that
imposing minimal additional costs on
all filers to properly conduct premerger
screening will likely reduce the number
of transactions that receive a Second
Request but do not face a court
challenge, a very significant benefit to
filers. The Commission expects that, on
balance, the final rule will reduce the
number of unnecessary or overly broad
Second Requests and that this outcome
is consistent with the statutory scheme
created by Congress.
Much of the increased cost of a
Second Request investigation (for both
the parties and the Agencies) is due to
the increasing complexity of merger
litigation, and including the costs
associated with post-complaint
discovery. Federal judges overseeing
merger trials routinely remark on the
scope and effort of proving and refuting
the facts needed to assess whether a
proposed transaction violates the
antitrust laws.240 The Agencies’ costs in
litigating these cases have also increased
significantly in recent years, especially
the cost of hiring outside experts to
support the litigation.241 To a large
extent, the scope and burden of a
Second Request is driven by the
growing need for data and other
evidence required to make an informed
decision whether to devote scarce
resources to a particular case in light of
the likelihood that the agency can
240 See, e.g., FTC v. Peabody Energy Corp., 492 F.
Supp. 3d 865, 874 (E.D. Mo. 2020); FTC v. Staples,
Inc., 190 F. Supp. 3d 100, 110 (D.D.C. 2016); FTC
v. Sysco Corp., 113 F. Supp. 3d 1, 15 (D.D.C. 2015);
United States v. JetBlue Airways Corp., cv–23–
10511 (D. Mass. Jan. 16, 2024).
241 See Letter from Lina M. Khan, Chair, Fed.
Trade Comm’n to Rep. Thomas P. Tiffany 5–6 (Nov.
3, 2023) https://www.ftc.gov/system/files/ftc_gov/
pdf/2023.11.3_chair_khan_letter_to_rep._tiffany_
re_merger_challenges.pdf (citing expert witness
costs related to merger enforcement in Federal
court).
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establish liability under section 7 of the
Clayton Act.
Of the commenters objecting to the
proposed rule, some argued that the
final rule would collapse the distinction
between the notification form and a
Second Request. The Second Request is
the Congressionally mandated tool for
the collection of additional information
to determine whether to challenge the
transaction prior to consummation. The
Commission states that it is not its
intention in any way to require in the
initial notification all the information
that may be necessary to determine
whether to file a complaint alleging an
antitrust violation. Instead, the final rule
ensures that the Agencies have the
information necessary to identify those
transactions that require the issuance of
Second Requests, a decision that must
be made prior to the expiration of the
statutory waiting period. The
Commission disagrees that the final rule
requires anything near the amount of
data and documents sought in Second
Requests, which are tailored for each
recipient. For example, the
Commission’s Model Second Request
requires the submission of all
documents related to pricing for any
relevant product for the last three
years 242 and the Department of Justice’s
Model Second Request requires the
submission of each database or data set
containing a range of information about
the relevant product.243 That level of
detail and analysis is not required by
the final rule and is not warranted in an
HSR Filing. In the final rule, the
Commission has identified the
information that the Agencies need to
conduct a preliminary screen for
antitrust risks. A Second Request
represents a whole different level of
detail and analysis, one much more
aligned with determining whether there
are facts sufficient to establish to a court
that the merger may substantially lessen
competition or tend to create a
monopoly.
As discussed in section III.A., the
Commission believes that it is
consistent with the statutory premerger
regime to collect certain critical
information directly from those
involved in the transaction and to have
that information available on the first
day of the initial waiting period. The
Commission believes that it is well
within its statutory authority to require
242 See Fed. Trade Comm’n, Bureau of
Competition, Model Second Request Specifications
8 (rev. Jan. 2024), https://www.ftc.gov/system/files/
ftc_gov/pdf/Final-Rev-Model-Second-Request-0126-2024.pdf.
243 U.S. Dep’t of Justice, Model Second Request,
Specification 2, https://www.justice.gov/atr/file/
706636/dl.
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minimally sufficient information in the
HSR Filing that is necessary and
appropriate to screen each reported
transaction for antitrust risk without
resorting to issuing more Second
Requests to require information that is
not currently submitted with the HSR
Form.
Moreover, the Commission believes
that Second Requests should continue
to be reserved for those transactions
more likely to violate the antitrust laws
and to result in measurable harm if not
blocked prior to consummation. Issuing
more Second Requests as a remedy for
deficient HSR Filings imposes
opportunity costs on the Agencies,
diverting resources that could be used to
address other potential violations of the
antitrust laws. Moreover, as discussed
above, one potential benefit of the final
rule is that it may reduce the number of
Second Requests or limit their scope.
Issuing more Second Requests runs
counter to that goal and would also
impose significant additional costs on
the Agencies, the filing parties, and
third parties. In the words of one
commenter: ‘‘These proposed changes
exemplify good government. They
would save regulators valuable time and
resources in evaluating merger
proposals, making the agency’s
processes more efficient.’’ 244
In sum, in adopting this final rule, the
Commission believes that it has
identified the specific additional
information that, in the Agencies’
experience, is most relevant to
determining whether to issue Second
Requests or narrow their scope.
Moreover, as detailed below in sections
IV. through VI., the Commission has
made significant modifications in the
final rule to better balance the need for
additional relevant information while
avoiding undue delay and cost where
the likely benefit to the Agencies is low,
especially for those deals that they can
quickly determine are not likely to
violate the antitrust laws. The
Commission believes that the final rule,
as modified, would better address the
information deficiencies outlined above
as compared to other available
regulatory options such as relying on
more Second Requests.
The Commission has also considered
whether to rely on the expanded use of
voluntary supplemental submissions
from the parties, including as part of a
pull-and-refile investigation, as an
alternative to the final rule. See section
III.A.2. But this alternative does not
address the information deficiencies
that this rulemaking has identified with
244 Comment of SEIU, Doc. No. FTC–2023–0040–
0699 at 2.
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the current information requirements.
Without the collection of information
related to the antitrust risks identified in
section II.B., the Agencies lack a basis
to identify the need for additional
voluntary submissions from the parties.
The Agencies are already relying on
supplemental submissions from a large
number of filers, often resulting in the
parties withdrawing and refiling their
notification. See Table 3. Routinely
requiring voluntary submissions from
even more filers as an alternative to
obtaining needed information in the
HSR Filing would impose unnecessary
burden and delay on filings that are not
currently flagged for follow up.
Based on the Agencies’ experience of
conducting premerger review for over
four decades, the Commission identified
the additional data and documents that,
if submitted with the HSR Filing, would
reduce delays and burdens associated
with information-gathering during the
initial waiting period and satisfy the
Agencies’ mandate to conduct a
premerger assessment of each reported
transaction. To that end, the final rule
targets information that is likely already
available to filers, such as documents
related to the transaction, as well as
historical data and documents about
their business, including ordinary
course business plans and reports. The
final rule marries descriptive responses
with documents submitted with the
HSR Filing, providing the Agencies with
a holistic view of the operations of each
party, including any existing business
relationships that would be affected by
the transaction. Overall, the final rule
aligns the information requirements of
the HSR Filing with the Agencies’ task
of identifying transactions that may
violate the antitrust laws. For many of
the new requirements, parties only have
to respond if they identify an existing
business relationship (e.g., one party is
the other party’s competitor or
supplier). Based on the Agencies’
experience, parties in most cases do
their own assessment of the antitrust
risk associated with the planned
transaction before submitting an HSR
Filing and will therefore already have
relevant information about any existing
business relationship. In short, the
Commission has calibrated the HSR
Filing’s reporting requirements so that
the filing contains sufficient information
for the Agencies to determine whether
the transaction is one that is likely to
raise antitrust concerns. The
Commission believes that the final rule
is well within the authority given to it
by Congress to implement a notification
scheme that minimizes costs and delays
associated with mandatory premerger
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review and yet generates the benefits of
preventing illegal mergers prior to
consummation.
B. Major Questions Doctrine
Two commenters suggested that the
proposed rule implicates the major
questions doctrine.245 The Commission
disagrees. According to the Supreme
Court, the major questions doctrine is
implicated in ‘‘extraordinary cases . . .
in which the history and the breadth of
the authority that the agency has
asserted, and the economic and political
significance of that assertion, provide a
reason to hesitate before concluding that
Congress meant to confer such
authority.’’ 246
This rulemaking does not involve a
major question as the Supreme Court
has used that term. The final rule
merely updates the disclosure
requirements for acquisitions that
already are required to submit to
mandatory premerger notification. As
reflected in Table 1, transactions
reported under the HSR Act constitute
only a fraction of the total number of
mergers and acquisitions that occur
each year in the United States. Congress
has determined that most acquisitions
should not be subject to premerger
review, and this rule does not impact
them.
Considerations of history and breadth
also demonstrate that the final rule does
not involve a major question. The
breadth of the Commission’s authority
here ‘‘fits neatly within the language of
the statute. . . .’’ and is well
established.247 The Commission has
245 One commenter also argues that the
Commission’s rule runs afoul of the non-delegation
doctrine. The Commission disagrees. First, the
Commission’s rule has no bearing on the authority
Congress delegated to the Commission when it
passed the HSR Act. Second, Congress’ delegation
of rulemaking authority to the Commission does not
run afoul of the non-delegation doctrine. The nondelegation doctrine is based on the Supreme Court’s
interpretation of Article I, Section 1 of the
Constitution, which vests all legislative powers in
Congress. The Court has interpreted this clause to
mean that Congress cannot delegate its legislative
power to another branch of government without
supplying an intelligible principle. See J.W.
Hampton, Jr., & Co. v. United States, 276 U.S. 394,
409 (1928); Gundy v. United States, 139 S. Ct. 2116,
2129 (2019). Congress provided several intelligible
principles in the HSR Act to guide the
Commission’s exercise of authority. For instance, it
directed the Commission to require notification in
such form and contain such documentary material
and information relevant to a proposed acquisition
as is necessary and appropriate to enable the
Agencies to determine whether the acquisition may,
if consummated, violate the antitrust laws. Congress
also stated that the Commission may define terms
and exempt classes of persons, acquisitions,
transfers, or transactions not likely to violate the
antitrust laws from the reporting requirements.
246 West Virginia v. EPA, 597 U.S. 697, 721 (2022)
(cleaned up); see also Biden v. Nebraska, 143 S. Ct.
2355, 2372 (2023).
247 Biden v. Missouri, 595 U.S. 87, 93 (2022).
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89249
clear congressional authorization to
issue rules and a long history of
exercising its authority to promulgate
HSR Rules under section 18a(d). The
Commission has made both substantive
and ministerial amendments to the rules
dozens of times to improve the
program’s effectiveness and to adjust the
reporting requirements to keep pace
with market realities.248 Requiring
248 See 43 FR 33450 (July 31, 1978) (publishing
final rules for premerger notification); 44 FR 66781
(Nov. 21, 1979) (increasing minimum dollar value
exemption contained in 16 CFR 802.20); 45 FR
14205 (Mar. 5, 1980) (replacing requirement that
certain revenue data for the year 1972 be provided
in the Notification and Report Form with a
requirement that comparable data be provided for
the year 1977); 48 FR 34427 (July 29, 1983)
(amending premerger notification rules to clarify
and improve the effectiveness of the rules and of
the Form and reduce the burden of filing
notification); 50 FR 46633 (Nov. 12, 1985) (revising
Form at 16 CFR part 803 appendix); 51 FR 10368
(Mar. 26, 1986) (same); 52 FR 7066 (Mar. 6, 1987)
(amending rules to reduce cost of complying with
the rules and to improve the program’s
effectiveness); 52 FR 20058 (May 29, 1987)
(amending definition of the term ‘‘control’’ as it
applies to partnerships and other entities that do
not have outstanding voting securities); 54 FR
21425 (May 18, 1989) (interim rule codifying
practices that make public administrative grants of
early termination of the waiting period through
means other than publication in the Federal
Register); 55 FR 31371 (Aug. 2, 1990) (revising
revenue reporting); 60 FR 40704 (Aug. 9, 1995)
(same); 61 FR 13666 (Mar. 28, 1996) (defining or
creating exemptions to filing); 63 FR 34592 (June
25, 1998) (exempting divestitures pursuant to
consent agreements); 66 FR 8680 (Feb. 1, 2001)
(interim rule implementing changes to the HSR
Act); 66 FR 23561 (May 9, 2001) (interim rule
revising revenue reporting); 66 FR 35541 (July 6,
2001) (implementing May 9, 2001 interim rule with
slight changes); 67 FR 11898 (Mar. 18, 2002)
(amending certain exemptions); 67 FR 11904 (Mar.
18, 2002) (clarifying); 68 FR 2425 (Jan. 17, 2003)
(same); 70 FR 4988 (Jan. 31, 2005) (amending the
premerger notification rules to reflect adjustment
and publication of reporting thresholds required by
the 2000 amendments to section 7A of the Clayton
Act, 15 U.S.C. 18a); 70 FR 11502 (Mar. 8, 2005)
(amending rules to address treatment of
corporations, partnerships, limited liability
companies and other types of non-corporate entities
and the application of certain exemptions); 70 FR
73369 (Dec. 12, 2005) (amending Form and
Instructions to relieve some of the burden of
complying with Items 4(a) and (b) and specifying
that notifications in certain types of transactions
expire after eighteen months if a second request
remains outstanding); 70 FR 77312 (Dec. 30, 2005)
(requiring that 2002 revenue data, identified by the
2002 NAICS, be provided in response to certain
items on the Form); 71 FR 35995 (June 23, 2006)
(allowing submission of notification and report
forms electronically via the internet); 76 FR 42471
(July 19, 2011) (implementing changes to streamline
the Form, adding Items 4(d), 6(c)(ii) and 7(d) to
capture additional information that would
significantly assist the Agencies in their initial
review, addressing omissions from 2005 rulemaking
involving unincorporated entities); 78 FR 41293
(July 10, 2013) (setting forth the procedure for
voluntarily withdrawing an HSR filing, establishing
when an HSR filing will be automatically
withdrawn if a filing publicly announcing the
termination of a transaction is made with the SEC,
and setting forth the procedure for resubmitting a
filing after a withdrawal without incurring an
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information necessary and appropriate
to determine whether a transaction, if
consummated, may violate the antitrust
laws is certainly a ‘‘tool’’ in the
Commission’s ‘‘toolbox,’’ given the
Commission’s history of taking action
against anticompetitive mergers.249
Since 1977, the Commission and the
Antitrust Division of the Department of
Justice have published an annual report
outlining their efforts to protect
competition by identifying and
investigating mergers and acquisitions
that may violate the antitrust laws.250
These reports demonstrate that
premerger notification and merger
enforcement is an area that falls
squarely within the Commission’s
‘‘wheelhouse.’’251
Even if the final rule could be
characterized as implicating a major
question, the HSR Act provides ‘‘clear
congressional authorization’’ for the
rule.252 Congress spoke clearly when it
granted the Commission authority to
determine the form and content of
premerger notifications as necessary and
appropriate to enable the Agencies to
determine whether a proposed
acquisition may, if consummated,
violate the antitrust laws,253 and the
final rule falls squarely within that
delegation of authority. The
Commission is asking filers to provide
information necessary to evaluate
whether a transaction may violate the
antitrust laws. This information is
missing from the current filings, and it
is appropriate that filers, who are in the
additional filing fee); 78 FR 68705 (Nov. 15, 2013)
(defining and applying the concepts of ‘‘all
commercially significant rights,’’ ‘‘limited
manufacturing rights,’’ and ‘‘co-rights’’ in
determining whether the rights transferred with
regard to a patent or a part of a patent in the
pharmaceutical industry constitute a potentially
reportable asset acquisition under the Act); 81 FR
60257 (Sept. 1, 2016) (allowing DVD submissions
and clarifying the Instructions to the Form); 82 FR
3212 (July 12, 2017) (amending the Form); 83 FR
32768 (July 16, 2018) (amending rules for clarity,
allowing use of email, and updating Instructions);
84 FR 30595 (June 27, 2019) (requiring use of 10digit codes based upon the North American Product
Classification System in place of the 10-digit codes
based upon the North American Industry
Classification System); 88 FR 5748 (Jan. 30, 2023)
(amending the Rules to conform to the new filing
fee tiers enacted by the Merger Filing Fee
Modernization Act of 2022, 15 U.S.C. 18b); 89 FR
7609 (Feb. 5, 2024) (amending Parts 801 and 803
of the Rules to make ministerial changes required
to reflect the annual adjustment of the filing fee
thresholds and amounts required by 2022
Amendments).
249 West Virginia v. EPA, 597 U.S. at 730.
250 See Fed. Trade Comm’n Annual Reports to
Congress Pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, supra note 56
(collecting reports).
251 Biden v. Nebraska, 143 S. Ct. 2355, 2382
(2023) (Barrett, J., concurring).
252 West Virginia v. EPA, 597 U.S. at 723–24.
253 15 U.S.C. 18a(d)(1).
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best position to report basic information
about their own businesses, provide that
information. The rule updates are
necessary and appropriate for the
Commission to accomplish the goals
Congress set out for it: effective
premerger review as a tool to prevent
illegal mergers prior to consummation
and fully enforce the antitrust laws’
proscription against undue
concentration. And just recently,
Congress increased the requirements of
the premerger notification program by
requiring the Commission to collect
information about foreign subsidies in
order to use this data as part of the
Agencies’ premerger review.254
Congress has left it to the Commission
to ‘‘fill up the details’’ based on the
many clear principles articulated in the
HSR Act 255 and in furtherance of sound
and effective enforcement of the U.S.
antitrust laws. Accordingly, even if the
major questions doctrine applies, the
Commission’s authority to issue the
final rule is clear.
C. Benefits and Costs of the Final Rule
The final rule is intended to address
existing information deficiencies in the
current HSR Rules so the Agencies can
identify transactions that may violate
the antitrust laws during the short
period of mandatory premerger review
provided in the HSR Act. The
Commission has determined that the
status quo is insufficient because it
leaves information gaps that prevent the
Agencies from efficient and effective
premerger screening to identify which
transactions require in-depth review.
The final rule also addresses significant
information asymmetries between the
parties and the Agencies by shifting
more of the costs of information
acquisition to the parties, who are most
familiar with their business operations
and structure and who are pursuing the
transaction under review. The
Commission has considered alternatives
to the final rule that would rely on other
regulatory options, including the Short
Form Alternative discussed in section
III.E., and has determined that those
alternatives offer different tradeoffs
between benefits and costs. The
Commission believes that the final rule
has the best balance of benefits and
costs within the statutory scheme of the
HSR Act because it imposes less delay
254 See Merger Filing Fee Modernization Act of
2022, 15 U.S.C. 18b (requiring the Commission to
promulgate a rule requiring HSR filings to include
information on subsidies received from certain
foreign governments or entities that are identified
as foreign entities of concern).
255 Gundy v. United States, 139 S. Ct. 2116, 2136
(2019) (Gorsuch, J., dissenting) (quoting Wayman v.
Southard, 23 U.S. 1, 31, 43 (1825)).
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and is less costly than issuing more
Second Requests, and it imposes less
delay and provides more certainty
regarding the completeness of the
information than relying on more
extensive voluntary submissions of
information. Moreover, the final rule is
superior to the short form alternative, an
option suggested by commenters and
discussed below in section III.E.,
because the Commission lacks a basis at
this time to identify a set of transactions
that should be eligible for short form
treatment using the current information
requirements. Most importantly, none of
the other alternatives close the
information gaps identified in section
II.B. to permit the Agencies to
effectively and appropriately identify a
subset of filings for which Second
Requests are warranted and to make
critical resource decisions, preventing
the Agencies from fulfilling their
mandate to conduct a premerger
antitrust assessment of reported
transactions.
Given that the final rule is the best of
the available alternatives, the
Commission now addresses comments
on whether it is a reasonable exercise of
the Commission’s statutory authority to
adopt the final rule to enable the
Agencies to determine whether an
acquisition may, if consummated,
violate the antitrust laws in fulfillment
of their premerger review obligations
under the HSR Act.
1. Benefits
The Commission has determined that,
due to evolving commercial realities,
the current information requirements for
the HSR Form and Instructions are not
delivering the benefits of mandatory
premerger review as contemplated by
Congress. As discussed in section II.B.,
changes in M&A activity, corporate
structures, and investment strategies
have exposed significant information
gaps that undermine the Agencies’
ability to efficiently and effectively
identify transactions that may violate
the antitrust laws during the initial 30day waiting period based on
information contained in the current
HSR Form. As a result, the Agencies
lack sufficient information about the
parties and transaction to conduct an
initial antitrust assessment for all types
of potential harm that could occur due
to the merger. Moreover, these changes
have amplified information asymmetries
between what the parties know about
their business activities and how the
Agencies collect the information
necessary to decide whether to issue
Second Requests. The Commission has
determined that to realize the benefit of
detecting illegal mergers prior to
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(6) a more efficient allocation of
resources devoted to merger
enforcement, including by avoiding
expensive and time-consuming
litigation to unwind consummated
mergers that cause harm but were not
identified under the current rules.
Consistent with Congressional intent,
all of these benefits accrue to the
American public in the form of
reductions in the harmful effects of
illegal consummated mergers, including
price increases or reductions in output,
reductions in quality and innovative
activity, lower wages, and other effects,
and more effective use of public
resources devoted to antitrust
enforcement. Other market participants
that would otherwise be harmed by an
illegal merger also benefit from
improved detection that leads to
enforcement that prevents or neutralizes
the harm from that merger.
Many of these benefits cannot be
quantified, or quantification cannot be
done with a high degree of reliability.
Where the Commission is unable to
estimate a benefit quantitively, it
provides a qualitative description of the
benefit using the best available
methods,256 and in light of the purpose
of mandatory premerger review. Based
on its experience gathered over decades
of premerger review of transactions
reported under the HSR Act, the
Commission considered the following
benefits that would derive from the final
rule as compared to the status quo.
89251
consummation through mandatory
premerger review, the Agencies need
more information relevant to the
antitrust risk of reportable acquisitions
in the HSR Filing.
The Commission has considered the
extent to which the final rule furthers
the Congressional goal of preventing
illegal mergers prior to consummation
through mandatory premerger review.
The benefit of having sufficient
information in the HSR Filing to screen
for all types of antitrust risks derives
from several sources:
(1) the non-consummation of harmful
mergers that otherwise would not have
been caught during premerger
screening, whose harm continues unless
and until the merger is unwound and
competition in the affected market is
restored, if it can be restored at all;
(2) the reallocation of staff hours from
attempting to collect additional
necessary information from the parties
on a voluntary basis and reduced
uncertainty that delay and insufficiency
create for resource allocation decisions;
(3) the reallocation of staff hours from
collecting additional necessary
information from third parties regarding
the parties’ business operations;
(4) the reduction in burden required
for third parties to respond to the
Agencies’ outreach to provide
information known to the filing parties,
but not currently required by the Form;
(5) improvements in premerger
screening through
(i) more accurate identification of
transactions requiring in-depth review;
(ii) the reduction in the number of
HSR Filings withdrawn and refiled for
the purpose of allowing Agency staff to
collect and review more information
from the parties;
(iii) reduction in delays associated
with HSR Filings, including those that
are withdrawn and refiled but do not
receive Second Requests;
(iv) the narrowing of issues required
to properly focus any in-depth review,
including through the issuance of more
targeted and less burdensome Second
Requests;
(v) the reduction in the number of
Second Request investigations that do
not ultimately result in enforcement or
voluntary restructuring; and
a. Detecting Additional Harmful
Mergers
Section 7 of the Clayton Act prohibits
an acquisition where the effect of such
acquisition may be to substantially
lessen competition or to tend to create
a monopoly. Acquisitions that have
these effects deprive the public of the
benefits of competition, which include
lower prices, improved wages and
working conditions, higher quality and
resiliency in the supply chain, and more
innovation and choice, among other
benefits. section 7 of the Clayton Act
was designed to arrest anticompetitive
tendencies in their incipiency,257 and
mandatory premerger review gives the
Agencies time and information to assess
whether a reported transaction may
violate the antitrust laws and seek to
block it in Federal court prior to
consummation. While it is difficult to
calculate with precision the likely ill
effects of an acquisition before it
happens, Table 2 above contains
estimates of potential harm from
mergers in cases that were litigated by
the Agencies in recent years,
representing a range of outcomes from
mergers that were not consummated as
a result of premerger review and a
subsequent Agency enforcement action.
For any particular illegal merger, the
potential for harm may be small or large
and depends on many factors, including
the size of the companies involved, the
geographic scope of their operations, the
number of customers they serve, and the
value of their products. Many of the
benefits of competition that may be lost
due to a merger are more difficult to
quantify, such as the loss of innovation
competition or degradation in the
quality of products or services offered.
Thus, the magnitude of the
anticompetitive effect of any particular
merger that would have occurred but for
the Agencies’ intervention is imprecise
at best and does not capture the full
impact of the loss of dynamic and
beneficial competition now and in the
future.
In connection with their enforcement
and reporting mandates, the Agencies
also provide public estimates of the
average consumer savings resulting from
antitrust enforcement, including
mergers that the Agencies challenge in
an enforcement action (which include
negotiated settlements requiring
divestitures or transactions that are
restructured prior to consummation).
These estimates are contained in each
agency’s budget justification submitted
to Congress.258 Table 4 below
summarizes the Agencies’ estimates of
harms to consumers and other market
participants that would have occurred
in the affected markets but for the
agency’s antitrust enforcement action.
These savings reflect all civil antitrust
enforcement activities, which include
merger enforcement.
256 See generally Anthony E. Boardman et al.,
Cost-Benefit Analysis: Concepts and Practice 44 (5th
ed. 2018); Office of Management and Budget,
Circular A–4 at 5 (Nov. 9, 2023), https://
www.whitehouse.gov/wp-content/uploads/2023/11/
CircularA-4.pdf.
257 See, e.g., Brown Shoe Co. v. United States, 370
U.S. 294, 318 nn.32–33 (1962); see also United
States v. AT&T, Inc., 916 F.3d 1029, 1032 (D.C. Cir.
2019); Saint Alphonsus Med. Ctr.-Nampa v. St.
Luke’s, 778 F.3d 775, 783 (9th Cir 2015); Polypore
Int’l., Inc. v. FTC, 686 F.3d 1208, 1213–14 (11th Cir.
2012); FTC v. IQVIA Holdings Inc., No. 1:23 Civ.
06188 (S.D.N.Y. Dec. 29, 2023).
258 The Agencies provide annual budget
justifications to Congress which contain these
estimates. See Fed. Trade Comm’n, ‘‘Budget,
Performance, and Financial Reporting,’’ https://
www.ftc.gov/about-ftc/budget-strategy/budgetperformance-financial-reporting (collecting reports)
and U.S. Dep’t of Justice, ‘‘Budget and
Performance,’’ https://www.justice.gov/doj/budgetand-performance (collecting reports).
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Table 4: Annual Estimated Consumer Savings from Antitrust
Enforcement (Millions of Dollars)
Fiscal Year
FTC
DOJ
Total
2014
1,419
3,378
4,797
2015
3,400
3,387
6,787
2016
3,610
2,271
5,881
2017
3,710<
1,408
5,118
_ _ _20_1_8_ _ _ _3c-"-,7_6_0_ _ _~~-~9_2_8~~-----4-"---,6~_8___
2019
4,860
3,939
8,799
2020
2,681
712
3,279
2021
2,840
1,567
. 4,407
2022
3,190
529
3,719
3,290.
1,822
5,112
2023
5,259
Average Annual Savings
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259 Most
calculations seek to use quantification
tools that align theories of harm being pursued, but
not all theories are associated with readily available
tools. Thus, for some merger wins, the Agencies’
estimates of consumer savings will not reflect the
full scope of theories due to the challenges of
quantification. This is most relevant for coordinated
effects; when a merger raises both unilateral and
coordinated effects concerns, the calculations put
forward will often reflect only the unilateral
concerns (due to the greater availability of
unilateral merger simulation tools) but not a robust
estimation of additional harm arising from the
threat of increased coordination.
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enhanced detection made possible by
the final rule. In addition to these
benefits, the final rule permits the
Agencies to fulfill their statutory
mandate to conduct premerger review
for the purpose of preventing illegal
mergers prior to consummation, which
is a key competition policy directive
that undergirds our nation’s reliance on
open and competitive markets to drive
innovation and economic growth.
b. Avoidable Costs and Delays Arising
From Insufficient Information on the
HSR Form
To understand the inefficiencies
created by inadequate information in
the current HSR Filing, the Agencies
conducted a review of the effort
required to collect additional
information beyond what is contained
in the HSR Filing for investigations that
did not result in an enforcement
action.260 The Agencies examined all
HSR Filings in FY 2021, when they
received 7,002 HSR Filings for an
associated 3,520 transactions.261 The
Agencies identified those transactions
for which either Agency opened an
investigation that did not result in (1) an
action brought in Federal court to block
the transaction, (2) a negotiated
260 The Agencies selected FY 2021 for this effort
because of the large number of reportable
transactions that year, 3,520, which provided for a
robust data set. The Agencies have no basis to
believe that the mergers that occurred in that year
were different in any material way from the mergers
that occurred in other years and so consider them
to be representative of HSR-reportable merger
activity in general.
261 Fed. Trade Comm’n & U.S. Dep’t of Justice,
Hart-Scott-Rodino Annual Report, Fiscal Year 2021
appendix A (FY 2021). As appendix A n.1 notes,
there are typically two filings for each transaction,
one from the acquiring person and one from the
acquired person.
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settlement with divestitures, or (3) the
transaction being abandoned or
restructured as a result of one agency’s
antitrust investigation.262 On the basis
of this review, the Agencies determined
that they conducted 100 investigations
in FY 2021 for which they collected
information from non-public sources
but that did not result in an enforcement
action, referred to here as ‘‘no-action
investigations.’’ 263 Investigational costs
associated with these no-action
investigations are one product of
inefficiencies created by insufficient
information in the HSR Filing because
they create unnecessary burdens for the
parties, the Agencies, and third parties
that could be avoided if the HSR Filing
contained sufficient information to
determine that the transaction is not one
that requires challenge via litigation
prior to consummation. In addition to
the benefits of improved detection
outlined above, these benefits represent
opportunity costs for Agency staff (who
would spend their time on other tasks
if not collecting necessary information
for transactions that do not warrant
enforcement action prior to
262 These criteria are the ones used by the
Agencies to report publicly on their merger
enforcement activities.
263 In FY 2021, the Agencies took action against
32 transactions. See Fed. Trade Comm’n & U.S.
Dep’t of Justice, Hart-Scott-Rodino Annual Report,
Fiscal Year 2021 appendix A (FY 2021) at 2. The
Agencies provide data on HSR reportable mergers
on a fiscal year basis, but enforcement decisions
may occur in a fiscal year after the transaction was
first reported. As a result, the number of
enforcement actions reported in the annual HSR
reports are not necessarily related to the
transactions that are reported for that fiscal year.
For this exercise, the Agencies tracked the
outcomes of transactions that were reported to the
Agencies in FY 2021 but decisions about those
transactions may have occurred in the following
fiscal year.
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The Agencies’ estimates of consumer
savings in Table 4 are calculated based
on the relevant product and geographic
markets that were alleged (or would
have been alleged) in either a litigation
or settlement complaint. However,
sometimes litigation or settlements do
not address the full scope of the
Agencies’ competitive concerns. Due to
various reasons (resource constraints,
investigative efficiency, litigation
strategy, etc.), a complaint may, for
example, exclude certain markets of
concern or theories of harm. When such
a merger is blocked or abandoned in its
entirety, any expected harm is avoided
in all implicated markets and for all
theories of harm. In those cases, limiting
the calculations to just those markets
and theories that would have appeared
in a filed complaint further understates
the full scope of consumer benefit.259
These calculations also do not include
less quantifiable harms that are avoided
through antitrust enforcement, such as
reduced innovation or quality.
The Commission believes that the
enhanced ability of the Agencies to
detect illegal mergers under the final
rule will result in similar benefits to
additional consumers and other market
participants that would have been
affected by an illegal merger but for the
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consummation), as well as burdens and
costs for the parties and third parties
who respond to staff inquiries designed
to collect the information necessary to
conduct a premerger assessment of a
reported transaction.
In the 100 no-action investigations,
staff contacted at least one third party,
with an average number of 18 thirdparty interviews per investigation. Each
of these interviews required significant
time from these third parties to identify
the knowledgeable personnel in the
related business operations, and prepare
for questions in advance of talking to
Agency staff. While some third parties
rely on in-house counsel to help prepare
for these interviews, some retain outside
legal counsel who have experience with
antitrust investigations. The
Commission lacks a reliable
methodology to calculate or estimate the
costs borne by third parties to provide
necessary information relevant to the
Agencies’ initial antitrust assessment.
The Commission believes that it is
appropriate to shift some of this
information-gathering burden to the
merging parties and away from other
market participants—including
customers who may suffer harm if the
merger is consummated—who currently
absorb this burden due to deficiencies
in the existing HSR Form. The final rule
realigns the burden of providing
necessary information toward the
parties themselves and away from other
third-party companies, including
smaller entities who are saddled with
unexpected compliance and legal costs
solely because they operate in the same
or adjacent business lines as the
merging parties. As a result, the
Commission anticipates a reduction in
third parties’ costs from adopting the
final rule.
Moreover, given the effort that is
required to obtain this information from
third parties, there is often a delay in
collecting critical business facts until
late in the initial waiting period, near
the time when a decision must be made
about issuing Second Requests. As
discussed above, additional information
from the parties and third parties that is
submitted on a voluntary basis often
arrives late in the review period. These
delays contribute to additional
avoidable costs through the issuance of
Second Requests that might have been
avoided or that were not tailored to
areas of competitive concern due to
insufficient information in the HSR
Filing.264
264 For any investigation that results in Second
Requests, staff spends a significant amount of time
during the initial 30-day waiting period trying to
identify the areas of a potential antitrust violation.
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One source of delay is the parties’
voluntary decision to withdraw and
refile their HSR Filing. In 53 of the 100
no-action investigations, the parties
voluntarily withdrew and refiled their
HSR Filings, which restarted the initial
waiting period and gave Agency staff
additional time to conduct the review.
As discussed above, the Commission
believes that most of the investigations
in which the parties withdraw and refile
their HSR Filings are the result of the
parties’ concern that the Agency may
issue Second Requests when they are
not warranted or that the Agency will
issue a Second Request that is too broad.
As Table 3 shows, when the parties
withdrew and refiled, they avoided
Second Requests nearly 70 percent of
the time in the period FY 2018 through
FY 2022. For the remaining 30 percent,
the additional time allowed the parties
to engage in additional advocacy to
avoid or potentially narrow any Second
Requests. For withdraw and refile
transactions that avoid Second Requests
altogether, there is unnecessary delay
and uncertainty that could be avoided if
the information required to make a noaction decision was provided sooner,
including with the HSR Filing.
But for transactions that receive
Second Requests, the delay can be
substantial; seventeen of the 100 noaction investigations referenced above
involved a Second Request. The
decision to issue Second Requests,
which requires approval from Agency
leaders,265 has significant consequences.
As discussed in section III.A.3., the
costs and delays associated with Second
Requests are substantial, and for any noaction Second Request investigation,
those burdens may be avoided if
sufficient information were available at
an earlier time in the investigation,
including in the HSR Filing. For the
Agencies, there are significant
consequences as well. A Second
Request investigation requires a team of
lawyers, economists, and support staff.
The broader the scope of the
investigation (e.g., covering many
different products or many different
geographic areas), the more staff must be
assigned. As a result, avoiding
unnecessary or unfocused Second
Requests would provide a benefit to the
parties, the Agencies, and any third
Both Agencies make public their Model Second
Requests. See supra notes 242–43. Starting from
these models, staff customize each request by
identifying areas of existing competition and
modifying the terms to fit the particular industry
dynamics, products and services, or geographic
reach.
265 For the Commission, the Chair issues the
Second Requests; for the Antitrust Division, that
determination is made by the Assistant Attorney
General. 15 U.S.C. 18a(c)(1)(A).
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parties contacted during the
investigation.
Based on this experience, the
Commission believes that the final rule
will provide a substantial benefit to the
Agencies, the parties, and third parties
by reducing the number of Second
Requests issued or narrowing the scope
of any Second Request. A more efficient
process that better identifies
transactions that do not require
additional investigation benefits parties
as well.
Many commenters asserted that the
Commission failed to take into account
the increased burden on staff of
reviewing additional information in
HSR Filings. Several stated that given
the purportedly huge volume of
materials generated by the new
requirements, especially the expanded
document demands, Agency staff would
be overwhelmed, thereby undermining
effective screening even for deals they
could evaluate with current information
requirements. One commenter estimates
that the proposed rule would result in
over 177,000 additional staff hours (100
full-time attorneys) needed to review
the information contained in the revised
HSR Filing. On the other hand, other
commenters asserted that the proposed
changes would modernize the
premerger process to better account for
the evolving complexities of today’s
mergers and address potential
shortcomings of past merger review that
have become clearer in retrospect.
Based on its own experience and in
light of the significant reductions
contained in the final rule as compared
to the proposed rule, the Commission
believes that the additional information
required by the final rule would result
in an overall reduction in the number of
staff hours spent collecting additional
information from all sources, including
the parties, as well as a reduction in
associated burdens of reviewing and
processing that information. For
example, while Agency staff may need
to review the transaction documents
and additional information submitted
with an HSR Filing, they would spend
less time on more costly and timeconsuming tasks such as conducting
independent research or outreach to
third parties, preparing voluntary
information requests, reviewing
additional information submitted by the
parties, drafting Second Requests,
reviewing voluminous submissions
from the parties in response to those
requests, and preparing internal reports
and memoranda for review by managers.
The Commission also acknowledges that
it may incur minimal additional
administrative and support system costs
associated with the revised HSR Form,
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such as technology costs to process and
host additional documents and filings.
Overall, however, the work of Agency
staff will be more efficient and effective
as they will be able to more readily and
accurately identify those transactions
that pose a risk that they may violate the
antitrust laws.
In sum, under the existing HSR
reporting requirements, inadequate
information in the HSR Filing leads to
significant time and effort for Agency
staff, third parties, and merging parties
even for transactions that do not warrant
a legal challenge. These costs (and
associated delays) represent an
opportunity for the Agencies to realize
benefits from the enhanced information
requirements contained in the final rule
by (1) streamlining the Agencies’
internal processes and resources
devoted to merger review; (2) reducing
costly delays for certain parties whose
deals are eventually consummated; and
(3) reducing the burden on third parties
to collect information for premerger
screening. By requiring more of the
information to be collected upfront from
the parties as part of the HSR Filing, the
final rule will reduce some of the costs
and effort currently associated with
premerger review for transactions that
the Agencies ultimately determine do
not require enforcement action.
The Commission acknowledges that
for some filings, Agency staff will still
engage in some of these activities to
verify the information in the HSR Filing
and reach out to stakeholders who may
be affected by the transaction. However,
the Agencies will not need to spend as
much time and resources to acquire the
basic business information about the
parties and the transaction that is
needed to evaluate the antitrust risk,
because more of that basic information
will now be contained in the HSR
Filing. The reduction in those
information-acquisition costs will allow
resources to be redeployed to other
critical tasks of the Agencies, such as
investigating other mergers (including
consummated mergers) or other
antitrust violations. In addition, any
reduction in the costs and burdens
imposed on third parties during noaction investigations is a direct benefit
of the final rule.
2. Costs
The Commission anticipates that the
incremental costs attributable to the
final rule will primarily fall on
individuals and companies who must
make HSR Filings because they are a
party to a reportable transaction. The
final rule may have effects on other
individuals or companies who are
considering a reportable transaction but
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do not eventually pursue one, although
these costs will be indirect and hard to
quantify. This indirect effect does not
include those potential deal partners
who decide not to pursue an unlawful
transaction because the final rule
decreases the likelihood that it will go
undetected. That is, any improvement
in the Agencies’ ability to detect
potentially illegal mergers is a benefit of
the final rule and cannot reasonably be
viewed as imposing unnecessary or
unreasonable costs on parties
contemplating a reportable transaction.
The final rule may also impose
additional costs on the Agencies to
ensure compliance and review
additional information contained in the
HSR Filing, although these costs will be
more than offset by other reductions in
costs, as discussed above.
For those individuals and companies
that must submit an HSR filing, the
burden of complying with the final rule
will primarily consist of the additional
cost of completing and submitting an
HSR Filing to the Agencies. This
includes internal costs (for employees
tasked with collecting and reviewing
relevant information as well as in-house
compliance attorneys and other nonlegal support staff) and external costs
(including outside experts hired to
assist in preparing the HSR Filing such
as counsel expert in HSR rules or other
tasks that filers chose to outsource to a
third-party service provider). The
majority of filers hire experienced
attorneys who are familiar with current
HSR Rules. The Commission expects
that filers will continue to do so and
that those professionals (and other legal
and technical support staff) will require
some additional time to prepare
filings.266 Current requirements also
require knowledgeable personnel from
the filing entity to collect and prepare
data and documents for the Filing, and
the Commission expects that these
individuals will expend some
additional time and effort to comply
with the final rule.
The Commission anticipates that the
final rule will result in incrementally
higher direct costs for all filers.267 As
discussed above, some of these
information acquisition costs are
currently borne by third parties and the
Agencies and will now be borne directly
266 The Agencies receive a small number of filings
from companies or individuals who do not hire
attorneys to prepare their HSR Form.
267 As compared to the current rules, the
proposed rule contained modifications that
eliminated certain information requirements that
the Commission has determined no longer provide
a benefit for premerger screening. These reductions
in burden are incorporated in the final rule and are
reflected in the analysis of incremental costs
associated with the final rule.
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by the filers themselves. Incremental
direct costs associated with the final
rule will be borne primarily by those
UPEs (and the entities they control) that
must submit an HSR Filing, though
some portion of the costs may be borne
by officers or directors of entities within
the acquiring person that will have to
provide information to the acquiring
person related to other entities for
which they serve as officers and
directors to complete the HSR Filing.268
Direct costs vary depending on a
number of factors that are different for
each reportable transaction: the type of
interest being acquired; the complexity
of the transaction; the complexity of the
UPE and its related entities and
investors; the scope and number of
existing business relationships between
the merging parties; whether the filer is
the acquiring or the acquired person;
and the size and scope of each filer’s
business operations. Generally, costs are
lower for simple transactions (such as
for open market purchases of stock or
conversion of stock options), for
acquisitions of non-controlling stakes,
and for acquisitions of control where the
merging parties do not have an existing
business relationship. Costs are highest
for strategic acquisitions of a competitor
or of a key supplier or customer where
the Agencies must engage in a thorough
review and are more likely to engage in
an in-depth investigation including
through the issuance of Second
Requests. The key variable that is likely
to determine the monetary impact of the
final rule on any particular filer is the
level of the antitrust risk associated with
the reported transaction. The
Commission believes that this outcome
is consistent with the legislative intent
in imposing mandatory premerger
review as a means of preventing illegal
mergers prior to consummation.
The Commission expects that the
incremental increase in costs associated
with the final rule will be most
significant for the first HSR Filing
prepared by a given filer because there
will be costs associated with becoming
familiar with the new reporting Form
and Instructions and to gather the
required information about the filer’s
operations. In addition, the Commission
believes that some filers (or their
counsel) will find it efficient to
268 Sometimes, the parties will allocate the costs
associated with premerger review between them by
contract. These provisions are typical for strategic
acquisitions where the parties expect some level of
antitrust scrutiny and often require the acquiring
party to compensate the acquired party for costs
related to the HSR Filing as part of the purchase
price. In conducting its cost assessment, the
Commission has assumed that each filer is
responsible for its own costs.
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automate some portion of the reporting
process, which will increase the burden
of the first filing. For any subsequent
HSR filing related to another
acquisition, these repeat filers will incur
lower costs because some of this prior
work will not be necessary to the extent
that they made investments to put
processes in place to maintain or
automate the collection of relevant
business information. In other words,
any estimated incremental costs are
expected to decline over time.
Nothing in this rulemaking affects the
filing fees for making an HSR Filing,
which are mandated by Congress and
adjusted by the Commission
annually.269 While the final rule does
not alter these HSR-related costs, recent
congressional changes in these fees use
an approach that takes into account the
size of the reportable transaction and
the size of the parties involved. Last
year, Congress revised the schedule of
HSR filing fees, creating a new fee
structure with five tiers, which
increased fees for some transactions
while reducing them for others.270
Specifically, the new fee structure
lowered fees for some mergers valued
under $500 million and increased fees
89255
for transactions valued at $1 billion and
more. Prior to this law, HSR filing fees
had a three-tier structure, with
thresholds adjusted every year. The
purpose of creating a new five-tier fee
structure was two-fold: to provide the
Agencies with additional resources to
review mergers and enforce the antitrust
laws, and to better reflect that reviews
of larger mergers generally consume
more Agency resources.271 Effective
February 28, 2023, the Commission
implemented the new fee levels, and on
March 6, 2024, the Commission
published the adjusted fees for 2024.272
Table 5: HSR Filing Fees
The Commission has identified
significant deficiencies in existing
information requirements, and those
gaps are hindering the Agencies’ ability
to obtain key facts needed for an initial
assessment of whether the transaction
may violate the antitrust laws and to
determine whether to issue a Second
Request. See section II.B. Congress
authorized the Commission to issue
rules to collect information that is
necessary and appropriate for the
Agencies to conduct premerger review
within the statutory time frame. The
final rule requires filers to gather
information relevant for screening the
transaction and results in relatively
higher costs for those reported
transactions that are more likely to pose
competition issues, including
transactions with complex party or deal
structures, or transactions involving two
entities with many overlapping business
operations or existing business
relationships in the supply chain, or
transactions in which the parties have a
history of acquisitions in the same
business lines. This is consistent with
the HSR Act’s focus on the largest
transactions, which are often the most
complex, and the overall intent to
reduce cost and delay for reportable
transactions other than those that may
violate the antitrust laws.
As discussed in more detail in section
V.D., the Commission believes that most
filers will not experience delays because
the final rule requires collection of
business information that should be
readily available or collected as part of
each filer’s due diligence efforts related
to the transaction. Filers who would
prefer to submit a letter of intent or
other preliminary agreement that is no
longer compliant with the final rule may
need to come to an agreement on more
details of the planned-for transaction.
But the Commission has determined
that this represents less than 10 percent
of current filers, meaning that most
parties are already coming to agreement
on the key terms that are required by the
final rule even if their transaction
documents are referred to as a letter of
intent.
a. Calculation of Direct Costs
To estimate the potential increase in
direct costs for filers attributable to the
changes in the final rule, the
Commission calculated the average
compliance burden by conducting a
survey of experienced HSR attorneys
who now work for the Agencies. See
section VIII. That survey revealed a
range of estimated costs for each new
information requirement in the final
rule. These estimates include the
amount of additional time required from
a variety of knowledgeable individuals,
including, for example, HSR specialists
at law firms hired to prepare the Filing
as well as individuals associated with
the UPE who collect and verify the
business information and responsive
documents, as well as costs associated
with any outside vendors hired to
complete the HSR Filing, such as data
vendors.
As explained in section VIII., the
Commission estimates that the
amendments contained in the final rule
would increase the time required for a
filer to prepare an HSR Filing, on
average, 68 hours, resulting in
269 Each year, the thresholds that determine
reportability under the HSR Act are adjusted based
on changes in the gross national product, 15 U.S.C.
18a note, while filing fees are adjusted in line with
the Consumer Price Index, Public Law 117–328, 136
Stat. 5967–68, Div. GG, Title I, sec. 101.
270 Public Law 117–328, 136 Stat. 5967, Div. GG,
Title I.
271 H.R. Rep. No. 117–493 pt. 1, at 3–5 (2022).
272 See Fed. Trade Comm’n, ‘‘New HSR
thresholds and filing fees for 2024,’’ Fed. Trade
Comm’n Competition Matters blog (Feb. 5, 2024),
https://www.ftc.gov/enforcement/competitionmatters/2024/02/new-hsr-thresholds-filing-fees2024.
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HSR Fees Effective February 23, 2022
HSR Fees Effective March 6 2024
Size of Transaction
Fee
Size of Transaction
• Fee
$101 million to $202 million
$45,000 JU9.5 million to $173.3 million
$30,000
~~--·•.. ----····
- ~ - $173.3 million.to $536.S million ... $105,000
$202 million to $1.0098 billion
$12S,OOO
$536.S ~!!!ion to$1.07~_billi~n ... $260.0~...
1t:07_3 bill~on to $2.146 billion
$415,000
$1.0098 billion or greater
$280,000
$2.146 billion to $5.365 billion
$830,000
$5.365 billion.or S!!!!er . • $2,335,000
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additional costs of approximately
$39,644 per filing on average.273 The
Commission believes that this level of
direct costs is small in relation to other
merger costs. Indeed, these total costs
are small in relation to the value of the
deals that must be reported under the
Act. The current minimum size for a
reportable transaction is $119.5 million;
as outlined in section VIII, for FY 2023,
the Commission estimates that the total
direct costs associated with the final
rule would have been only slightly more
than the value of a single reportable
transaction. Moreover, the Commission
believes that these direct costs may be
overstated and should decline over time
as parties and their lawyers become
more familiar with the requirements of
the final rule. Finally, these direct costs
do not take account of the substantial
benefits to the Agencies, the parties, and
third parties generated from a more
efficient premerger review process that
shifts some of the burden of information
collection and reporting away from
third parties to merging parties and
allows the Agencies to obtain critical
business facts earlier in the initial
waiting period, which in turn helps
mitigate avoidable costs associated with
Second Requests that might have been
avoided or that were not tailored to
areas of competitive concern due to
insufficient information in the HSR
Filing.
In addition, the costs associated with
completing an HSR Filing are often
minimal compared to other fees
associated with mergers and
acquisitions. Based on publicly
available data, the 20 largest M&A
transactions during 2021 and 2022
ranged in size from $1.44 billion to over
$70 billion, with average deal size of
$10.6 billion.274 Using the current
Congressionally mandated HSR filing
fees associated with deals of this size,
the average HSR filing fee for these
transactions would be $1,198,500,
ranging from $415,000 to $2,335,000.
For 18 of these deals, the fees paid by
the target to financial advisors are
available from public sources. These
fees varied considerably, ranging from
273 As further described in section VIII, 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.
274 See ‘‘Deal Analytics,’’ Bloomberg L. (last
viewed Apr. 3, 2024) (Prologis Inc.’s June 13, 2022
acquisition of Duke Realty Corp. (advisor fees over
$135M); Thermo Fisher’s Apr. 15, 2021 purchase of
PPD Inc. (advisor fees over $70M); sale of Twitter
Apr. 25, 2022 (advisor fees over $50M)). See also
Comment of U.S. Chamber of Com., Doc. No. FTC–
2023–0040–0684 at 20–21 & Fig. 3.
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$800,000 to $96 million. In 14 out of
these 18 cases, the fees paid by the
targets to just their financial advisors
were more than ten times the estimate
by one commenter of the average total
cost per filing for completing the HSR
Form ($437,314) 275 and in five cases,
fees to financial advisors were more
than 100 times of that estimate. In any
of these cases, financial adviser fees are
several multiples of the estimated
average new costs associated with the
final rule of $79,288 per transaction
($39,644 + $39,644) based on the
Commission’s estimates. See section
VIII. These advisor fees are instructive
in demonstrating that HSR filing fees
and HSR-related transaction costs for
most transactions do not comprise a
significant share of total transaction
costs and therefore would have minimal
impact on costs of dealmaking across
the economy.276
Another survey of middle-market
investment bankers, brokers and other
advisors reports that merger advisory
fees for deals valued up to $150 million
come in the form of retainers, monthly
or hourly charges, or success fees,
which are paid if the deal closes.277 For
deals in the $100 to $150 million range,
namely those most likely to be
reportable under the HSR Act, success
fees paid to financial advisors
represented 1 to 2 percent of deal value,
or $1,500,000 to $3,000,000 for a $150
million deal. As with higher valued
transactions, the other merger-related
costs for transactions on the lower end
of HSR reportability dwarf the costs
associated with the final rule.
One commenter commissioned a
report (‘‘the Kothari Report’’) that
projected that the direct cost of the
proposed changes may be nearly seven
times greater than the Commission
estimated for the proposed rule, after
accounting for both direct monetary
costs and further costs to the
economy.278 The Kothari Report
275 Comment of U.S. Chamber of Com., Doc. No.
FTC–2023–0040–0684.
276 In conjunction with the passage of the Merger
Modernization Act, the Congressional Budget Office
estimated the budgetary impact of changing merger
filing fees for transactions reported under the HSR
Act. CBO estimated that the bill H.R. 3843 (which
reflected fee levels that were eventually enacted)
would increase HSR filing fees by $1.4 billion over
the 2023–2027 period. Cong. Budget Office, Cost
Estimate, H.R. 3843, Merger Filing Fee
Modernization Act of 2021 3 (Sept. 27, 2022),
https://www.cbo.gov/publication/58527. CBO
estimated that the aggregate cost of the privatesector mandate would be about $325 million in
each of the first five years. Id.
277 Firmex, M&A Fee Guide 22/23 (N. Am. ed.,
2022–23).
278 Comment of U.S. Chamber of Com., Doc. No.
FTC–2023–0040–0684 at 21. Professor Kothari’s
report is attached as an annex to this comment. See
id. at 54–85 (hereinafter ‘‘Kothari Report’’).
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critiqued the Commission’s
methodology of calculating direct costs
in the NPRM’s PRA analysis in several
respects. The Commission considered
these comments and those of other
commenters and, as discussed in section
VIII, made adjustments to its cost
estimate methodology for the final rule.
As a result, the Commission disagrees
that the final rule will impose the level
of costs presented in the Kothari Report
for several reasons. First, the
Commission made significant
modifications to all aspects of the
proposed rule in response to concerns
raised in this report and in other
comments. As a result, the estimates
contained in the Kothari Report reflect
costs for a very different rule, one that
the Commission has determined not to
adopt. The Kothari Report relied on a
survey of experienced practitioners and
so did the Commission. The survey of
practitioners relied on in the Kothari
Report estimated that the proposed rule
would require an additional 242 hours
of time from outside counsel and
internal personnel. While the
Commission’s estimate was much lower,
that comparison is no longer relevant
because the Commission is not adopting
the rule it proposed. Instead, the
Commission is adopting a rule that is
substantially more modest in scope, one
that aligns compliance costs as much as
practicable with the risk that reported
transaction is one that requires a closer
look.
Moreover, even if the Commission’s
estimate of the economic impact of the
proposed rule was flawed, the
Commission made improvements to the
methodology it used to estimate the
additional effort that will be required of
filers to comply with the final rule. As
discussed in section VIII, the
Commission has accounted for the same
costs in its own estimates, such as the
time required from outside counsel, inhouse counsel, and business personnel
as well as costs associated with other
services such as data vendors. The
Commission believes that its estimates
of the economic impact of the final rule
are reliable and sufficient for it to
determine that the final rule is a
reasonable exercise of its rulemaking
authority even if it imposes modest
costs on overall dealmaking and in light
of the benefits of the final rule for
efficient and effective detection of
illegal mergers via mandatory premerger
review.
Much of the difference between the
Commission’s estimate and the one
contained in the Kothari Report is
attributable to the higher hourly rate
applied to the required hours, which the
Kothari Report suggests is more likely
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$936 per hour, and a category of ‘‘other’’
costs that is nearly one-third of the total
projected costs. The Commission
believes that its estimates of incremental
costs associated with the final rule are
more consistent with the range of filings
and filers based on its experience
receiving thousands of filings every year
and the merger investigations conducted
by the Agencies. See section VIII. The
Commission has no basis to inflate the
overall costs associated with the final
rule beyond what was estimated by
those with experience filling out HSR
Forms for a variety of filers and
transactions. As with prior rulemakings,
if the Commission determines that
certain requirements in the final rule are
not generating a benefit to the Agencies’
preliminary antitrust assessment in light
of the associated costs, the Commission
can consider adjusting those
requirements in future rulemakings.
The Commission acknowledges that
the incremental costs associated with
this rulemaking are more material than
its prior rulemakings, which frequently
reduced the burdens associated with
submitting an HSR Form. In fact, the
current Form is very similar to the
original 1978 version in its scope and
content. But the cumulative effect of the
economy-wide changes described in
section I. have seriously undermined
the Agencies’ ability to engage in
extensive fact-gathering to compensate
for deficiencies in the HSR Form. The
effort required by the Agencies to
conduct premerger review in today’s
economy threatens to render the process
ineffective for its specific purpose—
detecting and preventing illegal mergers
before they cause harm that cannot be
undone. The status quo does not allow
the Agencies to quickly identify which
transactions may violate the antitrust
laws, causing them to spend too much
time on ones that likely do not while at
the same time lacking sufficient
information to identify ones that do.
With this rulemaking, the Commission
is updating the Agencies’ tools for
detecting illegal mergers during
premerger review to match the size and
complexity of reportable transactions,
restoring rigor and efficiency to the task
of premerger review.
The Commission disagrees with other
assertions made in the Kothari Report or
finds them unpersuasive and not
entitled to significant weight. The report
focuses on the small number of
transactions that receive a Second
Request and ignores the benefits to filers
from the Agencies reviewing and
dispensing with non-problematic
transactions with greater efficiency and
assurance than before. The Kothari
Report also ignores the benefits to the
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public from the Agencies’ ability to
more effectively identify and investigate
potentially problematic transactions
based on the availability of better initial
information about potential competitive
harms. The Commission discusses these
and other benefits of the final rule in
section III.C.1.
b. Other Costs Not Attributable to the
Final Rule
Commenters raised concerns that the
proposed rule would lead to other costs
for those seeking to engage in M&A
activity. The Kothari Report predicted
that the proposed rule would so
increase the costs of M&A that it would
reduce the number of mergers,
including ones that would be beneficial
for consumers, innovation, investors,
and the economy. Other commenters
similarly argued that the Commission’s
objective is to stop all mergers by
making them too costly to pursue. The
Commission disavows any intention to
stop all mergers by imposing
unreasonable costs on those that are
subject to premerger review and
disagrees that the final rule will have
this effect. Moreover, the commenters
provided only speculation that the
proposed rule would deter or delay
some deals merely by increasing the
costs associated with making an HSR
Filing as compared to other factors that
more directly affect M&A activity, such
as interest rates. In the absence of actual
data from commenters, the Commission
must make a predictive judgment based
on the evidence available to it.279 As
noted in section III.C.1., the evidence
available to the Commission indicates
that the Agencies’ antitrust enforcement
saves consumers and other market
participants billions of dollars a year,
and in light of known information
deficiencies outlined in section II.B.,
there are strong indications that closing
known information gaps will allow the
Agencies to better identify additional
transactions that may also violate the
antitrust laws if consummated. The final
rule does not impose new incremental
costs that could plausibly deter
279 See, e.g., Huawei Techs. U.S., Inc. v. FCC, 2
F.4th 421, 454 (5th Cir. 2021) (‘‘Huawei does not
object to specific cost calculations such as these but
to the agency’s failure to consider additional,
difficult-to-measure costs about which the FCC
lacked hard data, such as ‘the broader economic
costs of depriving Americans of access to Huawei’s
market-leading technology.’ The agency’s decision
to base its analysis instead on the replacement cost
estimates before it does not render its analysis
unreasonable.’’); FCC v. Prometheus Radio Project,
592 U.S. 414, 427 (2021) (‘‘The APA imposes no
general obligation on agencies to conduct or
commission their own empirical or statistical
studies. . . . In the absence of additional data from
commenters, the FCC made a reasonable predictive
judgment based on the evidence it had.’’).
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beneficial or competitively benign
acquisitions, particularly after the
additional revisions narrowing the
requirements in the final rule are taken
into account.
Relatedly, other commenters raised
arguments about additional macro
impacts of expanding information
requirements for HSR Filings, such as
concerns about the impact on
institutional investors, including retail
investors, by indirectly impacting the
performance of investment portfolios.
Some said they were concerned
generally about the chilling effect on
M&A. Others raised concerns that
changing the status quo would create
market uncertainty, citing increased
market, labor, and operational volatility.
Several of these commenters raised
specific concerns that acquisitions in
their particular sector were typically not
challenged or even reviewed closely by
the Agencies. Concerns about
disproportionate impact for certain
sectors or types of filers are addressed
in section III.D. below.
The Kothari Report states that delays
caused by the additional time that will
be required to prepare a HSR filing
could kill deals and lead parties to
abandon transactions. It also stated that
delay breeds uncertainty in product,
labor, and capital markets, enabling
competitors to raid customers and staff,
and that delay would lead to lost
economic efficiencies that are realized
through mergers. For these propositions,
the Kothari Report cites an advisory
committee report by the U.S.
Department of Justice issued in 2000.
While that committee report explains
how delays can influence pending
mergers, the cited portion is discussing
international jurisdictions that do not
impose strict timelines or which have
prolonged agency investigations into
mergers 280—this rule does not
contemplate either. In addition, as
discussed above, the final rule will
allow the Agencies to reduce the
number of Second Requests or narrow
their scope, significantly reducing
delays in many instances.
Moreover, the Commission disagrees
that any delays and incremental costs
associated with an HSR Filing could
have a significant impact on overall
M&A activity. Deal volumes fluctuate,
often substantially, from year to year,
and these fluctuations are reflected in
the number of HSR Filings received by
the Agencies. But these fluctuations are
attributable to many economic factors,
280 Int’l Competition Pol’y Advisory Comm., Final
Report to the Attorney General and Assistant
Attorney General for Antitrust Ch. 3 (2000), https://
www.justice.gov/atr/final-report.
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including the cost of capital. Research
relied on by one commenter provides
evidence that a major driver of
uncertainty in M&A activity generally is
stock market volatility.281 This is
consistent with the Agencies’
experience. Figure 1 reflects the
volatility of HSR-reportable
transactions, and the Commission
believes that much of this volatility is
attributable to changes in interest rates
and other macro factors that drive M&A
activity generally, unrelated to
premerger review or the specific
information collected in an HSR Filing.
The Kothari Report also asserted that
M&A activity is beneficial to the
economy, and that any potential delay
or chilling of acquisitions due to the
final rule would lead to significant loss
of value creation. But the evidence cited
to support these concerns is inapposite.
For instance, a paper cited for support
that acquired plants become more
productive points to credit spreads and
aggregate market valuation as being
major drivers for merger activity.282
Similarly, another source relied on a
stylized, theoretical model of mergers
that does not provide any empirical
evidence about the benefits of M&A,
applying the theoretical model to a
situation where there is no M&A at all
to calculate the benefits of M&A.283
There is no reason to believe that the
final rule will significantly chill M&A
activity. Furthermore, in the model, the
author finds that preventing a small
fraction of deals over $1 billion has little
effect on aggregate efficiency, and that
due to the inefficiencies in the M&A
market, a policy of blocking a fixed
number of deals regardless of antitrust
concerns can improve aggregate
outcomes. Thus, the paper actually
demonstrates that preventing some
deals can improve economic
performance. The paper does not
provide a basis for the Commission to
conclude that changes of the magnitude
contained in the final rule threaten
economic efficiencies gained through
M&A activity generally.
Another paper cited in the Kothari
Report, which purports to support the
proposition that any discouragement of
pending mergers results in significant
281 Comment of U.S. Chamber of Com., Doc. No.
FTC–2023–0040–0684 (Kothari Report ¶ 57 n.46,
citing Vineet Bhagwat et al., ‘‘The Real Effects of
Uncertainty on Merger Activity,’’ 29 Rev. Fin.
Studies 3000–34 (2016)).
282 Comment of U.S. Chamber of Com., Doc. No.
FTC–2023–0040–0684 (Kothari Report at 24 n.47,
citing Vojislav Maksimovic et al., ‘‘Private and
Public Merger Waves,’’ 68 J. Fin. 2177–2217 (2013).
283 Id. (Kothari Report at 25 n.49, citing Joel M.
David, ‘‘The Aggregate Implications of Mergers and
Acquisition,’’ 88 Rev. Econ. Studies 1796–18
(2021)).
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value loss, is not on point.284 First, this
final rule is not intended to and should
not discourage mergers—the final rule
merely requires companies who are
already submitting HSR Filings to
submit more information with their
filings. In the paper’s survey of past
empirical assessments of mergers, it
highlights evidence that mergers that
create market power yield no better
performance, and sometimes worse.
That assessment is wholly consistent
with the Commission’s efforts in this
final rule: to collect information that
better allows Agency staff to identify
potentially anticompetitive mergers.
The Kothari Report mischaracterizes
this study as supporting the value of all
mergers. In fact, the author concludes
that mergers are not universally
accretive in value, stating: ‘‘[T]he buyer
in M&A transactions must prepare to be
disappointed. It is also true that most
transactions are associated with results
that are hardly consistent with
optimistic expectations. Synergies,
efficiencies, and value-creating growth
seem hard to obtain. It is in this sense
that deal doers’ reach exceeds their
grasp.’’ 285 Last, it should be noted the
study is dated 2002, and the latest
mergers it analyzes are from 1999,
whereas the Commission crafted this
final rule to address changes it has
observed in more recent transactions
that reflect current dealmaking
dynamics discussed in section II.B.
Indeed, one goal of this rulemaking is
to ensure that any benefits from M&A
are realized as quickly as possible and
that the costs of anticompetitive mergers
do not materialize. The Commission
acknowledges that there are benefits
generated from M&A activity generally,
and that those benefits flow broadly
throughout the economy. But the
Agencies are not tasked with
determining whether an acquisition is
‘‘beneficial’’ in any sense. The challenge
given to the Agencies by Congress is to
distinguish which acquisitions, among
the many thousands they review each
year, may violate U.S. antitrust law. For
this task, they need certain facts that
would reveal potential antitrust risks.
For instance, event studies may indicate
that M&A can result in significant value
creation, but these outcomes may be the
result of genuine synergies or they can
also occur due to the anticompetitive
creation of market power.286 This
284 Id. (Kothari Report at 26 n.52, citing Robert F.
Bruner, ‘‘Does M&A Pay? A Survey of Evidence for
the Decision-Maker,’’ J. Applied Fin. 48–68 (Spring/
Summer 2002)).
285 See Bruner, supra note 284, at 65.
286 W. Kip Viscusi et al., Economics of Regulation
and Antitrust 217–18 (5th ed. 2018) (horizonal
mergers raise the possibility of creating market
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highlights the very purpose of
mandatory premerger review: to subject
a certain number of larger acquisitions
to a quick and thorough antitrust review
prior to consummation solely for the
purpose of identifying the few that need
in-depth investigations. Throughout the
history of the HSR Act, the Agencies
have investigated just a small fraction of
deals through the issuance of Second
Requests. The Commission believes that
the final rule will render premerger
review more effective and efficient in
identifying those mergers that may lead
to anticompetitive harm, and that the
small incremental costs and delays
associated with the final rule are
necessary and appropriate and
consistent with the scheme established
by Congress.
Moreover, to the extent these
concerns arise from a belief that
disclosure of additional relevant
information to the Agencies will mean
that a reported transaction is more likely
to be challenged or investigated, that
outcome fulfills the purpose of
premerger review. As discussed above,
to the extent that the HSR Act itself
requires reporting for a large number of
transactions that may never violate the
antitrust laws, that has always been a
feature of HSR premerger notification.
Congress recently reaffirmed that
particular tradeoff by imposing new
disclosure requirements for foreign
subsidies on all filers while not
adjusting existing filing obligations.
In light of these considerations, the
Commission does not believe that the
final rule will have an undue effect on
dealmaking, including by discouraging
transactions that have little or no
antitrust risk. The expected costs of this
final rule are very small relative to the
overall value of reportable transactions,
the level of M&A activity in the United
States, and the size of the overall
economy. The benefits of the final rule
are expected to be proportional to
reductions in the errors in detection of
illegal mergers that this final rule
addresses.
Each year, the Agencies review
reported transactions with an aggregate
dollar value of nearly $2 trillion, on
average.287 Yet this is just a fraction of
the level of M&A activity in the United
States: as reflected in Table 1, over 80
percent of mergers completed in the
United States are not reported to the
Agencies. The costs associated with the
power and the possibility of achieving socially
beneficial cost savings).
287 See HSR Annual Reports for FY 2014 through
2023, available at Fed. Trade Comm’n, Annual
Reports to Congress Pursuant to the Hart-ScottRodino Antitrust Improvements Act of 1976, supra
note 56.
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final rule are very small in comparison
to the U.S. economy, which was valued
at nearly $28 trillion in 4Q 2023.288 Any
improvement in the Agencies’ ability to
detect illegal mergers prior to
consummation will lead to benefits that
will help reduce antitrust harm from
illegal mergers and improve the
efficiency and effectiveness of
premerger review. The greater the
improvement in detection and in
avoiding the costs and burdens of
acquiring information from sources
other than the parties, the greater the
benefits. The Commission expects that
the costs from the final rule will be so
small in relation to the total value of
reported transactions, to the level of
U.S. M&A activity in general, or to the
U.S. economy that there will be
negligible indirect effects, if any, on
dealmaking, innovation, investments,
and growth.
Nonetheless, the Commission has
narrowed its proposals so that the final
rule limits the incremental costs for
filers as much as practicable while still
generating additional information that is
critical for the initial antitrust
assessment in light of changes in market
realities and information gaps outlined
in section II.B. The need to modernize
premerger review to adjust to market
changes is compelling, and the
Commission is acting within its
statutory mandate to determine what
information is required to conduct
premerger screening that is appropriate
in the modern economy.
The Kothari Report also commented
that there is additional uncertainty for
potential filers arising from the
Agencies turning away from the decades
of practice under the current rules. Any
change brings with it some level of
uncertainty and will require adjustment
by all those involved. As with other
adjustments to the HSR rules in the
past, the Commission’s PNO staff will
be providing guidance and assistance to
filers who have questions about the final
rule. But the Commission believes that
the uncertainty related to the new rule
is a short-term issue that will be
resolved after the final rule goes into
effect. The commenters are overstating
the effect of uncertainty on the
economy. Not only are these concerns
temporary; they ignore the greater
benefits of a more efficient premerger
review process that may result in a
faster resolution of some deals,
including by reducing the number of
Second Requests and narrowing others.
288 U.S. Bureau Econ. Analysis, Gross Domestic
Product (updated Aug. 29, 2024) (Q2 2024
$28,652,337,000,000) (retrieved from FRED, Fed.
Reserve Bank of St. Louis), https://
fred.stlouisfed.org/series/GDP.
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The goal of this rulemaking is to provide
sufficient information so that the
Agencies can quickly and confidently
distinguish those transactions that
present little or no risk that they may
violate the antitrust laws, and identify
those transactions that require a more
searching investigation. As discussed
above, the Commission believes that the
final rule will reduce the delays that are
attributable to information deficiencies.
Moreover, the Commission disagrees
that the final rule will lead to greater
uncertainty about the outcome of the
Agencies’ premerger review. This
rulemaking does not (and cannot) affect
the ultimate determination of whether a
transaction violates the antitrust laws. A
Federal court will make that
determination for any transaction that
the Agencies or others seek to block
prior to consummation under prevailing
legal standards.289 Any ‘‘uncertainty’’
about the eventual outcome of
premerger review is directly related to
whether the merger violates the antitrust
laws and whether the Agencies are able
to detect that risk when conducting a
premerger assessment. Premerger review
is simply the tool Congress gave to the
Agencies to detect those mergers that
may violate the law so that the Agencies
can take steps to prevent their
consummation. On the margin, the
Commission believes that the final rule
will reduce uncertainty about the
outcome by providing more
transparency to the parties (and the
public) about the information the
Agencies rely on to make their
assessment that a transaction may
violate the antitrust laws. To the extent
that the commenters are concerned that
disclosing more information reveals a
risk to competition that the current rules
do not, that additional ‘‘uncertainty’’ is
a benefit of the final rule as a result of
improved detection and possibly greater
deterrence achieved through more
effective premerger review.
It is not feasible to design premerger
review requirements to only apply to
those mergers that will be found to
violate the antitrust laws, because there
are too many variables that weigh in
that outcome. Establishing that a merger
may substantially lessen competition or
tend to create a monopoly is highly factdependent exercise. The final rule
represents a reasonable reflection of the
Congressional policy to screen those
289 In
the Agencies’ experience, when faced with
an imminent or pending legal challenge to the
legality of the transaction, many parties chose to
abandon their merger plans rather than incur the
additional legal costs associated with defending an
injunction action in Federal court. This decision is
solely in the discretion of the parties and reflects
their assessment of litigation risks.
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mergers in advance to discover the few
that may cause lasting harm throughout
the economy and that should be blocked
prior to consummation. The
Commission has determined that the
current HSR reporting requirements are
not sufficient for the critical task of
premerger review in light of changes in
the economy and in M&A activity.290
Some commenters argued that the
proposed rule’s expansion of reporting
requirements would negatively impact
investments in biotech innovation, or
deny startups or other innovative
companies an exit strategy. Others
asserted that the acquisition of a small
company by a larger one can create
efficiencies by bringing together two
entities that specialize in activities in
which they have a comparative
advantage or provide assistance
necessary to bring discoveries to market.
One study cited by a commenter
estimates that it costs approximately
$2.6 billion to develop and bring a new
drug to market.291 Another commenter
noted that startups operate on tight
budgets and that exits, most often
facilitated by an acquisition, provide
liquidity, enable capital flows through
the startup ecosystem, and give startups
incentives to innovate. The Commission
recognizes these possible benefits and
does not seek to deny them to small
companies or others, nor does it believe
that the HSR reporting requirements in
this final rule will have any of these
negative effects on the opportunities for
small or startup companies to exit via
lawful acquisitions. As noted in section
II.B.4., many acquisitions of startups
and small innovator firms are not
reportable. For those acquisitions that
Congress has determined are large
enough to be reportable, the long-term
benefits, both monetary and nonmonetary, well outweigh the
incremental costs associated with the
final rule. Not surprisingly, acquisitions
of this type (and others) declined in
2023 due to higher interest rates.
Nonetheless, the Commission does not
believe that small companies are so
short-sighted that they will forgo
benefits of a negotiated exit acquisition
where the expected benefits dwarf HSR
filing costs.
Moreover, the Commission cannot
ignore that certain acquisitions may also
reduce innovation and harm
290 As discussed in section III.E., other countries
have adopted other procedures to review proposed
and consummated mergers.
291 Comment of Biotech. Innovation Org., Doc.
No. FTC–2023–0040–0706 at 7 n.16 (citing Joanna
Shepherd, ‘‘Consolidation and Innovation in the
Pharmaceutical Industry: The Role of Mergers and
Acquisitions in the Current Innovation Ecosystem,’’
21 J. Health Care L. & Pol’y 1, 16 (2018)).
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competition in violation of the antitrust
laws, particularly when dominant firms
use acquisitions to acquire nascent
threats. One commenter acknowledged
that an environment where a few large
companies dominate is undesirable, and
another noted that smaller companies
have flexibility, the ability to pivot in
response to new evidence, and a
willingness to accept risk that is rare in
larger firms. While acquisitions of small
firms by large firms can be beneficial,
when they substantially lessen
competition or tend to create a
monopoly, they can be detrimental to
innovation and growth. For these
reasons, and as discussed in section
II.A., Congress tasked the Agencies with
carrying out premerger review. The
Agencies would be remiss if they did
not fulfill that task by ensuring that the
HSR reporting requirements are attuned
to the risk that large firms are buying up
smaller firms in order to eliminate
nascent and potential threats. For any
negotiated exit acquisition that must be
reported under the HSR Act, the
incremental costs imposed by the final
rule are justified by the benefit to the
Agencies and the public of assessing the
risk that the acquisition may violate the
antitrust laws.
To be clear, not all exit partners are
denied to small firms due to antitrust
scrutiny; it is only those whose
acquisition would violate the antitrust
laws. For instance, when a large
incumbent seeks to acquire a smaller
company that constitutes a nascent
threat or an actual or potential
competitor, the Agencies may challenge
that merger. But in the Agencies’
experience, a startup firm deemed
valuable by a dominant incumbent also
enjoys other exit options. For example,
the Commission recently challenged the
proposed acquisition of a license to an
innovative, early-phase candidate drug
treatment for Pompe disease by the
company with the only FDA-approved
treatments for the disease.292 The
parties abandoned the transaction after
the Commission authorized a lawsuit to
block the deal; within five months the
innovator company had found an
alternative partner, negotiated a new
agreement, completed antitrust review,
and closed the deal. Moreover, the terms
of the new deal appear largely
equivalent to what the innovator had
negotiated with the incumbent.293 In
292 In re Sanofi Corp., No. 9422 (F.T.C. Dec. 11,
2023) (complaint alleging Sanofi’s proposed
acquisition of an exclusive license to Maze
Therapeutics’ pipeline Pompe therapy would have
eliminated nascent threat to Sanofi’s monopoly)
(transaction abandoned).
293 Compare Press Release, Maze Therapeutics,
‘‘Maze Therapeutics Announces Exclusive
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other words, if the acquisition of a
startup by a dominant incumbent carries
a risk that the Agencies may determine
that the transaction is one that may
violate the antitrust laws, it is likely that
there are other buyers that do not create
those risks and any of those buyers
present a viable exit strategy via
acquisition.
The Commission disagrees with the
suggestion that incremental changes in
the information requirements for HSR
Filings could have a chilling effect in
sectors that are especially acquisitive.
One commenter stated that in 2022
alone, 16,464 U.S.-based VC-backed
companies received $240.9 billion in
funding, yet when these transactions
were reportable they were rarely
investigated. Unless the new
information requirements in the final
rule reveal that a reported transaction
may violate the antitrust laws, the
Commission expects M&A activity in
these sectors to continue to be subject to
other economic forces that will
determine their viability or
profitability.294 Similarly, claims that an
industry or sector is ‘‘unconcentrated’’
are unavailing. The Agencies must
conduct a fact-specific, case-by-case
assessment of market dynamics to
determine whether any particular
relevant market affected by the merger
is concentrated, and that assessment is
typically left to an in-depth
investigation after the issuance of
Second Requests. Although the
Agencies routinely decline to
investigate transactions where there are
many remaining competitors postmerger, this is a decision made after
assessing relevant facts about the
transaction including those contained in
the HSR Filing, and is not based on an
Worldwide License Agreement with Sanofi for
MZE001, an Oral Substrate Reduction Therapy for
the Treatment of Pompe Disease’’ 1–2 (May 1,
2023), https://mazetx.com/wp-content/uploads/
2023/04/Maze-Therapeutics-Press-release-MZE001license-Final-.pdf (proposed license included $150
million upfront cash and equity investment, the
possibility of another $600 million in development,
regulatory, and commercial milestone payments,
plus further royalties), with Press Release, Shionogi
& Co., ‘‘Shionogi & Co., Ltd. and Maze
Therapeutics, Inc. Announce Exclusive Worldwide
License Agreement for MZE001, a Novel
Therapeutic Candidate for the Treatment of Pompe
Disease’’ 1 (May 10, 2024), https://mazetx.com/wpcontent/uploads/2024/05/CONFIDENTIAL_ProjectMagenta-Press-Release_Final-FINAL.pdf ($150
million upfront fee, plus development, regulatory,
and commercial milestones, plus further royalties).
294 See, e.g., Press Release, Nat’l Venture Cap.
Ass’n, ‘‘NVCA 2024 Yearbook: Charting the New
Path Forward for Venture Capital’’ (Apr. 9, 2024)
(noting that the U.S. venture capital investment
ecosystem is still the envy of the world.), https://
nvca.org/press_releases/nvca-2024-yearbookcharting-the-new-path-forward-for-venture-capital/.
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advance determination that certain
sectors are ‘‘unconcentrated.’’
The Commission has taken into
account the additional costs imposed on
small and innovative companies, as well
as those that operate in sectors where
the Agencies have historically not
engaged in merger enforcement. As
discussed in section II.B.5., the
emergence of strategic buyers engaged
in serial acquisition strategies raises the
possibility that some sectors that were
not concentrated in the past are
becoming more concentrated, especially
through transactions that are not subject
to premerger review. Thus, the Agencies
should not rely on assumptions about
historical levels of concentration when
conducting premerger review of a
reportable transaction in those sectors.
By requiring information about prior
acquisitions of both the buyer and
target, the Agencies are given better
information about the current
competitive landscape so that they can
make more accurate assessments about
the potential effect of the filed-for
transaction.
To the extent possible, the
Commission has imposed as few
additional requirements as is practicable
in light of the benefits derived from
more effective premerger review. If,
based on experience of collecting new
information, the Commission finds that
some requirements generate less-thanexpected benefits to the Agencies, it can
eliminate those requirements in future
rulemakings. In many prior
rulemakings, the Commission adjusted
its rules to reduce the burden on filers
after experience revealed that the
information did not provide the hopedfor benefit to the Agencies sufficient to
justify the costs to filers of providing the
information.295
3. Adjustments Made to the Final Rule
To Align Costs With Antitrust Risk
Since establishing a premerger
notification program pursuant to the
HSR Act, the Agencies have relied on
information contained in HSR Filings to
conduct their initial premerger review.
However, in light of the information
gaps identified in section II.B., the
Commission has determined that the
current requirements are not sufficient
for that task and determined to reset the
baseline requirements for all filers to fill
these information gaps. As a result, the
final rule eliminates some requirements
that are contained in the current Form,
and requires each filers to submit some
295 See, e.g., 76 FR 42741 (July 19, 2011)
(elimination of requirement to provide Base Year in
Item 5); 81 FR 60257 (Sept. 1, 2016) (elimination
of requirement to explain valuation of the
transaction).
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information that is not currently
required or certify that the request does
not apply to its operations.
After careful consideration of the
comments that identified aspects of the
proposed rule that would be a source of
significant costs for filers if adopted, the
Commission made significant
modifications to the final rule as
compared to the proposed rule. In
several instances, the Commission
determined that the costs of a particular
proposed requirement outweighed the
benefits and chose not to adopt those
provisions as part of the final rule. For
other proposals and where possible, the
Commission has tailored each
information request contained in the
final rule to reduce the cost of
compliance for filers yet generate the
information that is necessary and
appropriate for the Agencies to conduct
a premerger assessment of the
transaction. See sections IV to VI.
Overall, the final rule balances the cost
of collecting additional information in
the HSR Filing in light of the benefits of
obtaining additional information that is
relevant to the Agencies’ premerger
antitrust risk assessment, and aligns
those costs in proportion to the antitrust
risk associated with the transaction
under review. As a result, the final rule
is a reasonable exercise of the
Commission’s authority to require
information that is necessary and
appropriate to determine whether an
acquisition may, if consummated,
violate the antitrust laws. The
additional information required by the
final rule will close information gaps
described in section II.B. and address
information asymmetries by shifting the
burden of collecting necessary
information about the transaction and
the business of the filers from the
Agencies and third parties to filers.
To make these modifications to align
costs and benefits, the Commission
relied on the following tools and
approaches it has used when exercising
its HSR rulemaking authority over the
last forty-six years and consistent with
the statutory scheme. In addition to the
features of the HSR Act described in
section III.A. above that treat different
filers differently (e.g., requiring
notification from acquirers but not the
acquired person for cash tender offers in
order to start the waiting period and
exempting certain types of acquisitions
entirely), the Commission has
administered HSR reporting
requirements over the years in a flexible
way to minimize the burden on each
filer and each type of transaction as
much as practicable. Thus, contrary to
the assertions of several commenters,
the reporting requirements of the HSR
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Act have never been a ‘‘one-size-fits-all’’
reporting scheme because different filers
face different burdens for complying
with applicable reporting requirements.
Rather, the HSR Form and Instructions
have relied and will continue to rely on
an IF/THEN format that excuses certain
filers from information requirements
based on answers provided to other
requirements. For instance, several
current information requirements need
only be answered if the filer reports that
it generates revenues in the same
NAICS 296 code as the other party to the
transaction. The final rule expands the
existing IF/THEN format as the primary
means of mitigating the costs of
reporting certain new information in a
way that, as much as practicable, aligns
the information with the antitrust risk
associated with the transaction,
resulting in higher costs for those
transactions most likely to require close
scrutiny by the Agencies to determine if
they may violate the antitrust laws.
As summarized above in section I.
and explained in further detail in
section VI., the Commission has also
eliminated several information and
document requirements and reduced the
scope of many others as compared to the
proposed rule to align the cost of
reporting to the antitrust risk associated
with each transaction. First, the
Commission has eliminated in toto the
proposals that would have imposed
significant costs as compared to the
benefits, such as those requiring filers to
provide employee information,
geolocation information, the identity of
other interest holders or board
observers, or draft versions of submitted
documents. Second, the Commission
created a new category of filings, select
801.30 transactions, for which the costs
of complying with the final rule will be
minimal as compared to current
requirements. Next, the final rule
imposes relatively fewer new reporting
requirements on acquired persons,
reducing their costs as compared to the
acquiring person, which is the party
pursuing the transaction that requires
HSR reporting, and will operate the
acquired interests post-consummation.
The Commission has also reduced the
burden on filers by limiting the
lookback periods for several categories
of information and created de minimis
exclusions where appropriate. Finally,
the Commission will continue to allow
296 The North American Industry Classification
System is the standard used by Federal statistical
agencies in classifying business establishments for
the purpose of collecting, analyzing, and publishing
statistical data related to the U.S. business
economy. See U.S. Census Bureau, North American
Industry Classification System (rev. Sept. 10, 2024),
https://www.census.gov/naics/.
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filers to rely on good faith estimates or
answer in the negative to confirm that
certain information does not exist. For
instance, for a transaction in which
there are no existing overlaps or supply
relationships responsive to the final
rule, filers can indicate that there are no
such overlaps or relationships, although
there may be costs for the filer
associated with verifying that response.
The Commission also relies on
definitions and clarifications to reduce
or eliminate filing obligations or to
reduce uncertainty regarding
compliance. For instance, the Act
applies to a wide variety of acquisitions;
as a result, the Commission has
provided definitions and guidance over
the years to maximize compliance.
Sometimes this results in certain
transactions not being reported or
reducing reporting requirements for
certain types of transactions. The final
rule contains several new definitions
that are intended to reduce uncertainty
and costs, and improve compliance.
Select 801.30 Transactions
As part of the Commission’s effort to
reduce the cost of the final rule, the
Commission has created a new category
of transactions, defined as ‘‘select
801.30 transactions,’’ that will have
minimal reporting requirements,
including a few of the new information
requirements required by the final rule.
Where the Commission has not excused
requirements, it believes that the burden
of compliance will be low because
parties to select 801.30 transactions
generally have less complex internal
structures, do not hold significant stakes
in similar companies, and have not
generated the types of documentation
the Form and Instructions generally
require. As a result, the Commission
expects that responses to the remaining
requirements for these types of
transactions will generally be short, and
may just confirm that the parties do not
have responsive material. However, for
those transactions in which select
801.30 filers incur additional costs from
complying with the final rule, there will
be a benefit to the Agencies in learning
about potential competitive issues that
are not revealed by the current
information requirements, especially the
new information related to other entities
between the UPE and acquiring or
acquired person.
For select 801.30 transactions, filers
are excused from the following
information requirements:
i. Transaction Rationale
ii. Transaction Diagram
iii. Plans and Reports
iv. Transaction Agreements
v. Overlap Description
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vi. Supply Relationships Description
vii. Defense and Intelligence Contracts
Additionally, even where select
801.30 transactions are not expressly
excused from responding, there are
many items for which the Commission
believes the response will be ‘‘none’’
because of the nature of the transaction
or of the parties.
Less Information From the Acquired
Person
The final rule also seeks to reduce
costs by tailoring information requests
to each party’s role in the transaction.
Because the buyer (the acquiring
person) will have a larger stake in or
control of the target (the acquired entity
or assets), and often will be operating
the assets or business acquired postconsummation, more information is
needed from acquiring persons than
acquired persons. The acquiring person
is more likely to have certain types of
information relevant to the Agencies’
enforcement analysis, such as the
transaction’s structure, information
about other minority holders who might
have managerial control or influence,
and overlapping officers and directors
who could affect competitive decisionmaking after consummation. This
approach reflects the more limited time
the seller has had to consider the
implications of the planned transaction,
and to a lesser extent, the seller’s lesshoned strategic assessments of
competitive opportunities. In addition,
for certain information, such as a
transaction diagram, the Agencies only
need one response, and it is appropriate
to place the cost of providing this
information on the acquiring person and
not require the acquired person to
provide duplicative information.
Consistent with these considerations,
the final rule excuses the acquired
person from certain additional
information requirements that apply to
acquiring persons. In the final rule,
acquired persons are excused from the
following requirements:
i. Minority Shareholders, other than
those that will roll over to the
acquiring person
ii. Ownership Structure Description and
Chart
iii. Reporting of Officers and Directors
iv. Identification of International
Antitrust Notification
v. Transaction Diagram
vi. Identification of Other Agreements
Between the Parties
Balanced against these reductions in
burden, the final rule does require the
acquired person to report prior
acquisitions for the first time, for the
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reasons explained in sections II.B.5. and
VI.J.4.
IF/THEN Format
Certain information requirements of
the final rule are only applicable to
filers who provide a positive response to
other information requirements. That is,
the final rule reflects an IF/THEN format
by requiring some information only if
filers have provided other information
first. For example, many information
requirements do not require a response
if the filer indicates that there is no
reported overlap or supply relationship
between the merging parties. This is a
main feature of the current HSR Form,
and the Commission expands that
approach in the final rule to closely
align the information requirements with
the risk of a law violation the
transaction presents, resulting in an IF/
THEN format that adjusts the cost of
complying based on the existing
competitive relationship of the parties
to the transaction.
Importantly, information that is
critical to identifying competitive
overlaps or areas of premerger
competition justifies a higher cost of
collection and reporting.297 Examples
include reporting revenues for
identified overlaps by geographic
location so that the Agencies have some
basis to screen overlapping products for
local market impacts.298 Even if there is
some additional cost associated with
collecting this information, a
notification form that does not contain
such information would be unreliable
for detecting the risk that the transaction
would cause harm to competition at the
State or local level. Limiting the
requirement to provide certain
297 In the initial rulemaking implementing the
HSR premerger program, the Commission proposed
to require the reporting of revenues by Standard
Industry Classifications (SIC) codes. Many
commenters complained about the costs associated
with providing this information. But the Agencies
needed to establish some system for reporting
overlaps. This provides an early example of the
Commission determining that, where the
information is essential to enforcement of the
antitrust laws, the costs associated with collecting
and reporting that information is justified by the
benefits in light of other available options.
298 The Agencies rely on analytical tools to
identify an area of effective competition, often by
defining a relevant antitrust market. A relevant
antitrust market comprises both product (or service)
and geographic elements. See U.S. Dep’t of Justice
& Fed. Trade Comm’n, Merger Guidelines 4.3 (2023)
(describing the information and analysis used by
the Agencies to define markets for the purpose of
antitrust analysis). For screening purposes, the
Agencies may conclude that the parties to the
transaction do not serve the same set(s) of local
customers if there is reliable information in the HSR
Filing that indicates that they generate revenues in
different locales even if they supply the same
product or service.
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information only if both parties generate
revenues in the same or similar business
lines (as reflected in overlapping NAICS
code reporting or the descriptive
responses) or only if the parties operate
in the same areas of the country is a
powerful limitation aimed at generating
information that bears directly on the
question whether the transaction
involves direct competitors. For any
transaction that does not have these
overlaps, there is no burden associated
with answering questions that depend
on the reporting of such overlaps other
than certifying that such overlaps do not
exist. In the final rule, the following
information requirements are dependent
on the identification of an existing
overlap or a supply relationship:
i. Overlap Description
ii. Supply Relationships Description
iii. Officers and Directors (acquiring
person only)
iv. Plans and Reports
v. Prior Acquisitions
vi. State and Street-Level Reporting of
Geographic Market Information
vii. Author information for submitted
documents
viii. Defense and Intelligence Contracts
Limited Lookback Periods
The Commission also relies on
limited lookback periods to collect the
most recent and reliable information
and data related to the risk of a law
violation. For example, filers are only
required to submit the most recent
annual reports and annual audit reports.
This type of limitation is intended to
focus on more recent economic activity
and reduce the cost associated with
collecting potentially less probative or
out-of-date historical data. As discussed
below in section VI., the Commission
has reduced the lookback periods for
some information requirements as
compared to the proposed rule to reduce
compliance costs and focus the
information requirements on the most
recent and probative data needed for
premerger screening. In other places, the
Commission has identified a fixed
reporting period to limit the information
filers must gather to prepare the HSR
Filing and provide certainty for filers
about what is required. For example, as
compared to the proposed rule, the final
rule contains shortened lookback
periods for the following information:
i. Overlap Description
ii. Supply Relationships Description
iii. Officers and Directors
iv. Transaction Rationale
v. Minority Shareholders
vi. Prior Acquisitions
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De Minimis Exclusions
The Commission also relies on de
minimis exclusions to excuse the
reporting of otherwise relevant
information that might be costly to
collect. De minimis exclusions can
sometimes require extra effort by filers,
because filers must evaluate whether the
information is above or below the de
minimis threshold. In the Commission’s
experience, it can sometimes take less
time for filers to collect and report all
responsive information than to report
less information after conducting the
assessment required to eliminate de
minimis amounts. In deciding whether
to add de minimis exclusions, the
Commission carefully weighed the
additional costs for filers to determine
what information falls below the de
minimis thresholds and can therefore be
excluded, as compared to the costs of
collecting all responsive information.
The final rule contains new de minimis
exclusions for certain information in the
following requirements:
i. Supply Relationships Description
ii. Prior Acquisitions
iii. Defense and Intelligence Contracts
Voluntary Information
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Finally, one new information request
is not strictly required by the final rule,
but filers may provide it on a voluntary
basis. As part of the HSR Form, filers
may agree to waive the confidentiality
protections of the HSR Act to permit the
Agencies to share HSR materials with
other enforcers in order to facilitate
cooperation during any investigation of
the transaction. Such a waiver would be
beneficial for the Agencies, and the filer
may want to provide it as a way to limit
the need to produce multiple or
duplicative data sets and documents to
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other enforcers that are investigating the
transaction, thereby reducing its overall
regulatory compliance costs. Filers may
view this as a benefit and therefore may
grant a waiver even though their HSR
Filing would be compliant with the
final rule without it.
Non-Compliance Statement
In addition to these limits, the Act
allows for incomplete answers with a
statement of the reasons for noncompliance, and the Commission has
the discretion to permit filers to rely on
good faith estimates or no answer at all.
If the filer is unable to answer any
question fully, it must provide the
information that is available and
provide a statement of reasons for noncompliance as required by § 803.3,
which is intended to reduce
disagreements between filers and PNO
staff.299 Where exact answers cannot be
given, filers are allowed to enter best
estimates, while indicating the source or
basis of the estimate, and marking the
information with the notation ‘‘est’’ to
any item where data are estimated.
Finally, filers already routinely indicate
under the current rules that certain
required information is not applicable
given the type of transaction being
reported, and filers will continue to be
able to do so under the final rule.
299 The submission of the statement of reasons for
noncompliance is not intended to be a substitute for
compliance with the notification obligation but it
serves two salutary purposes: (1) reducing
disagreement between the Agencies and the filer,
and (2) providing a basis for any civil penalty
proceeding that may be brought under 15 U.S.C.
18a(g)(1). See 122 Cong. Rec. 29342 (1976); see also
43 FR, 33450, 33508–09 (July 31, 1978).
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Summary of Requirements Based on
Transaction Type
In the final rule, the Commission has
employed all of these techniques to
align the cost of complying with the
final rule in light of the benefit to the
Agencies, filers, and the public of the
Agencies having the information on the
first day of the statutory review period
to conduct their preliminary antitrust
assessment. The chart below
summarizes the different information
requirements of the final rule for the
acquiring person and the acquired
person for three distinct types of
transactions: (1) select 801.30
transactions, (2) those transactions that
will have no NAICS or described
overlaps or supply relationships; and (3)
transactions that report a NAICS or a
described overlap, or a supply
relationship, which includes
transactions with significant pre-merger
competitive interaction between the
filers (for example a company acquiring
one of its principal competitors or
suppliers).300 The chart indicates which
type of filer will not provide this
information because it is not required by
the final rule. As depicted in this chart,
the final rule creates different
information requirements for different
types of filers and different types of
transactions, resulting in a range of costs
associated with filing that are directly
proportional to the complexity of the
deal, corporate structure, and most
importantly the risk of law violation.
300 These three scenarios were used to calculate
costs for the Paperwork Reduction Analysis,
discussed below in section VIII.
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Figure 3: Applicability of Significant Updated and New Information
Requirements
By Filer and Transaction Type
Translations
Changes to Identification of Additional Minority Interest
Holders
Organization of Controlled Entities
Description of Ownership Structure
Organizational Chart (if exists)
Identification of Certain Officers and Directors
Description of Business of the Acquiring Person
Transactions Subject to International Antitrust Notification
Transaction Rationale
Transaction Diagram (if one exists)
Competition Documents from Supervisory Deal Team Lead
Plans and Reports
Transaction Agreements
Other Agreements Between the Parties
Overlap Description
Supply Relationships Description
Geographic Market Information (new organization, streetlevel reporting, and reporting of francisees)
Limiting Minority-Held Entity Identification to Overlaps
Prior Acquisitions
Subsidies from Foreign Entities or Governments of Concern
Defense or Intelligence Contracts
Small Businesses
Several commenters are concerned
about the additional costs associated
with the final rule for small businesses
who are parties to a reportable
transaction, stating that the proposed
rule would disproportionally affect
small businesses because they would be
less equipped than larger businesses to
cover the additional costs. Commenters
said that these additional costs would
not only deprive small businesses of
funds that are needed for operations or
innovation, they might also slow or
deter dealmaking involving small
businesses altogether. On the other
hand, an individual commenter
explained that the proposed rule would
help small businesses who have been
affected by mergers.
The Commission addresses concerns
about undue costs throughout this final
rule, making many adjustments to limit
301 See generally Boardman et al, supra note 256,
at 506; Executive Order 12866 directs agencies
when designing regulation to ‘‘consider incentives
for innovation, consistency, predictability, the costs
of enforcement and compliance (to the government,
regulated entities, and the public), flexibility,
distributive impacts, and equity.’’ E.O. 12866 Sec.
1(b)(5) (1993).
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the costs of complying for those filers
who do not have complex corporate
structures or extensive business lines,
including small businesses. In section
IX., the Commission certifies that the
final rule will not have a significant
economic impact on a substantial
number of small entities as that term is
defined by the Small Business
Administration (‘‘SBA’’). HSR reporting
requirements apply to very few small
businesses. Congress adjusted the
statute in 2000 to require annual
indexing of reporting thresholds so as to
minimize the effect of inflation that
would otherwise require more reporting
for small businesses and small
transactions, and nothing in the final
rule changes which acquisitions are
subject to premerger review. See section
III.A.1.
In fact, the Commission believes that
many small entities will benefit from
the final rule. As noted by one
commenter, the goal of antitrust
enforcement is to strike the right
balance: too little enforcement could
allow some companies to gain an unfair
advantage, while too much enforcement
risks driving up compliance costs and
undermining legitimate efforts to
compete. The Supreme Court has
explained that Congress designed
section 7 of the Clayton Act to ‘‘prevent
economic concentration in the
American economy by keeping a large
number of small competitors in
business,’’ 302 and to retain ‘‘ ‘local
302 United States v. Von’s Grocery Co., 384 U.S.
270, 275–76 (1966) (also noting that undue
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control’ over industry and the
protection of small businesses.’’ 303 As a
result, a merger of two small companies
that allows the combined entity to
compete more effectively with larger
rivals may be unlikely to violate the
antitrust laws. In contrast, the legislative
history of the Clayton Act reveals
Congress was very much concerned
with, and sought to prevent,
acquisitions involving large companies
buying smaller or up-and-coming rivals
that would otherwise cease to be
independent businesses.304 By making
possible more effective and efficient
premerger review of HSR-reportable
transactions, the final rule will facilitate
effective enforcement of the antitrust
laws, which in turn will preserve
opportunities for small businesses to
thrive in markets that are not dominated
by much larger competitors.
In passing the HSR Act, Congress
made plain that it was not interested in
burdening mergers between two small
companies with premerger review, since
small businesses generally do not
present the same risks of
anticompetitive effects as do larger
businesses. To that end, the HSR Act
specifically exempts certain smaller
companies from its reach. But it is not
possible to say that all transactions
involving small businesses carry little or
no antitrust risk, whether they are
concentration drives small businesses out of the
market).
303 Brown Shoe Co. v. United States, 370 U.S. 294,
316 (1962).
304 United States v. Aluminum Co. of America,
377 U.S. 271, 281 (1964).
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D. Disproportionate Impact on Certain
Sectors
Here the Commission addresses
arguments that the final rule would
have a disproportionate impact on
certain sectors as part of its
consideration of how the benefits and
costs associated with the final rule are
distributed among various groups.301
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reported or not. When they are required
to be reported, the Agencies are
obligated to conduct a premerger
assessment. Therefore, it is appropriate
for the Agencies to receive information
from even small businesses that are a
party to a reportable transaction to
determine whether those transactions
may violate the antitrust laws.
Based on the Commission’s
experience, deals of any size can present
significant antitrust risk. The American
Antitrust Institute analyzed historical
data about HSR filings from 1985 to
2020 and prepared a chart that reflects
the percentage of Second Request
investigations to transactions by deal
value.305 This data shows that while
transactions valued at under $100
million rarely receive Second Requests,
a not insignificant number of
transactions in the $100 to $150 million
range do. This confirms the Agencies’
experience that although many deals
that are subject to an in-depth
investigation involve large companies,
especially on the buyer side, it is not
possible to ignore that some transactions
that involve small businesses also
violate the antitrust laws.306 And of
course, the Agencies are also attentive to
small-value acquisitions that cause
harm even if they were not subject to
premerger review and seek to unwind
them as resources and precedents
allow.307
As modified, however, the final rule
imposes lower costs on transactions
involving independent small
businesses, as they typically involve
fewer business lines and less complex
corporate structures. Typically, the
305 See Diana L. Moss, Am. Antitrust Inst., ‘‘What
Does the Billion-Dollar Deal Mean for Stronger
Merger Enforcement?’’ 3 Fig. 2 (Sept. 20, 2022),
https://www.antitrustinstitute.org/wp-content/
uploads/2022/09/AAI_Billion-Dollar-Mergers_
9.20.22.pdf.
306 See, e.g., United States v. Neenah Enterprises,
Inc., No. 1:21–cv–02701 (D.D.C. Oct. 14, 2021)
(complaint) ($110 million asset purchase); In re
Global Partners LP, No. C–4755 (F.T.C. Mar. 2,
2022) (decision and final order) ($151 million
acquisition); In re ANI Pharmaceuticals, Inc., No.
C–4754 (F.T.C. Jan. 12, 2022) (decision and final
order) ($210 million acquisition); United States v.
Grupo Verzatec S.A. de C.V., No. 1:22–cv–01401
(N.D. Ill. Mar. 17, 2022) (complaint) ($360 million
acquisition). Note that the value of the transaction
is considered by some filers to be confidential
information and is not always disclosed in public
filings. See FTC v. IQVIA Holdings Inc., No. 1:23civ-06188 (S.D.N.Y. Dec. 29, 2023); In re Lifespan
Corp., No. C–9406 (F.T.C. Feb. 17, 2022)
(complaint).
1 See, e.g., In re The Golub Corp., No. C–4753
(F.T.C. Jan. 20, 2022) (decision and final order)
(divestiture of 12 supermarkets); United States v.
B.S.A. S.A., No. 1:21–cv–02976 (D.D.C. Mar. 15,
2022) (divesture of two business lines).
307 See, e.g., Polypore Int’l, Inc. v. FTC, 686 F.3d
1208 (11th Cir. 2012); In re Otto Bock HealthCare
N. Am., Inc., No. 9378 (F.T.C. Dec. 1, 2020).
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larger the company, the more extensive
and complex its business lines. Many of
the changes in the final rule are
designed to allow the Agencies to
quickly understand complicated entities
and the businesses that they have
connections to. These changes generally
will not impact small business. Further,
where possible, the final rule imposes
less burden on sellers (the acquired
person), which tend to be smaller in size
than buyers.308 In effect, the final rule
imposes costs on filers that are
commensurate with the antitrust risk
presented by the transaction: those with
low risks (e.g., simple corporate
structures, few lines of business or no
preexisting commercial relationship
with the other party) have the lowest
costs. Wherever practicable, the
Commission took into account the
burden across smaller businesses who
may engage in competitively benign
transactions and has adjusted the final
rule in several significant ways to
mitigate this burden. For example, the
Commission has excluded select 801.30
transactions from certain requirements,
eliminated other proposed
requirements, and modified other
proposed requirements as described
throughout this final rule. The
Commission believes that this approach,
which is focused on antitrust risk and
not necessarily business size,
nonetheless minimizes the costs for
small businesses involved in
transactions subject to mandatory
premerger review consistent with the
statutory scheme.
Startups
A number of commenters expressed
the view that the requirements of the
proposed rule would deter innovation
by denying startup firms an exit path;
they observed that many startups plan
for eventual acquisition, and this
strategy drives investment that allows
the firm to grow. Commenters stated
that any change to the status quo will
upset this balance. Others observed that
acquisitions by large, established firms
play a crucial role as an exit strategy for
startups securing venture capital, which
is an important source of funding in
many sectors, including tech. Some of
the same commenters, however,
acknowledged the valuable role startups
play by challenging established
incumbents. Various commenters made
nonspecific objections to increased
burdens imposed upon startups by the
proposals in the proposed rule.
308 See Fed. Trade Comm’n & U.S. Dep’t of
Justice, Hart-Scott-Rodino Annual Report, Fiscal
Year 2022, Tables VI through IX (FY 2022).
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Startup companies are not unique to
particular industries but represent an
important business model throughout
the U.S. economy. For any transaction
that does not present facts indicating it
may violate the antitrust laws—
including those involving startups—the
minimal additional burden of disclosing
more information is justified by the
Agencies’ need to conduct a thorough
review in light of the information gaps
discussed in section II.B. Where those
facts are absent, there should be no
additional delay or additional risk of
detection for those transactions. Given
the small incremental costs associated
with the final rule relative to other M&A
costs and the potential magnitude of
returns from an exit sale of a successful
startup, HSR compliance costs would
not plausibly factor into the ex ante
investment decision. To the extent that
the final rule requires additional
disclosures regarding the business lines
of startups, that burden is not different
from those imposed on established
businesses in the same sector. Moreover,
the Commission has no basis to excuse
startup companies from complying with
the final rule; it is not the case that they
always or mostly present no antitrust
risk. See sections II.B.4. and III.C.2.
Private Equity and Other Types of
Investments
The Commission received several
comments from groups representing
investors raising concerns about the
burden of gathering the information for
the proposed rule as well as the burden
of having to disclose the new
information. One commenter asserted
that certain proposed requirements
would be particularly onerous for
transactions involving private equity
and venture capital, such as the
expanded lookback period, information
regarding limited partnerships, more
information about prior acquisitions, the
identities of past and present members
of boards of directors, and disclosure of
the buyer’s prior acquisitions. Another
commenter said that the burden of the
information requirements would affect
the efficiency of transactions and
introduce more uncertainty and risk
into the deal process, which would
adversely impact returns for investors.
Another noted that the burden of the
proposed information requirements
would, among other effects, make
capital markets less efficient, resulting
in a significant impact on its members
and the thousands of pensioned
workers, retirees, universities, and other
investors who rely upon them. The
Commission discusses these concerns
elsewhere and has concluded that the
incremental costs associated with the
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final rule are small relative to the value
of the transaction and the costs of other
merger-related fees. As noted
throughout this final rule, the
Commission has taken many steps to
reduce the burden on all types of filers
as compared to the proposed rule,
including investors.
The same commenter who mentioned
the effect on capital markets also noted
that the HSR-reportable transactions in
which its members engage often do not
pose competitive risk. These are
transactions in which the acquiring
persons are investment groups, trusts, or
other financial vehicles or are providing
securities, commodities contracts, and
other financial investments or related
advice. According to this commenter, its
members rarely, if ever, have horizontal
or even vertical relationships with the
issuers whose securities they acquire.
Rather, the kinds of HSR-reportable
transactions in which its members
engage are not mergers or acquisitions
but the acquisition of minority
positions, for instance, when
concentrated funds make large
purchases due to sizeable investor
inflows, when benchmark-relative funds
make large purchases due to index
rebalancing, or when managers shift
portfolios into highly liquid names in
anticipation of redemptions or in
connection with wind-downs.
This and other comments generally
reflect three different types of concerns:
potential burdens for investors that
must make HSR filings, potential
burdens for minority investors in
entities that have to make HSR filings
(but have no HSR filing obligation
themselves), and potential burdens
related not to filing out the Form, but to
potential enforcement actions to block
the transaction that may arise from the
Agencies having more complete
information. The Commission addresses
each below.
As a starting point, the Commission
emphasizes that the final rule does not
change who must file 309 and the HSR
Act and Rules exempt passive
investments of 10% or less,310 or 15%
or less for institutional investors.311 The
final rule does not alter the analysis
regarding passive investments and
therefore the final rule has no impact on
investors who hold passive
investments 312 unless these investors
309 One commenter suggests that the proposed
rule would result in an increase in filings among
investors. Comment of TIAA, Doc. No. FTC–2023–
0040–0691 at 3. The Commission disagrees.
310 15 U.S.C. 18a(c)(9); 16 CFR 802.9.
311 15 U.S.C. 18a(c)(11); 16 CFR 802.64.
312 Some commenters discussed shareholder
engagement encouraged by the SEC. See, e.g.,
Comment of Managed Funds Ass’n, Doc. No. FTC–
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acquire more of a company than these
significant ‘‘investment only’’
exemptions permit and are, as a result,
required to report their investments for
premerger review. As a result, many of
the types of investors discussed in the
comments will not have HSR filing
obligations for their transactions, and
thus would not be required to fill out
the Form that is the subject of the final
rule.
Some investors will have filing
obligations either because they will hold
a stake that provides them with the
ability to direct or influence the
management of the company in which
they are investing (i.e., above the 10%
and 15% exemptions), or because they
do not intend to be merely passive
investors. In these instances, the Act
treats them as any other acquiring
person and the Agencies use the Form
to screen for potential competitive
effects. Until now, though, the Agencies
have received less information about
transactions where private equity and
other types of investors are involved
because the current Form does not
require sufficient information to explain
the often complex structures and
relationships between different entities
that are within the acquiring or acquired
person. The final rule intends to close
these information gaps and focuses on
information that should be within the
records of the acquiring or acquired
person.
Further, the Commission
acknowledges that investors can have
different motivations in making
acquisitions. Some do not seek to
control or influence the companies in
which they invest, but rather only seek
a desired rate of return. In contrast,
others seek positions with significant
management rights or stakes that result
in control of or influence in the target
business. The Commission has sought to
tailor the requirements of the final rule
to illuminate those factors that could
give rise to competitive concerns while
minimizing additional costs for those
investors that do not seek to participate
in or influence decision-making of
entities related to the acquiring entity or
other entities within the buyer that are
in the same industry as the target. As a
result, the Commission has made
significant changes as compared to the
proposed rule, declining to adopt many
of the proposed changes and
significantly tailoring others. The
Commission has also introduced the
concept of select 801.30 transactions,
which it anticipates will capture the
2023–0040–0651 at 8. The Commission notes that
the SEC is a different agency with a different law
enforcement mission.
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transactions of many investors that do
not seek to influence, direct, or manage
the companies in which they invest. See
section VI.A.1.f. The Commission has
relieved such transactions from many of
the new requirements, which it
anticipates will mitigate the potential
burden of providing information for
many investors who do have to file.
As to investors that do not have HSR
filing obligations but hold minority
interests in entities that do, the final
rule does require additional information
about some minority investors if those
investments are in entities controlled by
the acquiring person that are either
related to the transaction or operate in
the same industry as the target.
However, as described in section
VI.D.2.a., the burden of providing this
information rests on the acquiring
person, not on those minority investors.
Their presence as an investor should be
known to the filer because the filer
controls the entity, and when revealed
in the HSR Filing, will provide
information that will assist the Agencies
in determining whether those investors
also hold interests or have relationships
with entities related to the target.
Additionally, the Commission
modified the proposed rule to scale back
requirements that would have broadly
required disclosure of the limited
partners of certain entities. As discussed
below, the Commission has limited the
final rule to require identification of
only those limited partners that have
certain rights related to the board of
directors or a similar body. When
required, this information is limited to
providing the legal and business name
of the minority investor, its address, and
the percentage the investor holds in the
entity controlled by the acquiring
person. In most instances, the
Commission believes this information
should be available in the records of the
acquiring person. When it is not, the
Commission has explained that the
acquiring person can note that the
information is not available and why.
The final rule does not create an
obligation for the acquiring person to
request this information from its
minority investors. Therefore, the final
rule imposes no burden on such
minority investors in filling out the
revised Form. Investors that do not have
HSR Act filing obligations, but hold
minority interests in entities that do,
will not have any new obligations to
either make filings or provide
information for the filings of entities in
which they have minority holdings.
Several commenters raised concerns
that the additional information
requirements for funds, especially those
managed by activist investors, would
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have a detrimental impact on these
investors as a result of the disclosure of
the information itself. They pointed to
the disclosure of the interests and rights
of limited partners as creating
disincentives for shareholder
engagement or as undue interference in
the market for corporate control.
Another commenter stated that
disclosure requirements may deter
investments in private equity firms,
potentially reducing the flow of capital
to small- and medium-sized businesses.
The final rule does not target
information specific to any type of
investor. But if an investor holds a small
but significant stake (five percent or
more) or plays a role in the acquiring
person’s decision-making, the
Commission believes that disclosure of
these interests is justified by the
Agencies’ need to know about such
investments to conduct premerger
screening. As discussed in section
II.B.1. and section VI.D.1.d.ii, there have
been significant changes in the number
and breadth of investment companies
managing portfolios that include
investments in companies with
competitively significant relationships.
Due to these changes and others, the
Commission has determined that the
Agencies need more information about
minority holders between the UPE and
the acquiring person, as well as
information about those who serve as
officers and directors and who will be
involved in decision-making after the
transaction is consummated. Many
commenters specifically objected to
providing any information about limited
partners, noting that the existence of
significant management rights such as
board seats or board approval rights, is
‘‘atypical.’’ The final rule has been
modified to require disclosure only of
these types of limited partner situations,
which should mitigate these concerns.
Another commenter said that having
to disclose the required information
would deter investment in in certain
types of investment vehicles because of
the exposure of proprietary contractual
information and Personally Identifiable
Information (PII) about every facet of the
M&A process. This commenter noted,
for instance, that the requirement to
provide a term sheet or draft agreement
reflecting sufficient detail about the
proposed transaction when filing on the
basis of a Preliminary Agreement would
expose details about transactions that
could undermine competition in the
industry and harm returns to LPs. In
addition, this commenter stated that the
requirement for PE firms to submit a
narrative describing the justification for
certain transactions would impinge on
the proprietary information that PE
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firms exchange with target companies
and their consultants.
As noted above and elsewhere, the
Commission has made significant
changes as compared to the proposed
rule, and the changes in this final rule
should address many of this
commenter’s concerns. That said, the
Commission believes the commenter
has overread the Commission’s intent.
The purpose of the final rule is to
provide the Agencies with more
information on those factors that could
give rise to competitive concerns, not to
expose every facet of the M&A process
or investor strategy. The required
information does not require social
security numbers, addresses or other
sensitive PII. Moreover, the final rule
requires the disclosure of additional
information to the Agencies, not to the
public or third parties, and the
confidentiality of the information
provided to the Agencies as part of the
HSR filings process is protected by
statute, specifically 15 U.S.C. 18a(h).
Finally, as described in section VI, the
final rule will provide the Agencies
with more transparency into what the
acquiring person holds and whether any
person or entity that has influence over
the acquiring person is also involved in
the business of the target. Specifically,
the Commission has not limited the
information required about the
acquiring person even in the case of
select 801.30 transactions. As stated in
the NPRM and throughout this final
rule, the Commission believes this
information is critical to the Agencies’
initial review and the benefit for robust
premerger screening justifies the burden
of disclosing the information because it
may identify an existing business
relationship between the acquiring
person and target (via common investors
or shared managers) that are otherwise
not revealed in the HSR Filing.
The Commission disagrees with
comments that identify increased
transparency about the filed-for
transaction itself (and not the specific
burden of collecting and providing the
information) as a cognizable burden
associated with the final rule. The
purpose of the final rule is to require
information that allows the Agencies to
accomplish the task assigned to them by
Congress: to determine whether the
acquisition subject to the Act, if
consummated, may violate the antitrust
laws. Suggestions that increased
transparency would endanger certain
filed-for transactions implicitly indicate
that the current Rules have led to underenforcement of the antitrust laws. Any
burden related to deal uncertainty that
might arise from increased transparency
is not a burden related to compliance
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with the HSR Act and the final rule, but
rather is tied to whether the transaction
itself may violate the antitrust laws.
Biopharmaceuticals
Two commenters from the
biopharmaceutical sector suggested that
several requirements of the proposed
rule would disproportionately burden
biopharmaceutical firms and
transactions. They pointed to the
burden of identifying information
related to products in early stages of
clinical development, and stated that,
because the Commission’s 2013 rule
specific to pharmaceutical license
agreements increased the universe of
reportable transactions, any expansion
of the Form disproportionately burdens
the pharmaceutical sector. One
additionally objected to providing
information about employees, and the
other asserted disproportionate impact
from providing information regarding
additional prior acquisitions because of
the number of acquisitions in this
sector, and from disclosing officers and
directors due to biotech firms’
dependence ‘‘on a small cadre of
qualified directors and officers.’’ Both
commenters claimed the changes to the
HSR Form and Instructions will prolong
the time required for HSR filing
preparation and agency review,
resulting in delayed transactions.
The final rule does not target any
information that is unique to
biopharmaceutical companies, and the
Commission disagrees that the
additional information that would be
sought from these companies is not
relevant. Where the final rule requires
additional information from
biopharmaceutical companies, the cost
of supplying that information is justified
by the benefit to the Agencies in having
a more complete understanding of the
companies’ existing business operations
and their business strategy, including
prior acquisitions involving the same
business lines. For instance, many
biotech and pharmaceutical companies
invest in extensive R&D pipelines, and
the Agencies need information about
products in development to determine if
the companies are current competitors
for innovation in a particular space to
meet a particular need, or if one or both
merging parties are potential
competitors for any existing
products.313 As the commenters
313 See In re Sanofi Corp., No. 9422 (F.T.C. Dec.
11, 2023) (complaint alleging Sanofi’s proposed
acquisition of an exclusive license to Maze
Therapeutics’ pipeline Pompe therapy would have
eliminated nascent threat to Sanofi’s monopoly)
(transaction abandoned); FTC v. Mallinckrodt ARD
Inc. (f/k/a Questcor Pharms., Inc.), No. 1:17–cv–120
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acknowledged, mergers, acquisitions,
and exclusive licenses are particularly
prevalent in the pharmaceutical sector,
where the business model for new drug
development centers around such
transactions. Similarly, the
comparatively higher number of
transactions occurring in this sector can
be expected to trigger a higher number
of HSR Filings and could require filers
to disclose a greater number of prior
acquisitions. Even if biopharmaceutical
companies have to report more prior
acquisitions, this disclosure is also
justified because it is relevant to
determining whether there is a pattern
of serial acquisitions. The fact that
sharing of officers and directors is more
common among companies in this
sector means there is a greater need for
the Agencies to screen for related
competitive problems.314
On the other hand, other information
requirements have been modified to
reduce the costs for all types of filers,
including those in the
biopharmaceutical sectors. For instance,
the Commission declined to adopt new
information requirements related to
employees, which commenters asserted
could impose significant costs on those
in the biopharmaceutical as well as
other sectors. Overall, the impact of the
final rule is proportional to the number
and characteristics of transactions that
occur in any given sector of the
economy (including
biopharmaceuticals). To the extent that
the revised Rules will result in delayed
transaction closings, the potential
impact of incremental delay is
outweighed by the Agencies’ statutory
mandate to examine each transaction for
the potential for that it may violate the
antitrust laws. In other instances, the
additional information may actually
reduce delay by permitting the Agencies
to avoid issuing a Second Request or
issuing Second Requests that are more
tailored to the potential for competitive
harm than would have been issued
under the existing reporting
requirements.
(D.D.C. Jan. 25, 2017) (complaint alleging
Questcor’s acquisition of rights to pipeline
competing drug eliminated nascent threat and
protected its monopoly ACTH drug H.P. Acthar Gel)
(consent decree ordered license and $100 million
equitable monetary relief); In re Thoratec Corp., No.
9339 (F.T.C. July 28, 2009) (complaint alleging
Thoratec’s proposed acquisition of HeartWare
eliminated pipeline threat to Thoratec’s left
ventricular assist device monopoly) (transaction
abandoned).
314 Mark A. Lemley et al., ‘‘Analysis of Over 2,200
Life Science Companies Reveals a Network of
Potentially Illegal Interlocked Boards’’ (Stan. L. &
Econ. Olin Working Paper No. 578, 2022), https://
papers.ssrn.com/sol3/papers.cfm?abstract_
id=4253144.
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In sum, the Commission has
determined that the burden imposed on
this sector by the final rule is
proportionate to the market realities and
complexities of these companies and the
likelihood that any transaction may
require more in-depth antitrust review.
Hospitals
A national organization representing
hospitals and several State hospital
associations stated that the proposed
rule would have a negative and wholly
unnecessary impact on hospitals and
health systems. They asserted that the
additional information required by the
proposed rule would not generate
actionable information with respect to
hospital mergers. They objected to
specific requirements, stating that
reporting prior acquisitions has no
relevance in the context of hospital
mergers, or that it is inconceivable that
a hospital-related merger could
plausibly harm competition in any labor
market without also presenting at least
some competitive risk in a downstream
market.
The Commission responds that the
final rule does not target any
information that is unique to hospitals
and health systems, and disagrees that
the additional information, when sought
from hospitals, is not relevant. For
example, the commenters’ suggestion
that the Agencies not screen for hospital
labor competition issues is inconsistent
with growing empirical evidence of
competitive harm to labor markets from
consolidation generally and from
hospital mergers in particular.315
Moreover, as discussed above, an
empirical assessment of the price effects
of consummated hospital mergers
reveals that there are meaningful
information gaps in the current
requirements that led the Commission
to grant early termination of the waiting
period for hospital mergers that caused
significant price increases.316
As discussed, the final rule will
exclude non-profit entities organized for
religious or political purposes from the
specific requirement to produce
information disclosing officers,
directors, and members. This carve-out
will likely encompass some healthcare
organizations, including certain
religious-affiliated hospitals or other
provider groups. While these entities
will not be required to provide such
information as a matter of course in the
HSR Filing, it can nonetheless be
relevant in any in-depth investigation of
315 Concurring Statement of Commissioner
Rebecca Kelly Slaughter and Chair Lina M. Khan,
supra note 70, at 2 n.1; In re Lifespan Corp., No.
9406 (F.T.C. Feb. 17, 2022) (complaint).
316 See supra note 24 and related text.
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the transaction and may be sought from
the parties at a later date.
Given the Commission’s significant
expertise and interest in preventing
hospital mergers that may violate the
antitrust laws, the final rule is
appropriately focused on transactions
that are most likely to present antitrust
risk. The Agencies have determined the
information sought by the final rule will
close the information gaps that now
exist with regard to hospital and other
healthcare acquisitions. Moreover,
because many hospital mergers are not
reportable under the HSR Act, several
States have enacted premerger
notification laws for certain healthcare
acquisitions, including those involving
hospitals, to prevent consolidation that
may affect their citizens directly. In
light of all this evidence of a need for
robust screening in this critical sector,
there is no basis to excuse hospitals or
health systems from any of the new
requirements of the final rule beyond
the modifications that reduce costs on
filers overall, including on hospitals.
E. Regulatory Alternatives Considered
In addition to considering the costs
and benefits of the final rule as
compared to the status quo, the
Commission considered other
alternatives suggested by
commenters.317 The first alternative is
to not finalize any modification to the
current HSR Form and Instructions and
to issue more Second Requests when the
HSR Filing is insufficient to determine
whether the proposed acquisition may
violate the antitrust laws. Relatedly,
commenters suggested that the
Commission maintain current reporting
requirements and make more extensive
use of voluntary submissions from the
parties post-filing. These alternatives are
discussed above in section III.A.3.
Another alternative suggested by
commenters is for the Commission to
create two separate sets of information
requirements, one for acquisitions that
present a low risk of a law violation and
therefore require less reporting (a ‘‘short
form’’) that would continue to report the
information required by current HSR
rules and a second form for acquisitions
that cannot be considered low risk and
that would contain all of the new
information requirements in the final
317 Executive Order 12866 requires an assessment
of costs and benefits of potentially effective and
reasonably feasible alternatives to the planned
regulations and an explanation of why the planned
regulatory action is preferable to the potential
alternatives. E.O. 12866 sec. 6(a)(3)(C) (1993). As an
independent agency, the Commission is not subject
to the requirements of this executive order but
nonetheless used the principles outlined there to
explain why the Agencies’ chosen regulatory action
is preferable to potential alternatives.
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rule. Here the Commission discusses the
relative merits of adopting this
alternative over the final rule.
Several commenters suggested that
the Commission consider creating two
separate sets of information
requirements for notification, stating
that this approach is used by other
jurisdictions to alleviate some costs and
delays associated with merger
notification under their laws. They
asserted that it would be suitable for
effective and efficient premerger review
under U.S. law.
As discussed above, the HSR Form is
not ‘‘one size fits all’’ and the costs of
making an HSR Filing are unique for
each transaction. In this rulemaking, the
Commission is publishing, for the first
time, separate Forms for the acquiring
person and the acquired person. The
final rule has materially different
requirements for each filing person, and
providing separate Forms allows for
clearer instructions (avoiding
terminology in the proposed rule such
as ‘‘the acquired person or acquired
entity (as applicable)’’). The
Commission expects that having two
separate forms for each side of the
transaction will improve compliance
and reduce errors for filers.
Moreover, while not styled as a
‘‘short’’ or ‘‘long’’ form, the final rule
reflects the Commission’s consideration
of each requirement and makes clear
where there is a need for the
information for each type of transaction.
In particular, the IF/THEN structure of
the information requirements results in
some filers responding to only a few
information requirements. As a result,
in practice, there are ‘‘shorter’’ and
‘‘longer’’ versions of the forms
depending on the type of filer and the
type of transaction under review. The
Commission determined that this
approach better reflected the varying
information requirements the Agencies
need in order to effectively and
efficiently analyze the broad spectrum
of filers and transactions.
Most importantly, in its review of past
filings, the Commission found no set of
objective criteria that would
appropriately sort transactions into one
or more discrete categories for the
development of a single short form.
Rather, the final rule adopts new
information requirements but imposes
them differently to reflect each filer’s
role in the transaction (acquirer versus
acquired) and the relative antitrust risk
associated with the proposed
transaction. Filers with the highest
information and document requirements
are acquirers pursuing the acquisition of
a firm with whom they have extensive
existing business relationships or offer
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products or services in the same
industries that must be assessed prior to
consummation.
For one category of transactions,
select 801.30 transactions (described in
section VI.A.1.f.), the Commission has
determined that the Agencies need
minimal additional information such
that the final rule should impose fewer
new requirements. The Commission
believes that the few new information
requirements for select 801.30
transaction are justified in order to
ensure that the Agencies conduct a
premerger assessment to determine that
even these transactions do not present
risk of a law violation. Similarly, the
Commission determined that other
characteristics justify a different and
lighter burden, such as whether the
filing person is the buyer or the seller
in the transaction. Finally, many
requirements are tied to the acquiring
and acquired person operating in the
same industry or having a business
relationship. These questions would be
inapplicable to many filers, particularly
activist, institutional, and retail
investors, which typically do not have
controlling stakes in operating
companies or do not focus on a
particular industry. As a result, the costs
of complying with the final rule are
tailored to the risk of a law violation
associated with each transaction in a
way that is similar to, but more flexible
than, the ‘‘short form’’ alternative. The
size and complexity of each party to the
transaction, as well as the size and
scope of their respective business, vary
widely across filings. As discussed in
section II.B., there are specific risks to
competition that the current information
requirements do not disclose, making
the final rule a better alternative to
achieve robust premerger screening
even for select 801.30 transactions as
compared to a short form alternative.
In addition, the short form alternative
is likely to create uncertainty for filers
that do not qualify for short form
treatment but whose deals would
suddenly be viewed as ‘‘not low risk.’’
Having a bifurcated system that targets
some transactions as ‘‘low risk’’ is not
consistent with the statutory premerger
scheme Congress created when it
determined that reporting would be
required based on deal value regardless
of the risk of a law violation, with
additional authority for the Commission
to exempt transactions that it has
determined to present little to no
antitrust risk. At this time, the
Commission does not have a basis to
conclude that the existing requirements
continue to be sufficient for any
category of transactions.
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The Commission believes that
broadening the use of the HSR Form’s
existing IF/THEN format so that the
final rule aligns the cost of complying
with the associated antitrust risks of the
transaction is the most appropriate way
to implement the premerger notification
scheme established by Congress.
Congress has determined which
transactions are subject to premerger
review, relying on deal value to
determine reportability. This criterion
provides administrative clarity and
predictability for businesses. Some
jurisdictions use market share or
revenue (‘‘turnover’’) thresholds to
determine reporting or eligibility for
short form treatment. But in doing so,
these regimes also typically depend on
the competition authorities to provide
extensive guidance to business, often
prior to formal notification, regarding
the proper definition of markets. This
may require an in-depth analysis of the
potential markets at issue and can delay
formal notification.318 Congress has
chosen to rely on an objective and
administrable system of reportability
based on deal value and revenues for
filers. Adopting a different standard for
determining eligibility for short form
treatment would require the
Commission to engage in a separate and
challenging rulemaking to seek public
comment on what types of thresholds
should be adopted that would be
consistent with the premerger scheme
Congress adopted in the HSR Act. At
this time, the Commission has
determined that one category of filings,
select 801.30 transactions, will have
minimal additional information
requirements as compared to the current
HSR Form and has made other
modifications in the final rule to reduce
the costs for other types of filers and
transactions as well.
Although the short form alternative
would save some filers additional direct
costs associated with making an HSR,
the Commission chose to adopt the final
rule with modifications designed to
reduce the cost of filing as much as
possible for all types of filings,
including those transactions that might
be eligible for short form treatment. The
Commission believes that this approach
reflects, to the extent practicable, the
antitrust risks associated with a variety
318 Relying on market share thresholds presents
many challenges, and several jurisdictions have
replaced them with thresholds that are easier to
administer. In the early 2000s, approximately half
of the jurisdictions with merger control had
subjective notification thresholds such as market
share but by 2010 more than forty percent of these
jurisdictions had replaced their subjective
thresholds with objective, sales- or assets-based
thresholds.
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of filings, not just ones that could be
eligible for short form treatment. A final
rule that reasonably balances the
benefits to Agencies’ premerger review
with the costs imposed on filers and
others is a reasonable exercise of the
Commission’s rulemaking authority
under the HSR Act and is consistent
with the overall mandatory premerger
review scheme established by Congress.
The Commission believes that the final
rule, with its tailored modifications
based on the Agencies’ experience in
reviewing thousands of transactions,
will result in minimal additional costs
for certain filers and is preferable to
adopting and maintaining a short form.
Final Instructions and Changes From
the Proposed Rule
IV. Part 801
V. Part 803
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A. Sections 801.1(d)(2): Ministerial
Changes To Reflect Reorganization of
Form and Instructions
While the Commission will continue
to use the same mechanism for
electronic filing, it has re-organized the
Form and Instructions, as discussed
below in section VI. As a result, several
ministerial changes must be made to
§ 801.1(d)(2). This section, which
defines ‘‘Associate’’ and provides
examples, currently refers to item
numbers used in the current Form and
Instructions. The Commission adopts
revisions that align with the Form and
Instructions as adopted in this final
rule.
Specifically, the definition of
‘‘Associate’’ and the related examples
refer to Items 6(c)(i), 6(c)(2), and 7. This
information is now required by the
Minority-Held Entity Overlaps and
Controlled Entity Geographic Overlaps
sections, which replace the previous
item numbers. The Commission,
accordingly, modifies the Rule to reflect
these changes.
B. Section 801.1(r): Definitions of
‘‘Foreign Entity or Government of
Concern’’ and ‘‘Subsidy’’
On December 29, 2022, the President
signed into law the Consolidated
Appropriations Act, 2023, which
included amendments to the HSR Act in
the Merger Modernization Act. 15
U.S.C. 18b. The Merger Modernization
Act required the Commission, with
concurrence of the Assistant Attorney
General, and in consultation with
Chairperson of the Committee on
Foreign Investment in the United States,
the Secretary of Commerce, the Chair of
the United States International Trade
Commission, the United States Trade
Representative, and heads of other
appropriate agencies (‘‘Relevant
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Agencies’’), to promulgate a rule to
require persons making an HSR Filing to
disclose subsidies received from
countries or entities that are strategic or
economic threats to the United States.
After conducting its own internal
diligence to draft a rule and in
consultation with the Relevant Agencies
on this topic, the Commission proposed
amending § 801.1 to add proposed
paragraphs (r)(1) and (2), which define
‘‘foreign entity or government of
concern’’ and ‘‘subsidy,’’ respectively.
The Commission received no
objections to the proposed definitions
and received input that they appear to
be a reasonable implementation of the
Merger Modernization Act. As such, the
Commission adopts these definitions as
proposed.
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A. Sections 803.2, 803.5, and 803.10:
Adoption of Electronic Filing
The Commission proposed amending
§§ 803.2(e) and (f); 803.5(a)(1) 319 and (3)
and (b); and 803.10(c)(1)(i) and (ii) to
eliminate references to paper and DVD
filings and delivery to physical offices.
The Commission has been successfully
accepting filings electronically since
March 17, 2020, as a result of the
COVID–19 pandemic and resulting
closures of Federal office buildings
during the COVID emergency. The
Commission received only one
comment on this proposed change: One
commenter noted that electronic filing
is generally preferable and less
burdensome to filing by paper or DVD.
The Commission received no negative
comments on the elimination of paper
and DVD filings. The Commission
adopts this change as proposed, though,
as explained below, § 803.2(e) and (f)
have been redesignated as (d) and (e),
respectively.
Separately, the Commission noted in
the NPRM that the Agencies were
developing a new e-filing platform that
would eventually replace the current
mechanism for electronic filing. The
same commenter stated that before
seeking to impose an e-filing
requirement on all parties, the FTC
should provide further details regarding
the proposed user interface; the ability
for users to collaborate on a single filing;
the ability of users to save, review, and
edit; and how filing persons will receive
complete copies of filings as submitted.
At this time, no change has been made
to the method for accepting filings.
While the Form and Instructions have
319 In making this change, the Commission also
takes the opportunity to correct the capitalization
of ‘‘act’’ to lower case to be consistent with the
definitions and other usage of the term in the Rules.
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been updated, filers will continue to use
the platform that has been in use since
March 2020. The Commission continues
to develop a new interface for electronic
filing and will, at the appropriate time,
issue a rulemaking that provides
instructions and access to the new efiling platform in advance of its effective
date.
B. Sections 803.2(b), (c), and (e);
803.9(c); and 803.12(c): Ministerial
Changes To Reflect Reorganization of
Form and Instructions and Clarification
of Time Zone
As discussed above in section IV.B.,
several ministerial changes must be
made to the Rules to reflect the new
organization of the Form and
Instructions. Existing §§ 803.2(b), (c),
and (e), and 803.9(c) all currently refer
to item numbers used in the current
Form and Instructions. The Commission
adopts revisions that align the
references in the Rules with the
headings in the Form and Instructions
as adopted in this final rule.
Additionally, existing § 803.2(b) of the
Rules currently explains what
information needs to be provided by the
acquiring and acquired person for Items
5–8 of the current Form. As described
below, the Commission adopts separate
instructions for the acquiring and
acquired person, making existing
§ 803.2(b) unnecessary. For this reason,
existing § 803.2(b) is being removed,
and existing § 803.2(c)–(f) are being
redesignated as § 803.2(b)–(e),
respectively. Further, existing § 803.2(c)
and (e) have references to the current
Form numbering and are being
updated.320 Similar ministerial changes
are being made to §§ 803.9(c) and
803.12(c). Finally the references to time
in, redesignated § 803.2(d) have been
updated to specify Eastern Time,
consistent with other provisions of the
Rules and with longstanding practice.
C. Section 803.2: Requiring Separate
Forms for Acquiring and Acquired
Persons
The Commission proposed amending
§ 803.2(a) and deleting § 803.2(b)(1)(v)
so that filing persons that are both the
acquiring and acquired person are
320 For purposes of consistency and clarity, the
Commission is also making a ministerial change to
§ 803.2 to explain that documents must be provided
by 5 p.m. Eastern Time. Because electronic filing
permits parties to submit documents from different
time zones, they will need clarity as to which time
zone the Commission is referencing in the rules.
The Commission notes that § 803.10 already
specifies that Eastern Time should be used when
determining the expiration of the waiting period as
well as the date of receipt of filings and it has long
been the practice of the Commission to use Eastern
Time in applying this rule.
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required to submit separate Forms in
each capacity. The Commission
proposed this change because, in its
experience, filers that opt to combine
the information on a single Form often
do not include everything that is
required and would be reported if they
filed on separate Forms. Such combined
filings are also very confusing for the
Agencies to review. In contrast, when
filers choose to submit two separate
Forms for such transactions, the filings
provide all the required information and
in a much clearer format that allows the
Agencies to quickly understand how the
transaction might change the operation
of the acquiring person post-acquisition.
The Commission received only one
comment on this proposal, which
expressed support and noted that it will
enhance the understanding of the entire
transaction. The Commission adopts the
change as proposed but replaces the
word ‘‘should’’ with ‘‘shall.’’
D. Section 803.5(b): Requiring Detailed
Letters of Intent, Draft Agreements, or
Term Sheets
The Commission proposed amending
§ 803.5(b) to require filers who have not
executed a definitive transaction
agreement to submit a draft agreement
or term sheet describing the transaction
that is the subject of the HSR Filing with
sufficient detail to permit accurate
analysis.321 The Commission received
numerous comments on this proposal
focused on the increased burden and
delay for filing parties. The Commission
has adopted the proposal in the final
rule with modifications that respond to
these concerns.
Although filers can currently file on
the basis of preliminary agreements,
such as an indication of interest, letter
of intent, or agreement in principle
(‘‘Preliminary Agreements’’), in the
Commission’s experience, a small but
significant minority (approximately
10%) of filings made on the basis of
Preliminary Agreements do not contain
enough information to permit the
Agencies to conduct an accurate
determination of whether the
contemplated acquisition may violate
the antitrust laws if consummated.322 In
addition, such filings may be made prior
to significant negotiations or due
diligence and can be so lacking in
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321 NPRM
at 42182.
commenters assert that documents such
as letters of intent and preliminary agreements give
the agencies enough information to identify those
transactions that require further scrutiny. Based on
its experience over forty-five years of reviewing
merger filings that include these Preliminary
Agreements, the Commission disagrees that they
always provide sufficient information, especially
when filings are made prematurely, prior to any
significant due diligence.
322 Some
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specifics that they could force the
Agencies to expend resources on
transactions too uncertain to merit
review.
As discussed below, the Commission
has determined that it is necessary to
assure that filings are not made
prematurely—before the scope of the
transaction has been sufficiently
determined and before the parties have
engaged in enough diligence such that
consummation is not merely
hypothetical—and in contravention to
the purpose of requiring an affidavit
stating that there is a good faith intent
to consummate the transaction.
However, the final rule will not
specifically require term sheets or draft
agreements for all transactions where a
definitive agreement has not been
executed. Rather, the Commission will
continue to require filers to submit an
executed agreement but, if that
agreement does not describe with
specificity the scope of the transaction
that the parties intend to consummate,
filers must also submit an additional
dated document, such as a term sheet or
draft definitive agreement, that does
contain sufficient details about the
transaction that the parties intend to
consummate. This dated document can
also take other forms; the title of the
document is not determinative.
One commenter sought clarity on
what level of information would
constitute sufficient detail as required
by the proposed rule, including what
types of terms that may still be subject
to negotiations would render a term
sheet as an insufficient basis to submit
an HSR filing. The Commission agrees
that the additional clarity suggested by
the commenter would be helpful in
reducing uncertainty. The Commission
revises the Instructions accordingly, as
noted in section VI.H.1., to describe
what would be sufficient. The
Instructions state that the transaction
agreement or supplemental document
should contain some combination of the
following terms: the identity of the
parties; the structure of the transaction;
the scope of what is being acquired;
calculation of the purchase price; an
estimated closing timeline; employee
retention policies, including with
respect to key personnel; post-closing
governance; and transaction expenses or
other material terms. The Commission
notes that these examples are meant to
be illustrative and not exhaustive. In
contrast, indications of interest or other
agreements that merely indicate that the
parties will commence negotiations or
begin diligence will not be sufficient.323
323 Here is an example of the type of terms
contained in agreements that have been filed with
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Using the criteria adopted in the final
rule, the Commission analyzed all
filings that contained Preliminary
Agreements submitted in FY 2021 to
determine how many transactions
would be impacted by the final rule.324
Of the transactions that were submitted
on the basis of a letter of intent, term
sheet, or similar document that was not
a definitive agreement, less than 10%
did not provide the Commission with a
sufficient level of detail to assess the
transaction. From this data, the
Commission believes that filing parties
typically reach agreement on key terms
prior to filing, and there would be no
additional cost to them to comply with
the final rule. Of those that do not reach
such agreement prior to filing, the
Commission believes that antitrust
review is not warranted until such time
as the parties have resolved key aspects
of the transaction, such as those
described above, because the transaction
may never be consummated, or key
terms may change in ways that would
affect the Agencies’ initial review.
The Commission believes the
transaction agreement requirements of
the final rule represents a middle
ground between a merely conceptual
deal and a ‘‘ready to close’’ deal. The
Agencies need to know the key terms of
the transaction to determine whether it
may violate the antitrust laws if
consummated. Given the short period of
time given to the Agencies to make that
determination, it is necessary for the
transaction to be one that is likely to
close. The Commission acknowledges
that even with this modification, the
final rule may not permit some parties
to make an HSR Filing as early in their
deal process as is currently permitted.
However, parties will be able to file after
they have agreed to material terms of the
transaction even if a final agreement has
an HSR Form and conformed to existing
requirements, but will no longer be accepted
without filing an additional document that provides
the key terms of the agreement once the final rule
is effective: This letter agreement confirms the good
faith intention of Alpha (‘‘Purchaser’’), to
consummate the acquisition of Target, a
corporation, from Beta (‘‘Seller’’), for in excess of
$119.5 million and less than $235 million, subject
to the terms of a definitive agreement to be
negotiated and executed by them with respect to
such acquisition and the satisfaction of conditions
to be set forth therein. This letter agreement is nonbinding and subject to satisfactory completion of
due diligence, mutually acceptable definitive
documentation to be negotiated between Purchaser
and Seller. Purchaser will pay all filing fees in
connection with all filings under the Hart-ScottRodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder.
324 The Commission reviewed transactions filed
during FY 2021 due to the large number of filings
received by the Agencies during that fiscal year,
which made for a robust data sample. See supra
note 260.
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not been executed. The Commission
notes that for many filings that do not
contain an executed agreement today,
the parties continue to negotiate final
terms. The Commission expects that
after the final rule, parties that have
come to an agreement on key terms but
have not yet signed a definitive
agreement will continue to work to an
executed agreement while the Agencies
are conducting their antitrust review.
The transaction agreement
requirements of the final rule are
necessary to address a real shortcoming
of allowing notification on Preliminary
Agreements. As noted above, currently,
some parties submit a ‘‘letter of intent’’
that substantively only states that the
two parties have the good faith intent to
consummate a transaction. Some
documents are labeled an ‘‘expression of
interest’’ in a future transaction that is
similarly not specific. In the Agencies’
experience, such filings are often made
prior to any significant due diligence
has begun and do not demonstrate that
the parties have considered or agreed to
key terms that would be required for
consummation. Such filings require staff
to dedicate time to collect facts and
make an initial determination of
potential illegality for a transaction that
may never occur or without a sufficient
basis to know the full scope of what the
parties may agree to in the future. As
noted in the original Statement of Basis
and Purpose from 1978, because of the
time and resource constraints upon the
agency staff, the Agencies should not
expend resources to review transactions
so lacking in specifics that they could be
considered merely hypothetical.325
The Commission has considered the
additional effort required to review
transactions that are filed with
Preliminary Agreements and has
determined that permitting filings on
barebones agreements lacking sufficient
details about key terms is contrary to the
overall intent of the HSR Act. When a
filing is made, triggering the initial
waiting period, staff must start their
review of the transaction and decide
whether to issue Second Requests
within the applicable statutory waiting
period (15 or 30 days). If key terms of
the transaction have not yet been
established, staff may not have
sufficient information to determine the
potential antitrust risks. Further, if the
parties have not yet begun robust
negotiations or due diligence, the filing
will not contain documents that provide
business assessments of the transaction
because such assessments have not been
made. If the parties have not yet
analyzed the impact of the transaction,
325 43
FR 33450, 33511 (July 31, 1978).
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it is not appropriate for the Agencies to
begin such an assessment. This is
particularly true if such assessments or
negotiations lead the parties to abandon
the transaction. In those cases, the
Agencies will have needlessly spent
scarce resources and may have
burdened third parties investigating the
transaction. Even if the parties do not
abandon their transaction and the
reviewing agency issues Second
Requests, these investigations are often
unnecessarily slowed down by the
uncertainty surrounding the deal terms.
The Commission understands that filers
are anxious to get their HSR review
completed so that it does not delay
consummation of the transaction. But
putting the burden on the Agencies to
conduct antitrust assessments
prematurely based on Preliminary
Agreements that lack specificity
undermines the purposes of the HSR
Act. In addition, allowing notifications
on mere expressions of interest in a
future transaction creates opportunities
to file as early as possible knowing that
early filings put the Agencies at a
disadvantage in conducting a thorough
review.
Commenters raised concerns that the
delay associated with negotiating
additional deal terms would cause filers
not to pursue beneficial transactions.
One commenter claimed that as time is
often of the essence in mergers, the
result would be a significant chill on
mergers. Another commenter contended
that the proposal would deter
investment in private equity and would
increase costs that would likely be
passed down to limited partners.
Another commenter claimed that the
Agencies failed to consider additional
costs resulting from the additional
delays in the transaction timeline.
The Commission disagrees that
requiring more detail about transactions
filed on Preliminary Agreements will
chill M&A activity generally or for any
particular type of investment. First,
based on the Commission’s review of
filings detailed above, most reported
transactions already meet the
requirements adopted in the final rule.
For those that do not, the Commission
has identified a specific need for more
detail to ensure that the reported
transaction is likely to occur so that it
is ripe for antitrust review. In addition,
Congress identified those transactions
where time is of the essence—namely,
those that will be accomplished through
a cash tender offer—and provided for a
very short 15-day initial waiting period.
For these transactions, the acquiring
person does not need to file any
agreement; it merely attests that its
intention to make the tender offer has
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been publicly announced.326 For other
transactions, the Agencies need some
basis to know that the reported
transaction is one that is likely to occur
so that they do not begin an antitrust
assessment before fully understanding
how the transaction will likely change
the premerger market dynamics. In the
Commission’s experience, when parties
cannot reach agreement on a few key
terms within their desired timeline to
consummate the transaction, that is an
indication that the deal is one that is not
likely to close or is likely to close on
terms that are very different from the
ones in the Preliminary Agreements.
Finally, while the parties have an
interest in starting the 30-day review
period as soon as possible so that it does
not unnecessarily delay their deal, the
Commission has an obligation to review
the transaction to determine whether it
may violate the antitrust laws, and
cannot effectively do so prematurely.
The Commission believes that any delay
associated with filers complying with
the transaction agreement requirements
of the final rule is necessary and
justified by the benefits to the Agencies
and the public in avoiding premature
review of reported transactions.
Separate from the concerns about
delay, one commenter expressed
concerns that, as drafted in the NPRM,
the Instruction arguably requires the
production of the most recent draft
agreement, even if a term sheet was also
provided. The final rule requires filers
to analyze the executed agreement to
determine whether it provides sufficient
detail about the transaction. If that
document does not, then filers must
provide one additional dated document
that does sufficiently describe the
transaction. The same commenter also
questioned the value to the Agencies of
receiving the most recent draft
agreement, which they state is often
slanted to reflect the views of the most
recent party to circulate a draft and thus
is not necessarily representative of what
the definitive agreement will ultimately
become. If the most recent draft
agreement does not reflect the key terms
of the transaction, then some other
document, such as a term sheet, should
be submitted. Otherwise, as described
above, the filing may be premature.
Further, the Commission acknowledges
that certain provisions of a draft
agreement that are not strictly necessary
to understanding the antitrust
implications of a transaction may
change, sometimes substantially, and
that the final definitive agreement is the
most probative. However, the
Commission believes that not permitting
326 16
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filing until a definitive agreement has
been reached is not necessary and could
impose too great a cost due to the
associated delays. The Agencies have
extensive experience with reviewing
draft agreements and find that even they
can be probative. So long as the draft
agreement and the associated executed
agreement comply with the transaction
agreement requirements of the final
rule, the Commission will accept a
supplemental document that is in draft
form.
The same commenter suggested
revising proposed § 803.5 to change
‘‘will be consummated’’ to ‘‘the parties
intend to consummate.’’ The
Commission agrees that this change in
wording better captures the requirement
for the parties to attest to their good
faith intention to proceed with the
transaction based on the submitted
document and will add the phrase ‘‘the
parties intend to consummate’’ to
§ 803.5. The Commission notes,
however, that in order to satisfy the Act,
parties must file and observe the waiting
period for the transaction that will be
consummated. Therefore, if there are
material changes to the transaction after
filing, the parties must continue to
notify the Agencies so that they can
determine whether an amended or new
filing may be required. The Commission
thus adopts the proposed requirement to
submit a draft agreement or term sheet
with the clarifications noted above.
In sum, the Commission has
determined that changes to § 803.5
contained in the final rule are necessary
and appropriate to prevent the Agencies
from reviewing transactions for which
the merging parties have not yet reached
agreement on key terms. For premerger
review to be timely and effective, the
Agencies need some assurance that the
transaction is likely to occur and that
the scope of the transaction is revealed
in the transaction documents submitted
with the HSR Filing. The Commission
has modified the final rule as compared
to the proposal for this requirement to
reduce the cost and delay for filers as
much as practicable.
E. Section 803.8: Translation of
Documents
The Commission proposed amending
§ 803.8 to require submission of Englishlanguage translations for all foreignlanguage documents submitted with the
notification. Under § 803.8(a), filers
currently do not need to translate these
materials for the initial filing, and
English-language outlines, summaries,
extracts, or verbatim translations need
only be provided if they already exist.
Section 803.8(b), in contrast, requires
that all foreign-language documents
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responsive to a Second Request be
provided with English translations. The
Commission proposed combining
§ 803.8(a) and (b) so that proposed
§ 803.8 would therefore be one
paragraph requiring that verbatim
English translations be provided with
all foreign-language materials submitted
as part of an HSR Filing or in response
to a Second Request. The Commission
adopts this proposed change with a
revision to reduce potential confusion.
As explained in the proposed rule,
when the Agencies receive key
documents, such as the transaction
agreements, relevant financial analyses
or transaction-related assessments
required by Item 4(c) with no translation
at all or with unhelpful Englishlanguage outlines, summaries, or
extracts, the Agencies are at a significant
disadvantage during the very short
period provided for initial review. The
Commission received several comments
on this proposal, principally regarding
the burden and overall need for the
proposed translation requirement. One
commenter supported the proposed
change, noting that with the help of
modern software the cost of producing
English translations should not be
burdensome. The Commission agrees.
As stated in the proposed rule, the
Commission believes that translation
tools available to the parties have
become more abundant and these tools
provide many options for translation
that should significantly reduce the cost
of providing translations. Moreover, it is
important that the parties themselves
provide translations because they
created the documents at issue. The
parties should ensure that translations
are faithful to the original documents, a
task that the Agencies are unable to
complete, as they do not have the
context or background to the transaction
or companies that would be necessary to
identify material errors. The
Commission wants to avoid disputes
over translations of these complex
business documents that the parties
have not reviewed.
The Commission notes that not
requiring English-language translations
from all entities, including foreign
entities, under the current rule puts the
Agencies at a disadvantage when
reviewing HSR Filings with only
foreign-language documents. This also
creates an advantage for non-U.S. firms
(whose materials are most likely to be in
a foreign language). If key documents
are not translated, the Agencies cannot
give the transaction the same level of
rigorous review and scrutiny as they do
for transactions where all of the
documents can be reviewed starting on
the first day of the waiting period.
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Translation requires time that should
not be taken from the short period
available to the Agencies for the initial
review. Time spent translating
documents reduces the time available
for more critical tasks, such as assessing
the antitrust risk of filed transactions.
To understand the potential costs
associated with requiring submitted
documents to be translated, the
Commission examined all HSR filings
submitted in FY 2021.327 Of the 7,002
HSR Filings that year, only 40 contained
documents submitted in a language
other than English and did not provide
a translation. This represents fewer than
0.6 percent of filings that year. While
the cost of providing translations may
increase the cost of making an HSR
Filing for these particular filers, the
overall impact of this requirement is
limited.
Beyond the issue of increased cost,
some comments questioned the need to
include translations with HSR Filings,
especially for transactions that do not
raise competitive concerns. The
Commission disagrees that translations
of submitted documents are not
necessary for the Agencies to complete
their analysis or that they are useless to
the Agencies. The foreign-language
versions of the documents are required
by the Rules because they are
responsive to specific information
requests. As stated in the NPRM, the
Agencies receive HSR Filings that
contain only foreign-language versions
of key materials, such as the transaction
agreements submitted in response to
current Item 3(b) of the Form, the
relevant financials submitted in
response to current Item 4(b), and the
documents submitted in response to
current Items 4(c) and 4(d) of the Form.
These are the very documents that allow
the Agencies to conduct a preliminary
review of HSR Filings for compliance
with filing requirements and to
determine whether the transaction may
violate the antitrust laws. Other filers
submit these same types of documents
in a form that staff can quickly review.
Not being able to review these key
materials on the first day of the waiting
period puts the Agencies at a material
disadvantage during their initial review.
After carefully considering the
objections in the comments, the
Commission continues to believe
requiring translations of foreign327 As noted above in footnote 260, the Agencies
selected FY 2021 for this effort because of the large
number of reportable transactions that year, 3,520,
which provided for a robust data set. For these
transactions, there were 7,002 filings, roughly two
per transaction. See Fed. Trade Comm’n & U.S.
Dep’t of Justice, Hart-Scott-Rodino Annual Report,
Fiscal Year 2021 appendix B (FY 2021).
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language documents with HSR Filings is
necessary and appropriate for the
Agencies’ premerger assessment, and
notes that such translations may be
especially important for those
transactions that report foreign
subsidies.328 Despite the cost to filing
parties, translations permit staff to
review transactions and determine
whether they require further
investigation on the basis of the
materials contained in the HSR Filing.
With this cost in mind, the Commission
invited commenters to suggest other
alternatives that might achieve the
Commission’s goal of being able to
understand and assess foreign-language
documents while lessening the cost for
filing parties and received a range of
potential modifications to the proposal.
One commented suggested that the
requirement to provide verbatim
translations should be limited to only
final documents, not draft versions. As
noted in section VI.G.1.b., the
Commission has not adopted the
proposal to require drafts, so no
translations will be required for such
documents in connection with the
submission of the Form.
Commenters also proposed requiring
only general summaries in English in
lieu of verbatim translations, or
permitting a filing party to produce a
better-quality translation within a
reasonable time period if the Agencies
request them. The Commission
acknowledges these suggestions but
does not believe either presents a viable
alternative to the version of § 803.8
contained in the final rule. General
summaries do not provide the Agencies
with a complete, detailed picture of the
transaction. The Agencies’ preliminary
analysis of transactions often relies
upon a nuanced and thorough reading
of documentary attachments, and
general summaries may not include
facts or descriptions that the Agencies
find relevant. The ability to require a
better-quality translation within a
reasonable time period after the
submission of the HSR Filing will mean
the Agencies must depend on filing
parties to respond; this would likely
delay Agency review within the already
time-constrained initial waiting period.
The time saved by the parties in
preparing a summary in lieu of a
translation is outweighed by the benefit
to the Agencies of having a version of
the underlying document available at
the beginning of the waiting period.
Given the importance of having
translations of key documents, the
Commission adopts the proposed
changes to § 803.8 but deletes the
328 NPRM
at 42182–83.
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reference to ‘‘understandable.’’ The
Commission believes this word is
superfluous when used in conjunction
with ‘‘accurate and complete’’ and may
introduce confusion. Section 803.8 does
not require any particular method of
translation but specifies that, whatever
translation method the parties choose,
all verbatim translations must be readily
understood, materially accurate, and
complete. One commenter suggested
revising the instructions to state
explicitly that the submission of
machine translations is acceptable. The
Commission declines to state this
explicitly and notes that in complying
with the requirement to provide
translations, parties must certify that
translations are materially accurate even
if they do not identify how they were
created.
In sum, the Commission has
determined that the translation
requirement contained in the final rule
is necessary and appropriate to enable
the Agencies to quickly review
submitted documents with English
translations that have been certified as
accurate.
F. Section 803.10: Commencement of
Waiting Periods
The Commission proposed amending
§ 803.10(c)(1)(i) to clarify that filings
made electronically are to be credited as
received by the Agencies on the date
filed if: (i) the electronic submission is
complete by 5 p.m. Eastern Time; and
(ii) such date is not a Saturday, Sunday,
legal public holiday (as defined in 5
U.S.C. 6103(a)), or the observed date of
such legal public holiday. This change
codifies the current policy, and no
comments were received. The
Commission adopts this change as
proposed.
G. Section 803.12: Information To Be
Updated With Refiling
The Commission proposed amending
§ 803.12(c) to specify what updates
would be required to the acquiring
person’s filing if the acquiring person
chose to withdraw its HSR Filing and
refile it. This procedure for voluntary
withdrawal and refiling permits the
acquiring person to restart the initial
waiting period, providing the Agencies
an additional 15 or 30 days (depending
on the transaction type) to review the
transaction without issuing a Second
Request, as long as certain conditions
are met. Currently, the rules require
updates to Items 4(a), 4(b), 4(c), and
4(d). The NPRM proposed changes to
§ 803.12(c) including: eliminating the
requirement to provide updated
financials, currently required by Items
4(a) and (b); requiring updated
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Transaction-Related Documents with
the updated HSR Filing; requiring
updated transaction agreements; and
requiring updated information about
subsidies from Foreign Entities of
Concern. The Commission adopts the
proposed change with modifications to
reflect ministerial changes to the names
of sections of the Form.
The Commission received one
comment on this proposal that noted
that the proposal would impose a
significant additional burden on the
merging parties by requiring them to
conduct a new search for TransactionRelated Documents with an expanded
set of custodians. According to this
commenter, it would also discourage the
parties’ use of pulling and refiling, and
divert agency resources away from the
review of other reported transactions.
Parties who withdraw and refile
under § 803.12(c) must already search
for new documents responsive to
current Items 4(c) and 4(d). The basic
requirement to search for new
Transaction-Related Documents remains
largely the same with the addition of
only a single new custodian (the
supervisory deal team lead, as defined)
and a clarification that versions sent to
any member of the board of directors (or
similar body for non-corporate entities)
are responsive and should not be treated
as draft documents. The search required
is a limited one, reaching back at most
to the 15 or 30 days since the original
filing was made. The Commission notes
that these newly created documents and
updated agreements are material to the
Agencies’ evaluation of the transaction
and the determination of whether to
issue a Second Request. Additionally, a
change in information about subsidies
may also be material and, until the
Agencies have more experience with
receiving this information, as required
by Congress, parties must also provide
updates to this item. The Commission
therefore adopts the proposal with
changes made to the names of the
sections in the Form and Instructions.
VI. Part 803 Appendix A and Appendix
B
Below, the Commission describes the
changes to the appendices to Part 803,
the Form and the Instructions. As
discussed in section V.A., the
Commission will continue to use the
same electronic filing mechanism that
has been in place since March 2020.
Therefore, the Commission now
provides a Form which will be available
on the FTC’s website in Microsoft Word
format to collect the information
required by the Instructions.
Additionally, as discussed in section
V.B., separate forms will be required for
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parties that are filing both as acquiring
and acquired persons for related
transactions. As a result, and to aid
parties in understanding which
provisions are applicable to acquiring
persons and which are applicable to
acquired persons, the Commission has
now provided separate Instructions and
Forms for acquiring and acquired
persons. This change has also allowed
the Commission to simplify the
language of some of the instructions,
such as by defining ‘‘target’’ to include
all acquired entities or assets and
eliminating use of phrases such as
‘‘acquiring person or acquired entity as
appropriate’’ that were included in the
draft instructions. Other ministerial
changes to aid readability of the
Instructions are also noted below.
For ease of reference, the Commission
includes the following materials
regarding the adopted Instructions and
Form:
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• An outline of the organization of
the Form and Instructions,
• A chart that identifies proposed
new locations of the current Items of the
Form and Instructions, including
whether substantive changes are
adopted, and
• A chart of the new categories of
required information.
These materials appear immediately
below.
Instructions Outline
• General Instructions and Information
• Fee Information
• General Information
• Ultimate Parent Entity Information
Æ UPE Details
Æ Acquiring Person or Acquired Entity
Structure
Æ Additional Acquiring Person
Information (Acquiring Person Only)
• Transaction Information
Æ Parties
Æ Transaction Details
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Æ Transaction Description
Æ Additional Transaction Information
Æ Joint Ventures (Acquiring Person
Only)
Æ Business Documents
Æ Agreements (Acquiring Person Only)
• Competition Descriptions
Æ Overlap Description
Æ Supply Relationships Description
• Revenues and Overlaps
Æ NAICS Codes
Æ Controlled Entity Geographic
Overlaps
Æ Minority-Held Entity Overlaps
Æ Prior Acquisitions
• Additional Information
Æ Subsidies from Foreign Entities or
Governments of Concern
Æ Defense or Intelligence Contracts
Æ Voluntary Waivers
• Certification
• Affidavits
BILLING CODE 6750–01–P
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Cross Reference Between Current Form and Final Rule:
Item l(c)
Item l(d)
Item l(e)
Item l(f)
Item l(g)
Item Hh)
Item 2(a)
Item 2(b)
Item 2(c)
Item 2(d)
Item 3(a) (Entities)
Item 3(a)
(Description)
Item 3(b)
Item 4(a)
Item 4(b)
Item 4(c)
Item 4(d)
Item 5(a)
Item 5(b)
Item 6(a)
Item 6(b)
Item 6(c)(i)
Item 6(c)(ii)
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Item 7(a)-(d)
Item 8(a)
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New Location
Fee Information
General Information
General Information
General Information
General Information
Transaction Information/Transactions Subject to International
Antitrust Notification
Ultimate Parent Entity Information/UPE Details
Separate Forms will Identify Acquiring and Acquired Person, No
Combined Form
Ultimate Parent Entity Information/UPE Details
Ultimate Parent Entity Information/UPE Details
Ultimate Parent Entity Information/UPE Details
Transaction Information/Parties
Ultimate Parent Entity Information/UPE Details
Ultimate Parent Entity Information/UPE Details
Transaction Information/Parties, Transaction Description
Transaction Information/Transaction Details
Transaction Information/Transaction Details (Acquiring Person
Only)
Transaction Information/Transaction Details
Transaction Information/Parties
Transaction Information/Transaction Description
Transaction Information/Agreements
Ultimate Parent Entity lnformation/UPE Details, Acquiring Person or
Acquired Entity Structure
Ultimate Parent Entity Information/UPE Details, Acquiring Person or
Acquired Entity Structure
Transaction Information/Business Documents
Transaction Information/Business Documents
Revenue and Overlaps/NAICS Codes
Transaction Information/Joint Ventures (Acquiring Person Only)
Ultimate Parent Entity Information/Acquiring Person or Acquired
Entity Structure
Ultimate Parent Entity Information/UPE Details
Revenue and Overlaps/Minority-Held Entity Overlaps
Revenue and Overlaps/Minority-Held Entity Overlaps (Acquiring
Person Only)
Revenue and Overlaps/Controlled Entity Geographic Overlaps
Revenue and Overlaps/Prior Acquisitions
Jkt 265001
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Substantive
Chan2:es?
No
No
No
No
No
Yes
No
No
No
No
No
No
No
Yes
No
No
No
No
No
Yes
Yes
Yes (Natural
Persons)
Yes (Natural
Persons)
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
ER12NO24.040</GPH>
Current Form
Item
Fee Information
Corrective Filing
Cash Tender Offer
Bankruptcy
Early Termination
Foreign
Jurisdictions
Item l(a)
Item l(b)
Federal Register / Vol. 89, No. 218 / Tuesday, November 12, 2024 / Rules and Regulations
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New Requirements and Categories of Information:
Identification of d/b/a
Description of Ownership Structure of the
Acquiring Entities
Organizational Chart for Funds and Master
Limited Partnerships (If One Exists)
Identification of Certain Officers and Directors
Description of the Business of the Acquiring
Person
Identification of Related Transactions
Mandatory Disclosure of International
Antitrust Notification
Transaction Rationale
Diagram of the Transaction (If One Exists)
Production of Certain Documents of the
Supervisory Deal Team Lead
Production of Certain Plans and Reports
Expansion of Transaction Agreements to be
Produced
Identification of Other Agreements Between
the Parties
Description of Overlaps
Description of Sunnly Relationships
Identification of Franchisees with Revenue
Overlaps
Identification of Additional Prior Acquisitions
Disclosure of Subsidies from Foreign Entities
or Governments of Concern
Identification of Certain Defense or
Intelligence Contracts
Voluntary Waivers for International
Competition Authorities
Voluntary Waivers for State Attorneys General
Statement of Penalties for False Statements
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BILLING CODE 6750–01–C
A. General Instructions and Information
The Commission proposed creating a
General Instructions and Information
section within the proposed Instructions
that largely parallels the General section
of the current Instructions but is
significantly reorganized and includes a
ministerial change to clarify what
information is found on the PNO
website. Within the proposed General
Instructions and Information section,
the Commission proposed substantive
changes to the following sections:
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Location
General Instructions and Information
General Instructions and Information
Ultimate Parent Entity Information/UPE Details
Ultimate Parent Entity Information/Acquiring Person or
Acquired Entity Structure
Passim
Ultimate Parent Entity Information/Additional Acquiring
Person Information (Acquiring Person Only)
Ultimate Parent Entity Information/Additional Acquiring
Person Information (Acquiring Person Only)
Ultimate Parent Entity Information/Additional Acquiring
Person Information (Acquiring Person Only)
Transaction Information/Transaction Description (Acquiring
Person Only)
Transaction Information/Transaction Description
Transaction Information/Transaction Description (Acquiring
Person Only)
Transaction Information/Additional Transaction Information
Transaction Information/Additional Transaction Information
(Acquiring Person Onlv)
Transaction Information/Business Documents
Transaction Information/Business Documents
Transaction Information/Agreements
Transaction Information/Agreements (Acquiring Person Only)
Competition Descriptions/Overlap Description
Competition Descriptions/Sunnly Relationship Description
Revenue and Overlaps/Controlled Entity Geographic Overlaps
Revenue and Overlaps!Prior Acquisitions
Additional Information
Additional Information
Additional Information
Additional Information
Certification
Definitions, Identification of the Filing
Person, Responses, and Translations. As
discussed below, the Commission
adopts some of the changes as proposed,
adopts others with modification, and
does not adopt others. In addition, in
order to effectuate separate, tailored
Forms and Instructions for the acquiring
and acquired person, and to enhance
clarity, the Commission adopts certain
ministerial changes discussed below.
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1. Definitions and Explanation of Terms
a. Economic Research Service’s
Commuting Zones
The Commission proposed adding a
definition for Economic Research
Service’s Commuting Zones to facilitate
responses to proposed requirements
related to labor markets. The
Commission received several comments
on the Economic Research Service’s
Commuting Zones, and all cited the
burden of this proposal. Many noted
that the U.S. Department of Agriculture
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New Definitions
Translations
Identification of Additional Minority Interest
Holders
Organization of Controlled Entities
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has not updated these metrics since
2012, which makes them unreliable as
a basis for determining the geographic
scope of labor markets. As the
Commission is not adopting the
information requirements for employees
in the final rule (see section VI.I.3.), the
Commission does not adopt this
definition.
b. Fee Information
The Commission adopts a ministerial
change related to this item. As a result
of the new fee structure mandated by
Congress in the Merger Modernization
Act, the fee information description
now refers to the adjusted fees and fee
tiers.
c. North American Product
Classification System Data
The Commission proposed
eliminating the reporting of 10-digit
North American Product Classification
System (‘‘NAPCS’’) based codes, and, as
a result, proposed deleting the NAPCS
definition from the proposed
Instructions. The Commission received
one comment on the elimination of the
NAPCS definition; the comment
supported the proposed streamlining of
manufacturing revenue reporting. The
Commission adopts this change as
proposed. See section VI.J.1. for further
discussion on the elimination of
NAPCS-based codes.
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d. Notification Thresholds
The Commission adopts a ministerial
change related to this item. Currently,
the section entitled ‘‘Thresholds’’
discusses filing fee and notification
thresholds as a single item. With the fee
changes that were enacted in the Merger
Modernization Act, these are now
separate thresholds. As discussed in
section VI.A.1.b., ‘‘Fee Information’’
discusses the fee tiers. The definition of
‘‘Notification Thresholds’’ now
discusses only the notification
thresholds that are defined in § 801.1(h).
e. Standard Occupational Classification
The Commission proposed adding a
definition for Standard Occupational
Classification (‘‘SOC’’) codes to facilitate
responses to proposed requirements
related to labor markets. As the
Commission is not adopting information
requirements for employees in the final
rule that would require reporting on this
basis (see section VI.I.3.), the
Instructions do not contain a definition
for SOC codes.
f. Select 801.30 Transactions
As discussed in section III.C., the
Commission received many comments
that objected to the burden of the new
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requirements as proposed. Among the
objections were claims that the
proposed requirements reached
transactions that typically were not
investigated by the Agencies, that the
burden of the new requirements could
slow the pace of some transactions and
deter others, and that the burden would
fall not just on acquiring persons but on
target companies that did not initiate or
consent to the transaction. One
commenter urged the Commission to
exempt from HSR reporting
requirements certain transactions that
the Agencies rarely challenge, including
acquisitions of voting securities that do
not transfer control of the target
company. The Commission
acknowledges these comments, and
while it disagrees that there is any
category of transaction for which all of
the adopted proposals should not apply,
it does agree that exempting certain
transactions from some of the new
requirements will not inhibit the
Agencies’ ability to understand the
transaction and determine that it
warrants further investigation. To that
end, the Commission limits the amount
of information required for the
notification of certain transactions
subject to § 801.30 that also meet
specific conditions.
Section 801.30(a), first promulgated
by the Commission in the original rules,
defines certain types of transactions in
which the consent of the acquired
person may not be required.329 These
transactions include acquisitions made
on the open market, via tender offers,
through the exercise of warrants or
options, or through the conversion of
non-voting securities. The involvement
of the acquired person varies across
these transactions. In some instances,
such as an investor acquiring voting
securities on the open market, the
acquired person does not have to agree
to the transaction and may not even
have knowledge of it. In others, the
acquiring and acquired person both
assent to the deal. For example, some
transactions are effectuated by a tender
offer or the acquisition of purchases on
the open market or from third parties—
making § 801.30 applicable—but are
also subject to an agreement between
the acquiring and acquired person.
When the agreement of the acquired
person is not required in a transaction,
the Commission believes that certain
requirements of the final rule are
unlikely to provide information
necessary to determine whether that
transaction may violate the antitrust
laws. Several commenters agreed that in
329 16 CFR 801.30(a); see also 43 FR 33450, 33483
(July 31, 1978).
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such transactions the target in particular
would not be able to provide the new
information required in the final rule in
the short time they have to make their
filing. Further, in such transactions, the
acquired person may not know that it
has a filing obligation until the
acquiring person has filed and will have
limited time to prepare its filing. For
this select set of transactions, the
Commission has determined that it is
not necessary to collect certain
information, particularly in light of the
costs that would be imposed on these
types of filings which often carry low
antitrust risk. Therefore, the
Commission, adapting suggestions from
the comments, introduces and defines
the term ‘‘select 801.30 transactions.’’
Select 801.30 transactions are those
transactions that do not result in the
acquisition of control to which § 801.30
applies and where there is no agreement
or contemplated agreement between any
entity within the acquiring and acquired
person. An example of a select 801.30
transaction includes an acquisition of
voting securities on the open market via
a national exchange by an investor that
has no other ties to the issuer and which
acquisition does not result in the
acquisition of control. Additionally,
select 801.30 transactions include
acquisitions resulting from a traditional
executive compensation arrangement
where the executive exercises
contractual benefits pursuant to a
compensation package to acquire voting
securities and nothing more.
In addition to excluding transactions
in which there is an agreement between
the acquiring and acquired person, the
definition of ‘‘select 801.30
transactions’’ excludes transactions that
would result in the acquiring person
obtaining control, as defined by the
Rules, of the acquired entity or where
the acquiring person has obtained or
will obtain certain rights related to the
board of directors, general partner, or
management company of an entity
within the acquired person. These
excluded transactions are likely to
require a more thorough review for
potential antitrust risk, and therefore it
is necessary and appropriate for the
Agencies to receive some additional
information related to them as
contemplated in this rulemaking. The
Commission uses the term ‘‘select
801.30 transaction’’ throughout the
discussion below, and transactions that
meet the definition will not be required
to respond to certain items as part of the
Commission’s efforts to limit costs to
filing parties in response to the
comments. See Figure 3.
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Federal Register / Vol. 89, No. 218 / Tuesday, November 12, 2024 / Rules and Regulations
g. Supervisory Deal Team Lead
As discussed in section VI.G.1, the
Commission proposed that, in addition
to requiring documents prepared by or
for officers and directors in response to
current Item 4(c), filing persons must
also submit transaction-related
documents prepared by or for
supervisory deal team lead(s). This
proposal targeted documents authored
by or for the person who functionally
led the deal team even if not an officer
or director. In the Agencies’ experience
with Second Request responses, these
documents often include information
that would have been highly relevant to
the Agencies’ analysis of the transaction
during the initial waiting period to
determine whether Second Requests
should issue and what additional
information they should seek. The
Commission adopts this definition to
limit the proposal to a single individual
and provide clarity regarding
identification of the appropriate
individual.
The proposed rule noted that the
identification of any supervisory deal
team lead would not be based upon title
alone and that this addition would
require the filing person to determine
the individual or individuals who
functionally lead or coordinate the dayto-day process for the transaction at
issue. A supervisory deal team lead
need not have ultimate decision-making
authority but would have responsibility
for preparing or supervising the
assessment of the transaction and be
involved in communicating with the
individuals, such as officers or
directors, who have the authority to
authorize the transaction. In the
proposal, any such individual(s) might
be the leader(s) of an investment
committee, tasked with heading the
analysis of mergers and acquisitions, or
otherwise given supervisory capacity
over the flow of information and
documents related to transaction.
The Commission received many
comments on its proposal to require
current 4(c) documents from the
supervisory deal team lead(s). Several
comments noted that the proposed
Instructions do not offer a definition of
supervisory deal team lead(s) and that
the proposed rule’s description of the
term was vague, ambiguous, and
subjective, leaving filers uncertain
which individuals must be searched in
addition to officers and directors. One
comment stated that the term was
neither defined nor self-explanatory,
and the proposal’s descriptions of what
constitutes a supervisory deal team
lead(s) offers two separate standards.
Yet another comment noted that the
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description could potentially describe a
company’s entire corporate
development team.
Concerns about the meaning of the
term ‘‘supervisory deal team lead’’ led a
number of commenters to propose a
definition. One commenter suggested
limiting supervisory deal team lead to
the senior most member of the corporate
development deal team responsible for
driving the strategic vision and
assessment of the deal, who would not
otherwise qualify as an officer or
director. Another commenter suggested
it should be the most senior member of
a filing party’s deal team responsible for
the company’s strategic vision and who
otherwise would not qualify as a
director or officer. Also, another
commenter offered that supervisory deal
team lead(s) should be expressly
defined to mean the individual with
primary responsibility for supervising
the assessment of the transaction, and
that it should only be one person.
The Commission acknowledges that a
definition of supervisory deal team lead
in the Instructions would help filers
accurately identify the appropriate
individual to be searched for responsive
materials. The Commission notes that
many of the comments’ proposed
definitions provided useful contours to
help define the term. As discussed
above, certain commenters suggested a
definition that the relevant individual
have responsibility for business strategy
associated with the transaction under
review. The Commission agrees that
centering the definition on the ‘‘primary
responsibility’’ for the strategic
assessment of the deal will help identify
the correct individual.
The Commission also agrees that the
definition should focus on one
supervisory deal team lead to mitigate
any confusion or uncertainty raised in
the comments about having two or three
supervisory deal team leads. As
discussed in section VI.G.1., several
commenters also raised concerns with
the burden associated with collecting
documents from additional custodians,
particularly if multiple individuals
fulfilled that role.
The Commission therefore adopts a
new definition for ‘‘supervisory deal
team lead’’ as the individual who has
primary responsibility for supervising
the strategic assessment of the deal, and
who would not otherwise qualify as a
director or officer. This definition
focuses on the one person who oversees
the strategic assessment of the
transaction and it should mitigate the
concerns of some commenters that the
term is so vague that it might introduce
uncertainty as to when the initial HSR
waiting period begins. These
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commenters explained their concern
that Agency staff may become aware of
another employee who would better
constitute a supervisory deal team lead
than the individual selected by the filer
and reject the filing. In response to
comments that requiring filers to select
a supervisory deal team lead will allow
the Commission to reject filings, the
Agencies will continue to rely on filers
to certify to their good faith belief in
completing and certifying to the
accuracy of the filing, and the Agencies
will continue to rely on that good faith.
In the situation where the only
individuals supervising the strategic
assessment of the deal are already either
an officer or director, filers can state that
this is the case and identify an officer
or director as the supervisory deal team
lead.
h. Target
For additional clarity in the
instructions, the Commission introduces
and defines the term ‘‘Target’’ as a
ministerial change. The target includes
all entities and assets to be acquired by
the acquiring person from the acquired
person and eliminates the need to use
the inadvertently confusing phrase ‘‘the
acquired entity(s) or assets’’ throughout
the Instructions. The Commission notes,
however, that the Instructions do
continue to use ‘‘acquired entity(s)’’ in
certain instances where a question may
not be relevant to the acquisition of
assets.
i. Year
As part of the Commission’s effort to
add more clarity to the Instructions, the
Commission makes a ministerial change
to the definition of ‘‘most recent year’’
found in the definition of ‘‘year’’ to
make clear that the ‘‘most recent year’’
is the most recently completed calendar
or fiscal year. This is the current intent
of the definition and consistent with the
guidance that has been given informally
and with how filing persons complete
the form and provide information.
2. Filing as an Acquiring and Acquired
Person
As discussed in section V.C., the
Commission adopts the proposed
changes to § 803.2 such that filing
persons will be required to submit
separate forms when filing as an
acquiring and acquired person.
Additionally, the Commission has
created separate, tailored Forms and
Instructions for the Acquiring and
Acquired Person. Since filers will
choose the appropriate Form for the
filing, the Commission adopts the
ministerial change to eliminate the
question, currently Item 1(c), asking the
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filing person to identify whether the
filing is being made as an acquiring or
acquired person.
3. Responses
In the new Responses section, the
Commission proposed setting out the
specifics of how filers would provide
the information responsive to the
proposed new questions. The revisions
included eliminating instructions
regarding filings made on paper or DVD,
see above at section IV.A; the
Commission adopts these changes as
proposed. The proposed responses
section also described the information
that filing persons would need to
provide in a log of responsive
documents and descriptive responses to
be submitted with an HSR Filing. This
information would have generally been
the same as the information currently
required for documents submitted in
response to Items 4(c) and 4(d) of the
current Form, with two proposed
expansions. The first would have
required the filing person to identify the
request(s) to which the document would
be responsive. The second would have
required the identification of the
individual within the acquiring or
acquired person who supervised the
preparation of documents prepared by
third parties, or for whom the document
was prepared. The Commission adopts
the proposal with modifications to
reflect the layout of the Form and to
reduce the burden for transactions that
do not have either a NAICS overlap, see
section VI.J., or overlap or supply
relationship identified in the
Competition Descriptions, see section
VI. I.
The Commission received two
comments regarding the new Responses
section, both of which focused on the
proposed requirement for filing persons
to provide the name, title, and company
of the individuals within the filing
person who supervised the preparation
of third-party documents or for whom
the documents were prepared. One
commenter expressed concern that the
proposal could put certain fund
employees at risk of violating their
nondisclosure agreements with target
companies. Another commenter noted
that there is minimal if any value to the
Agencies having this information for
every single reportable transaction, but
collecting and filing a comprehensive
list of all the people who may have
supervised the creation of these
documents will require many hours of
work.
The Commission acknowledges the
cost but disagrees that this information
is not valuable or informative. In the
Agencies’ experience, knowing the
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authors of documents assists in the
evaluation of the documents as well as
any subsequent investigation by
providing context regarding who was
involved in the preparation of the
document. Currently, the Agencies do
not receive this context for documents
prepared by third parties. Therefore, for
documents prepared by third parties,
such as consultants or bankers, the
Commission adopts the proposal for the
filing person to identify the individual
or individuals who supervised the
production of such documents, or for
whom the document was prepared. This
information will not be required for
documents that were provided to the
parties without solicitation, or for
documents provided to the acquiring or
acquired person by the other party.
As part of the Commission’s overall
effort to reduce the burden on filing
parties, the Commission has revised the
proposal to only require authors (or the
individuals that supervise the creation
of documents) for filings in which there
are NAICS overlaps, or overlaps or
supply relationships identified in the
Competition Descriptions. For those
transactions where such an overlap or
supply relationship has been identified,
filers will be required to provide the
same author information as is currently
required for documents responsive to
Items 4(c) and 4(d), as well as the
individuals within the filing person
who supervised the preparation of thirdparty documents or for whom the
documents were prepared. The
Commission notes that these third-party
documents are already required. The
additional information is related to the
identification of the individuals within
the acquiring or acquired person, so no
new non-disclosure risks should result
from the requirement. Finally, because
the Form requires identification of the
file name for each document submitted,
the ‘‘Responses’’ section does not
require a document log. A privilege log
will still be required.
4. Translations
As noted in section V.E., the
Commission amends § 803.8 to require
the filing person to submit English
translations of all foreign-language
documents. The Instructions also reflect
this change.
5. Non-Compliance
While the Commission does not make
any changes to the explanation of ‘‘noncompliance,’’ it does emphasize that if
the filer is unable to answer any
question fully, it is required to provide
the information that is available and
provide a statement of reasons for noncompliance consistent with § 803.3 and
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as permitted by the HSR Act.330 Further,
where exact answers cannot be given,
filers are allowed to enter best estimates,
while indicating the source or basis of
the estimate and marking the
information with the notation ‘‘est’’ for
any item where data are estimated. The
Commission routinely accepts filings
and commences waiting periods for
filings that avail themselves of this
procedure. For example, publicly traded
filers are often unable to identify with
certainty their minority shareholders,
and instead provide information that
has been filed with the SEC. The
Commission did not propose any
changes to this Instruction and does not
change it now.
B. Fee Information
Although the Commission proposed
moving the filing fee information to the
Transaction Information section of the
proposed Instructions, in the final Form
and Instructions, filing fee information
will instead be collected in its own
section. The Form also includes new
areas for filing persons to indicate
whether the fee is being paid by more
than one entity, and if so, how much
each entity will pay. Additionally, the
Commission adopts a ministerial change
to eliminate the need to provide
Taxpayer Identification or Social
Security Numbers and the name of the
institution, such as the bank, from
which the fee will be paid. The
Commission has determined that it no
longer needs this information to identify
filing fees, and parties therefore no
longer need to provide it.
C. General Information
The General Information section of
the Form and Instructions requires filing
persons to indicate whether the
transaction is a post-consummation
filing, cash tender offer, or bankruptcy,
and whether early termination of the
transaction is requested—information
that is currently collected on the first
page of the Form. The Commission did
not propose and does not adopt any
material changes to these items.
D. Ultimate Parent Entity Information
1. UPE Details
The UPE Details section of the Form
and Instructions requires information
about the UPE of the acquiring or
acquired person, including contact
information, financial documents, and
information about certain minority
shareholders or interest holders. Much
of this information is currently required
by Items 1, 4(a) and (b), and 6(b). The
Commission proposed (1) requiring
330 15
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contact information for the individual to
whom Second Requests should be sent;
(2) clarifying the instructions related to
the provision of financial documents for
natural person UPEs; (3) requiring filers
to stipulate that the appropriate size of
person threshold is met, if applicable;
(4) identifying additional minority
holders of entities within the acquiring
person; and (5) reducing the types of
minority holders of the acquired entity
that must be reported. As discussed
below, the Commission adopts some of
these proposals without change and
some with modification.
a. Contact Information
The Commission proposed that all
filers, not just foreign filers, must
identify the individual to whom Second
Requests should be addressed. The
Commission received no comments on
this change and adopts it as proposed.
b. Annual Report and Audit Reports of
the UPEs
This section requires information
currently required by Items 4(a) and 4(b)
as it pertains to the UPE of the acquiring
or acquired person. Annual and audit
reports of other entities within the
acquiring and acquired person are
required by the Acquiring and Acquired
Person Structure section, as discussed
in section VI.D.2.b. The Commission
proposed clarifying the current
instructions regarding which annual
reports and audit reports are required
from natural person UPEs. The
Commission makes no change to the
instruction that natural person UPEs
should not produce any personal
balance sheets or tax returns. Since
natural persons should not provide
personal financial information, no
information should be provided in the
UPE section. The Commission did not
propose and does not make any change
to the annual or audit reports required
of the UPE of the acquiring or acquired
person.
The Commission did propose
clarifications regarding what other
annual and audit reports entities within
the same person as natural person UPEs
must provide. This proposed
clarification is discussed in section
VI.D.2.b.
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c. Size of Person Stipulation
The Commission proposed adding an
item on the Form that would allow filers
to stipulate that the size of person test
is met (at the appropriate dollar amount)
or indicate that the size of person test
is not applicable. The Commission
received no comments on this change
and adopts it as proposed.
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d. Minority Shareholders or Interest
Holders
The Commission proposed a Minority
Shareholders or Interest Holders section
to require identification of minority
interest holders of certain entities
within the acquiring person and the
acquired entities. Currently, Item 6(b)
requires acquiring persons to identify
minority holders of 5% or more but less
than 50% of the acquiring entity and the
UPE of the acquiring person (or, for
natural person UPEs, the highest-level
entities they control). Acquired persons
are required to report such minority
holders of the acquired entity. For UPEs
of the acquiring person, acquiring
entities, and acquired entities that are
limited partnerships, only disclosure of
the general partner is currently required.
The Commission proposed several
changes to require additional
information about the identity of
minority holders, as well as
identification of additional minority
interest holders by the acquiring person,
but potentially fewer by the acquired
person. First, the Commission proposed
requiring disclosure of the ‘‘doing
business as’’ or ‘‘street name’’ of
minority investors that are related to a
master limited partnership, fund,
investment group, or similar entity.
Second, the Commission proposed to
expand the entities for which the
acquiring person must identify certain
minority interest holders to include
entities related to the acquiring entity.
Third, the Commission proposed
requiring the identification of certain
minority holders of limited
partnerships, rather than just the general
partner. Finally, the Commission
proposed limiting the minority interest
holders that acquired persons would
need to identify. The Commission
adopts the first two proposals without
change but modifies the limited partners
that need to be identified, as discussed
below.
(i) Provision of ‘‘Doing Business As’’ or
‘‘Street Names’’
First, the Commission proposed that
the acquiring person provide the doing
business as or ‘‘street name’’ of minority
investors that are related to master
limited partnerships, funds, or
investment groups. The Commission did
not receive comments on this specific
proposal but did receive comments to
similar proposed requirements in other
areas of the Instructions. Objections in
these other sections generally focused
on the lookback period and the burden
of searching for all names that were
potentially used by a business. In this
section, the Commission did not
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89281
propose a lookback period, but instead
proposed requiring only the current
name of the related master limited
partnership, fund, investment group, or
similar entity.
The Commission continues to believe
that this information should not be
costly for filers. In many cases,
communication between the acquiring
person and the investor will include
this information. For example, though
the minority investor may be
RANDOMNAME, LLC, the acquiring
person regularly communicates with
INVESTMENT GROUP and sends
information related to the investment in
care of that business. However, if this
information is not known to the
acquiring person, it can so note in a
statement of non-compliance.
The task of screening transactions for
potential competitive effects is stymied
when filers provide only legal names,
which are often unrelated to the name
by which the public knows the
business. Knowing the d/b/a or street
name of the entities involved in the
transaction allows staff to use public
resources to gather additional
information, for example through
internet searches or look-ups using
commercial services relied on by the
Agencies to provide industry data.
Because of the value to the screening
process, the Commission adopts this
requirement as proposed.
(ii) Identification of Additional Minority
Investors in the Acquiring Person
The Commission next proposed two
changes that could increase the number
of minority investors the acquiring
person would need to identify: First, it
proposed that the acquiring person be
required to report holders of 5% or more
but less than 50% of (1) the acquiring
entity, (2) any entity directly or
indirectly controlled by the acquiring
entity, (3) any entity that directly or
indirectly controls the acquiring entity,
and (4) any entity within the acquiring
person that has been or will be created
in contemplation of, or for the purposes
of, effectuating the transaction. Second,
it proposed that filing persons report
holders of 5% or more but less than
50% of limited partnerships, in addition
to the general partner.331
Comments on these two proposed
changes were similar and often
intertwined. One commenter urged the
Agencies to collect the proposed new
information and stated that the
ownership structure resulting from the
331 This change also relieved natural person UPEs
from the obligation to identify minority
shareholders of all top-level entities, instead only
requiring identification for entities related to the
transaction.
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transaction may change the parties’
incentives to compete, enhance the
acquirer’s ability to influence decision
making through changes in voting
interests or governance rights, or
facilitate the sharing of competitively
sensitive information between rivals.
Two others also supported the proposal,
with each noting the various potential
anticompetitive impacts of minority
interests. Specifically, one commenter
stated that these new requirements
would address complex corporate
structures, which may obscure
potentially significant relationships.
The other commenter also supported
providing more information about
shareholders, particularly since the
current Form and Instructions can treat
portfolio companies of private equity
funds as independent from each other
and their management companies.
Broadly, critics of these proposed
changes expressed concerns about the
burden of collecting the requested
information. Additional criticisms
included objections to the five percent
threshold for identification, with
commenters stating that the interests of
such minority investors may be wholly
unrelated to the notified transaction, or
less likely to result in a substantial
lessening of competition. Concerns were
also raised about confidentiality and
disclosure, noting the Commission’s
prior consideration of the fact that the
identity and investment level of limited
partners is often highly confidential
when it decided in 2011 not to require
disclosure of limited partners.
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Commenters further speculated that
requirements to disclose the identity of
additional minority investors could
create a chilling effect on fundraising
and deals. Finally, commenters stated
that such a decrease in fundraising and
deal volume could affect smaller
businesses, pension plans, endowments,
charitable foundations, and activist
investors, among others. Each of these
objections is discussed below.
(a) Identification of Minority Holders of
Additional Entities
Regarding the first proposal to expand
the entities for which minority holders
must be identified, the Commission
notes that until 2011 acquiring persons
were required to report minority holders
of 5% or more for all corporate entities
within the acquiring person that had
assets of $10 million or greater. As part
of the 2011 rulemaking, the Commission
determined that this broad requirement,
which could reach entities within the
acquiring person that had no nexus to
the reported transaction, was not
essential to an initial review of the
transaction.332 Through this change, the
Commission expanded the requirement
to include identification of minority
holders of non-corporate entities, but it
limited the obligation for the acquiring
person to the identification of minority
holders of only the acquiring UPE and
the acquiring entity. As a result, the
Agencies receive information about
332 75 FR 57110, 57118 (Sept. 17, 2010); 76 FR
42471, 42472 (July 19, 2011).
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what entities have a ‘‘seat at the table’’
in the case of very simple corporate
structures where the acquiring person
UPE directly controls the acquiring
entity without any intermediary entities,
or where intermediary entities are
wholly owned by the acquiring person,
without the acquiring person providing
information about entities unrelated to
the transaction.
Since 2011, however, the Commission
has learned through experience that
many acquiring persons have more
complex structures that include many
entities between the UPE and acquiring
entity that are not wholly owned but
that are related to the acquiring entity.
For example, ‘‘A’’ plans to acquire a
target and will bring in ‘‘B’’ as a coinvestor. The UPE of ‘‘A’’ creates (or
already has) a number of intermediary
entities within its person to effectuate
the transaction. ‘‘B’’ does not invest in
either the UPE of ‘‘A’’ or the entity that
will make the acquisition, but rather in
one of these intermediary entities.
Currently, as illustrated in Figures 4 and
5a, when ‘‘A’’ makes its filing, it is not
required to disclose the co-investment
of ‘‘B’’ so long as the investment is
below 50%. The current focus on just
the UPE and the acquiring entity
deprives the Agencies of key
information about individuals and
entities that may have influence, or even
management or operational oversight,
over entities related to the transaction
and could make or influence
competitively important decisions postacquisition.
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89283
Figure 4: Current Rules Only Requires Disclosure
of Minority Holders (or General Partner) of A
Disclosure of 5" or greater
minority holders (or GP) required
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ER12NO24.042</GPH>
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Disclosure of 5" or greater
minority holders (or GP) required, but none
dlsdosed here because It Is wholly owned
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Figure Sa: Current Rules Do Not Require Disclosure of
B Fund as a Co-Investor in the Acquisition; No Ability for
Agencies to Know to Research B Fund's Other Holdings
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disclosure of these relationships could
surface antitrust risks that require the
Agencies’ attention during the initial
antitrust review. Because information
that reveals whether there are existing
investment relationships between the
acquiring person and the target is
necessary and appropriate for the
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Agencies’ initial antitrust review, the
Commission adopts this change as
proposed. As a result, as shown in
Figure 5b, the Agencies will receive the
information necessary to determine
whether the acquisition of the target by
the acquiring entity may violate the
antitrust laws.
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As discussed in section II.B.1., and
illustrated in Figure 5a, individuals or
entities that have significant rights or
holdings in entities related to the
acquiring entity may also take active
positions in or exert control over
competitively significant businesses,
including competitors, and the
Federal Register / Vol. 89, No. 218 / Tuesday, November 12, 2024 / Rules and Regulations
89285
Figure Sb: Final Rules Require Disclosure ofB Fund;
Agencies Know to Research B Fund's Other Holdings
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In objecting to these proposals,
commenters stated that identification of
these additional minority holders would
be burdensome. The Commission notes
that, rather than merely reviving an
expansive requirement to disclose all
the minority investors of entities within
the acquiring person, it proposed a more
tailored instruction to require disclosure
only of the entities related to the
transaction. Given this limitation and
the information gaps caused by vast
changes to the M&A landscape
discussed in section II.B.1., the
Commission believes that the
identification of the minority holders of
the entities that are related to the
transaction is necessary and appropriate
and should be contained in an HSR
Filing. Further, if the acquiring person
does not have knowledge of the identity
of the minority investors, it can so
indicate and explain, just as acquiring
persons currently do when the minority
investors of the UPE or acquiring entity
are unknown.333 For example, acquiring
persons that have publicly traded UPEs
routinely note that they do not have
information about minority holders
beyond what is reported to the SEC.
One commentor stated that the ‘‘direct
or indirect’’ and ‘‘control or controlled
by’’ language was broad and would
require substantial time and resources to
navigate. The Commission disagrees and
notes that this requirement does not
require a broad analysis of various
theories of control but rather requires a
determination of ‘‘control’’ as defined
by § 801.1(b). The proposed instruction
stated that the controlling relationship
can be either direct or indirect to make
clear that the requirement was not
limited to entities just one level above
or below the acquiring entity. For
example, in a common scenario
involving multiple shell entities, the
acquiring UPE controls an intermediary
entity that controls an intermediary
entity that controls the acquiring entity,
333 See also the discussion of non-compliance in
section VI.A.5.
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as shown in Figure 6a below. The
Instructions contained in the final rule
require disclosure of minority holders of
five percent or more of each of those
intermediary entities, subject to the
limitations on disclosure of limited
partners discussed below in section
VI.D.1d.ii., as shown in Figure 6b.
Control is a long-standing concept in the
Rules, and the determination of control
in this context is consistent with control
determinations that filers need to make
for a variety of items currently included
in the Form and Instructions.
The Commission received suggestions
to change the existing five percent
threshold but declines to adopt this
change. Because of the complexity of
investment structures, minority
investors with even low equity stakes
can have formal rights to direct or
influence the strategic decisions of the
company, informal channels to exert
influence, or the right to obtain sensitive
business information about the entity in
which they are invested. Further, as
illustrated in Figures 6a and 6b,
investment groups may be broken up
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across multiple entities that are, for HSR
purposes, separate persons.334 These
types of organizations can take active
positions in multiple companies in the
same or related industry, a trend that
the Commission and commenters have
observed. As a result, the Agencies need
to know who these investors are in
order to determine whether the
acquiring person has connections to the
target’s business that could have
competitive effects.
Figure 6a: A Single Investment Group May Divide Its
Investment; Current Rules Do Not Require Disclosure if
Investments Are Not Made in A or Acquiring Entity
5" or more but less than 509'
334 In 2020, the Commission proposed changing
the HSR Rules to require aggregation of such
interests when determining whether a filing must
be made. 85 FR 77053 (Dec. 1, 2020). The
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Jkt 265001
Commission has not adopted any of those
proposals. This more modest proposal to identify
minority shareholders does not create any new
obligations to file but does provide the Agencies
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with the identity of funds and other investors that
hold, or will hold, interests in entities related to the
acquiring entity through multiple HSR persons,
allowing for further investigation as warranted.
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89287
Figure 6b: Final Rules Require Disclosure Regardless of the
Entity In Which B Fund Invests
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Disclosure
The Commission disagrees with the
commenters’ assertions that this
information is not necessary to assess
the competitive effects of the filed for
transaction and is beyond the authority
of the Commission. As discussed in
section II.B.1., that analysis requires the
Agencies to understand the scope of the
acquiring person’s involvement in the
business of the target. Minority holders
of entities within the acquiring person
that are related to the acquiring entity
may have the ability to influence
decision-making of the acquiring entity
and target post-acquisition. Therefore,
they are functionally ‘‘in the deal’’ and
their existing business relationships are
relevant to a thorough antitrust analysis
of the transaction. The increasing
complexity of corporate structures and
investment vehicles has increased the
number of transactions with these types
of minority interest holders, and the
Commission has determined that the
Agencies need to update the
information requirements to keep pace
with these changes.
The Commission finds the additional
critiques of the proposal unpersuasive
as well. The Commission addresses
arguments about chilling deal volume
and investment levels in section III.C.2.
above. As to commenters opposing this
particular change to the Instructions, the
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Commission is unaware of any evidence
that fundraising or deal volume was
negatively affected during the period
prior to 2011 when HSR rules required
broader disclosure of minority investors,
nor that such activity increased when
the requirement was dropped. Given the
many other factors that influence the
level of investment and M&A activity
generally, the Commission believes it is
unlikely that the disclosure of minority
holdings in parties involved in
reportable transactions has any
measurable effect on dealmaking or
investment levels.
Further, commenters objecting to the
Agencies’ need for identification of
additional minority interest holders also
offered contradictory critiques, with
some stating that the Commission did
not identify transactions where the
minority interest holders were relevant
to the competition analysis, and others
stating the fact that the Commission
offered two examples demonstrated that
the current Form and Instructions
provided the Agencies with sufficient
information. First, cases cited in the
NPRM provide examples of enforcement
actions brought by the Agencies on
various legal theories and fact patterns
and do not necessarily reflect cases that
were discovered through the HSR
process. Second, the need for this
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information is obvious and its relevance
plain: the Agencies need to know who
will be making decisions for the
combined entity post-acquisition. For
example, the hypotheticals discussed
above demonstrate that existing
information gaps in the current Form
leave the Agencies without enough
information to even know to ask
additional questions about additional
individuals and entities within ‘‘A.’’ In
the hypotheticals above, ‘‘B’’ could hold
up to a 49.9% stake in an entity related
to the transaction and functionally
jointly control the acquiring entity along
with ‘‘A.’’ Or ‘‘B’’ could hold only 5%
but have ancillary rights or outsized
influence over the operations of the
acquiring entity (and thus the target
after consummation). Or ‘‘B’’ could be
its own person for HSR purposes, but
one of several related entities that each
has a minority interest that, when
aggregated, account for a significant, or
even majority, stake in the acquiring
entity. In any of these scenarios, as well
as many others, the identity of the
minority interest holder would be
critical to understanding the
competitive implications of the
transaction. Though the filing
requirement falls on ‘‘A,’’ ‘‘B’’ has a seat
at the table, and the Agencies must be
able to investigate whether ‘‘B’’ has ties
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to the business of the target. If the
Agencies are not alerted to the existence
of ‘‘B’’ on the Form, there is no ability
to screen for potential issues that arise
from ‘‘B’s’’ involvement in both the
acquiring entity and, upon
consummation, the target.
Regarding concerns about privacy, the
Commission notes that the contents of
HSR filings are confidential.335 Unlike
requirements for disclosure made by
private parties or government rules
promulgated to require public
disclosure, information included in HSR
filings is protected by statute.
Additionally, disclosure of minority
investors, other than limited partners,
which are discussed below, is already
required by the current Form. The
proposal to require identification of
additional minority investors, including
some limited partners, is an incremental
expansion of what is currently required
(and for corporate entities, less than
what was required under the HSR Rules
from 1978 to 2011). Additionally, the
Agencies often require disclosure of an
even broader group of minority
investors, including limited partners, in
response to a Second Request, as
discussed in more detail below. The
proposed requirements, therefore, did
not introduce any new privacy
concerns, and commenters did not offer
any evidence that the current disclosure
rules have created any substantive
issues related to privacy.
The Commission further notes that
the proposed requirements do not
require the acquiring person to ask the
minority investors for any information.
Therefore, completion of the Form itself
should impose no burden on the
minority investors themselves. Only if
the identity of the minority investor
reveals a competitively relevant
connection and an investigation is
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335 15
16:57 Nov 08, 2024
(b) Identification of Limited Partners
In addition to increasing the number
of entities for which minority
shareholders would need to be
identified, the Commission also
proposed requiring the identification of
minority investors of limited
partnerships that held 5% or more, in
addition to the general partner. Filing
persons are currently only required to
identify the general partners of limited
partnerships, but not limited partners,
regardless of the percentage held. After
considering the comments received
regarding this proposal, the Commission
adopts a modified requirement to
identify only the general partner and
limited partners that have certain rights
related to the board of directors (or
similar bodies) of entities related to the
acquiring entity.
The current requirement to identify
only the general partner of limited
partnerships, and not its minority
investors, was based on the
understanding that limited partners had
no control over the operations of the
fund or portfolio companies.336 As
discussed above and in section II.B.1.,
the operations and investments of
limited partnerships and limited
336 75 FR 57110, 57118 (Sept. 17, 2010) (proposed
rule), adopted 76 FR 42471 (July 19, 2011).
U.S.C. 18a(h).
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opened would the investor potentially
have any cost. These costs are not
imposed by the information
requirements of Form and Instructions
but rather by a potential investigation or
enforcement action for a violation of the
antitrust laws. Disclosure of an existing
business or financial relationship in an
entity that is engaging in an HSRreportable transaction is not an
improper burden and allows the
Agencies to fulfill their statutory
mandate to scrutinize every filing to
determine whether it may violate the
antitrust laws.
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partners cannot be easily generalized.
Though some argue that limited
partners may have limited influence
over investment or operational
decisions, this is not universally true.
Limited partnerships often file for
acquisition of control of entities.
Investment groups, which utilize
limited partnerships, often make
investments in specific industries,
leaving open the possibility that there is
a competitive relationship between
these investments and the target of the
filed-for transaction.
Further, the Commission has learned
through its work that limited
partnerships are not exclusively used as
vehicles for diffuse groups of passive
investors to invest their capital. Instead,
some limited partnerships function as
aggregation vehicles that allow private
equity or other investor groups to direct
the strategic business decisions of the
portfolio companies in which they
invest. The decision to organize as a
limited partnership rather than an LLC
or incorporated entity may be driven not
by how the entity will function in the
marketplace but by other factors, such
as tax and liability.
The scenario in Figure 7a illustrates
how the current Form and Instructions’
lack of information about limited
partnerships can affect a preliminary
antitrust assessment. ‘‘A’’ and ‘‘B’’ form
a new limited partnership that will be
an acquiring person. ‘‘A’’ and ‘‘B’’ will
each hold 49.9% of this entity and will
have rights related to the board (or
similar bodies) of entities related to the
transaction. The remaining 0.2% will be
held by the general partner. Pursuant to
the current Instructions, this newly
formed acquiring person would not be
required to provide any information
other than the name and address of its
general partner when making a filing for
a reportable transaction.
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89289
Figure 7a: Current Rules Only Require UPE to Disclose Name and Address oflts General
Partner; No Disclosure that A and B are Functional Buyers of Target
Compounding the difficulty in
understanding the scope of the
acquiring person’s relationships, A
Investment Group and B Investment
Group may have used a code name for
the transaction, such as ‘‘Project
Alpha,’’ and also used that code name
to name the newly created entity. In this
scenario, the Agencies could receive a
filing from Alpha Fund, L.P., that only
discloses that it has a general partner,
Alpha GP, L.P. There is no requirement
that Alpha Fund, L.P. disclose that A
Investment Group and B Investment
Group each hold nearly 50% and will
effectively co-own and manage the
target after consummation. A Fund I or
B Fund I could be head-to-head
competitors of the target (or control
competitors of the target) or have some
other competitively significant
relationship with the target. But the
current Form would not make the
Agencies aware of their significant stake
in Alpha Fund, L.P. As shown in Figure
7b, the final rules address this by
requiring the identification of A Fund I
and B Fund I (and their affiliations with
A Investment Group and B Investment
Group, if known to UPE), allowing the
Agencies to research whether the
transaction may violate the antitrust
laws.
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Agencies may receive some disclosure
through the reporting of associate
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overlaps in current Items 6(c)(ii) or
7(b)(ii) and 7(d). However, many
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The Commission notes, as did one
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Figure 7b: Final Rules Require UPE to Disclose Name and Address oflts General Partner and
the Investment of A Fund I and B Fund I; Agencies Know to Research Holdings of A and B
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investment groups are set up such that
the associate definition, which focuses
on entities, does not apply, even though
the same individuals may be managing
multiple funds. The Commission
considered changing the definition of
associates but determined that, at this
time, it would be less complex and less
burdensome on filers to merely require
the identification of certain limited
partners, which the Commission
believes will allow the Agencies to use
other sources to conduct a preliminary
assessment of the competitive
implication of these minority holders. If
this proves to be insufficient, the
Commission may revisit the
requirements in future rulemakings.
Despite the need for identification of
some limited partners, the Commission
understands that there are still many
limited partners who are essentially
‘‘silent’’ investors that do not participate
in management decisions. They hold
only financial interests for the purpose
of earning a return on their investment
and do not hold additional rights or
participate in the governance or
business operations of the limited
partnership or the investments of the
limited partnership. Therefore, the
Commission adopts an incremental
change for the identification of limited
partners, implementing in part the
suggestion of one commenter to require
only limited partners that have certain
rights related to the board of directors or
similar bodies of entities related to the
acquiring entity.337 The hypothetical in
Figure 8a shows a structure where the
UPE of the acquiring person is a limited
partnership in which its limited
partners do not have any rights related
to the board of directors or similar
bodies of any of the UPE, Acquiring
Entity, or either of the two Controlled
entities between them. Additionally,
UPE controls a limited partnership in
which B Fund, an active co-investor for
the transaction, has made its
investment. Currently, UPE is only
required to disclose its general partner.
Figure 8a: Current Rules Only Require UPE to Disclose the Name and Address of Its
General Partner
..............__""'-..:;
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Outside Investor Limited Partners
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Dlffuseholdlnpw!lhout
lflhUtoboardof
directors or similar
entities
5" or men, but less thanr•·'\
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--........__ ............\_,................. ........./
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t ......__.,..>'
No Dlsdosure
As shown in Figure 8b, the final rules
would not require the disclosure of the
‘‘Outside Investor Limited Partners’’
because none has any rights to the board
or similar body of an entity related to
the acquiring entity. In contrast, UPE
would need to disclose that B Fund is
a limited partner of the Controlled
entity as well as the general partners of
UPE and Controlled LP.
337 Comment of Dechert, Doc. No. FTC–2023–
0040–0659 at 11 (commenting that it is not clear
why a broad requirement to disclose all limited
partners who hold interests of five percent or more
is necessary to identify a potential competitive
concern irrespective of such limited partners’
ability or inability to participate in the management
or control of the applicable fund, general partner,
or acquired business).
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89291
Figure 8b: Final Rules Require UPE to Disclose General Partners and its Active
Co-Investor (B Fund) But Not Passive Limited Partners or the Holdings of B Fund
---·-..._ .."')
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entities
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In the Commission’s experience,
competitive concerns that arise from
limited partners holding interests in the
acquiring person most frequently stem
from those limited partnerships that act
as vehicles for investor groups to
manage, direct, or influence the
portfolio companies in which they
invest. The Commission has determined
that it is not necessary to know the
names of limited partners that do not
also have certain management rights
and the final rule does not require
disclosure of their minority interests.
The Commission expects that this
modification will address concerns of
commenters that disclosing limited
partners would require investment firms
to renegotiate agreements with limited
partners. As discussed above, there is no
restriction on the Agencies’ ability to
require disclosure of the identity of
limited partners today during an indepth investigation of the transaction.
As a result, limited partners should be
aware that their holdings may be
relevant to an antitrust review of any
transaction involving one of their
investments. Indeed, the Commission
has brought enforcement actions against
acquisitions involving minority
holdings of limited partners in
competing businesses.338 As the
338 See, e.g., In re Red Ventures Holdco, LP, No.
C–4627 (F.T.C. Nov. 3, 2017) (overlapping limited
partnership holdings violated section 7); In re TC
Group, L.L.C., No. C–4183 (F.T.C. Mar. 16, 2006)
(acquisition involving minority stake giving two
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Jkt 265001
agencies charged with enforcing the
antitrust laws, the Agencies have the
authority to investigate the commercial
dealings of limited partners for potential
law violations regardless of any private
agreements that promise non-disclosure.
Therefore, any deficiency in agreements
to permit disclosure to government
agencies already exists. Further, if
disclosure is the source of the Agencies’
being made aware of a potential
competitive concern with the
transaction, any cost to the limited
partner related to the completion and
submission of the HSR Filing is justified
because the information is necessary to
determine whether the transaction may
violate the antitrust laws. Nonetheless,
the Commission has modified the
requirement to reduce the type of
limited partners that must be disclosed,
focusing only on those with the ability
to participate in management or control.
On this basis, filers can exclude limited
partners who serve as passive investors,
who are essentially the customers of
private investment firms, according to
one commenter. To the extent that these
limited partners do not participate in
the management of the filing person,
they need not be disclosed as a minority
holder.
private equity investors seats on the boards of
competitors).
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(iii) Limiting Requirements for Acquired
Persons
Finally, the Commission proposed
limiting the reporting requirements for
the acquired person. Currently, the
acquired person must identify the name
and headquarters address of all holders
of 5% or more but less than 50% of the
acquired entity, along with the
percentage held. If the acquired entity is
a limited partnership, only
identification of the general partner and
its headquarters address is required. The
Commission proposed limiting this
requirement to minority holders of the
acquired entity that would hold an
interest after that consummation or
would receive an interest in another
entity within the acquiring person as a
result of the transaction. However, the
proposed requirements to identify
certain limited partners also applied to
the acquired person, if the minority
investors will stay with the target postacquisition. The Commission adopts
this proposal with modification.
The proposed limitation to identify
only minority interest holders of the
target that will remain invested after
consummation is intended to reduce the
cost of complying with the final rule for
the acquired person. The Commission
has determined that the identity of any
minority interest holder of the target
that will cease to be involved with the
target or acquiring person post
consummation has limited relevance to
understanding who could influence
decision-making of the business post-
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acquisition. The Commission adopts
this portion of the proposed rule. It
modifies the proposed instruction to
reflect the modification it adopts for the
identification of limited partners, as
described above. Thus, the final rule
will require the acquired person to only
identify minority holders of 5% or more
if such holder will continue to be
invested in the target or will acquire an
interest in an entity within the acquiring
person. If the target is a limited
partnership, only limited partners (1)
that hold 5% or more in the acquiring
entity, (2) will continue to hold an
interest in the acquired entity, or
acquire an interest in the acquiring
person, after the transaction is
consummated, and (3) will have that
have certain rights related to the board
of directors or similar bodies of entities
related to the acquiring entity will need
to be identified. If the acquired person
does not have this information, it can so
note in an endnote.
The Commission also notes that one
commenter focused on the requirement
to identify roll-over investors, stating it
would be a new burden that would
discourage continued post-transaction
investment. The Commission disagrees
with this assessment. Currently, the
acquired person already must identify
all 5%–49.9% holders of the acquired
entity, including roll-over investors.
Further, the Commission once again
notes that the amount of information
required is limited; only the name of the
minority interest holder (and the name
of the master limited partnership, fund,
or investment group, if applicable), its
headquarters address, the name of the
acquired entity it holds an interest in,
and the percentage held must be
disclosed.
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2. Acquiring Person and Acquired
Entity Structure
The Acquiring and Acquired Person
Structure sections of the Form and
Instructions require the reporting of
information currently required by Items
1(f), 4(a) and (b), and Item 6(a). The
Commission proposed that filing parties
provide more information about the
structure of the acquiring person and
acquired entity, as well as the names
under which they do business. The
Commission also proposed a
clarification regarding annual reports
and audit reports of natural person
UPEs. As discussed below, the
Commission adopts some of these
proposals without change and some
with modification.
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a. Entities Within the Acquiring Person
and Acquired Entity
This section contains information
currently required by Items 1(f) and 6(a)
of the current Form. The Commission
proposed requiring filing persons to
organize the list of controlled entities by
operating company or business, and, for
each such operating company or
business, the Commission proposed that
filers identify the name(s) by which the
company or business does business, as
well as any name(s) by which it
formerly did business within the three
years prior to filing. The Commission
adopts the proposal with modification.
The Commission received several
comments opposed to this proposal.
One commenter stated that the Agencies
do not need to know the relationships
between and among all related entities
for its initial review of the HSR filing.
The commenter asserted that the
majority of covered entities will likely
have no overlapping activities with the
acquired company, and thus learning
about them adds no value to the
Agencies’ initial screen. The
Commission disagrees that the Agencies
do not need this information and that it
adds no value to the initial screen. This
is the very information that allows the
Agencies to understand what businesses
are involved in the reported transaction.
The Commission does, however, make
several modifications to these proposals
that should reduce the cost of providing
this information. The Commission
adopts the proposal to require DBA
names but does not adopt the proposal
to adopt ‘‘formerly known as’’ (FKA)
names. One commenter noted the
difficulty of providing ‘‘doing business
as’’ names for filing parties that do not
maintain such records, but the
Commission believes these DBA names
will be of great value to the Agencies in
the initial waiting period. Businesses
create (or change) DBA names for a
variety of reasons and may be required
to register these names with State or
local authorities. One commenter
objected to the three-year period, and, as
part of its overall efforts to reduce costs
associated with an HSR Filing, the
Commission eliminates this lookback so
that filing parties must only provide this
information as it stands at the time of
filing.
Another commenter recommended
that for executive compensation
transactions the filing persons be
permitted to dispense with the
requirement to report ‘‘doing business
as’’ names, assuming certain conditions
are met. They stated that these
transactions are unlikely to generate
meaningful antitrust issues but that
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requiring prior business names will add
materially to the burden on the acquired
side without a corresponding benefit.
The Commission agrees and as part of
its overall effort to reduce cost, adopts
the modification to allow both filing
parties in select 801.30 transactions
(which include those related to
executive compensation) to provide this
information as kept in the ordinary
course without DBA names.
Finally, one commenter noted that the
proposed rule appears to use the terms
‘‘operating business,’’ ‘‘operating
entity,’’ and ‘‘operating company’’
interchangeably. The commenter
requested clarification of the definitions
or adoption of one term for consistency.
The Commission agrees that using these
three terms interchangeably is confusing
and thus adopts ‘‘operating business’’ to
capture entities that comprise distinct
operations. Under this modification,
filing parties need to organize their
response by operating business(es)
whether they are corporations, noncorporate entities, or assets that function
as an operating business.
In sum, the Commission adopts
modifications that require filing
persons, except for those in select
801.30 transactions, to organize
controlled entities at the time of filing
by operating business and, for each such
operating business, identify the name(s)
by which the operating business does
business. For example, a fund must
organize its response by portfolio
company(s), and a conglomerate must
organize its response by business(es).
b. Annual Report and Audit Reports
Information for this section is
currently required by Items 4(a) and (b).
The Commission proposed clarifying
the current instructions regarding which
annual reports and audit reports are
required from natural person UPEs.
Currently, natural person UPEs, in lieu
of personal financial documents, must
produce financial documents for the
highest-level entity(s) within their
person. In addition, natural person
UPEs must produce the same additional
reports that non-natural person UPEs
must produce: for acquiring persons, the
reports of the acquiring entity(s) and
any entity controlled by the acquiring
person whose dollar revenues
contribute to an NAICS overlap; and for
acquired persons, the reports of the
acquired entity(s). The Commission
proposed new language to make this
requirement clearer and the
Commission adopts this change with
modification.
The Commission received one
comment that supported the proposal.
Another commenter suggested two
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revisions to the proposed Instructions.
This commenter first suggested that for
natural person UPEs who filed as
acquired persons, the instructions
should only require the most recent
annual reports for the highest-level
entity the Natural Person controls that
includes the assets or entities being
sold. Second, as a general matter, the
commenter stated that persons filing
notification should not be required to
provide annual reports for entities that
have less than $10 million in total
assets, unless that entity’s revenues
contribute to a competitive overlap
between the parties.
In considering the two suggested
revisions in this comment, the
Commission agrees that it is sufficient
for the UPE of the acquired person to
provide financial reports for only the
highest-level entities that control the
acquired entity, as appropriate, in lieu
of providing personal financial
documents. The Commission also has
determined that this limitation is
appropriate for acquiring persons with
natural person UPEs as well. Therefore,
the Commission adopts this suggestion,
and natural persons, in lieu of providing
personal financial statements, will need
only provide financial reports for the
highest-level entities that control the
acquiring entity or acquired entity, as
appropriate. The financial information
for these highest-level entities should be
provided in this section and not the
UPE Details section, as discussed in
section VI.D.1.
The Commission declines to adopt the
suggestion that persons filing
notification should not be required to
provide annual reports for entities that
have less than $10 million in total
assets, unless that entity’s revenues
contribute to a NAICS overlap or any
overlap identified in the Overlap
Description. ‘‘The person filing
notification’’ is a defined term for the
purpose of the Instructions and is
limited to the UPE. Therefore, other
than for natural persons, the proposed
Instructions only require reports from
the UPE and, for the acquiring person,
acquiring entity(s) and entities that
contribute to a NAICS overlap, and for
the acquired person, the acquired
entity(s), which is consistent with the
current requirement. The Commission
finds these reports valuable, regardless
of whether those entities have $10
million in assets.
3. Additional Acquiring Person
Information
The Commission proposed requiring
additional information about the
acquiring and acquired person. These
proposals included a description of the
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ownership structure of the acquiring
person and acquiring entity as well as
an organizational chart if the acquiring
person UPE is a master limited
partnership or fund, information about
other types of interest holders that may
exert influence over the acquiring
person, and the identification of
officers, directors, and board observers
of the acquiring person and acquired
entity. As discussed below, the
Commission adopts some of the items as
proposed, adopts some of the proposals
as modified, and does not adopt others.
a. Ownership Structure
The Commission proposed that
acquiring persons provide a description
of the ownership structure of the
acquiring entity and, for fund or master
limited partnership UPEs, an
organizational chart sufficient to
identify and show the relationship of all
the entities that are affiliates or
associates. The Commission also
proposed that acquired persons describe
the ownership structure of the acquired
entity.
The Commission did not receive any
comments regarding the requirement to
provide a description of the acquiring
and acquired entities’ ownership
structure. The Commission believes that
such descriptions will provide
information and nuance about
ownership structures that may not be
clear from a simple list of minority
holders. Moreover, descriptive
responses allow filers to offer
clarification about the structure,
including whether the ownership
structure is subject to change between
filing and consummation of the
transaction. As a result, the Commission
adopts this item as proposed for the
acquiring person. However, this
information is less relevant from the
acquired entity. As part of its efforts to
reduce the cost related to filing where
possible, the Commission does not
adopt the proposal for the acquired
person.
As for the proposed requirement for
the acquiring person to provide
organizational charts, commenters noted
that organizational charts are not always
kept in the ordinary course of business,
and structures may be so complex that
they cannot be synthesized into a chart.
The Commission acknowledges that
there may be some cost associated with
creating organizational charts just for
the purpose of making an HSR Filing
and modifies this item to require charts
that show the relationship of entities
that are affiliates or associates if such
charts exist, even if they were created
for other purposes. The Commission
declines to adopt the suggestion to limit
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this requirement to transactions where
there is an identified NAICS or product
or service overlap. These charts are
necessary for staff to understand the
totality of the transaction, including the
role of key decision makers and their
responsibilities relative to the business
lines under review.
The complex structure of investment
entities is not adequately captured by
the current Form, and there is often no
other source for Agencies to learn of
these relationships. Information about
the acquiring entity’s ownership
structure is therefore necessary and
appropriate for the Agencies to evaluate
the transaction at issue. The
Commission has modified the proposal
to limit the reporting costs by requiring
only the acquiring person to provide a
description of its ownership structure
and to provide organizational charts
only if they exist.
b. Other Types of Interest Holders That
May Exert Influence
The Commission proposed an Other
Types of Interest Holders that May Exert
Influence section that would have
required the acquiring person to identify
certain individuals or entities, beyond
those with the minority interests
discussed above, that may have material
influence on the acquiring entity and
entities related to it. These included
certain individuals or entities that (i)
provide credit; (ii) hold non-voting
securities, options, or warrants; (iii) are
board members or board observers or
have nomination rights for board
members or board observers; or (iv) have
agreements to manage entities related to
the transaction. As discussed below,
while understanding these relationships
can be very important in assessing the
competitive effects of certain
transactions, the Commission has
elected not to adopt proposals (i), (ii),
and (iv) at this time. As discussed in
section VI.D.3.c., the Commission
adopts with modification the proposal
to require identification of officers and
directors, which incorporates some of
proposal (iii).
The Commission received several
comments in support of the proposed
change to disclose other types of interest
holders. One commenter stated that
disclosure of these interest holders
would be helpful to close a loophole
when the filing parties may have
influence or joint profit maximizing
incentives with rivals. Another
commenter noted that the information
would also enable the Agencies to
assess conflicts of interest or the
potential for inappropriate sharing of
competitively sensitive information.
Other comments highlighted the
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importance of identifying situations in
which a single creditor to competing
firms could have an incentive to
facilitate their coordination or collusion
as well as situations in which a private
lender may assert control or an investor
may have a dual role as private provider
of leveraged loans to finance buyouts.
The Commission also received several
comments opposed to these proposed
changes. Critics noted that some of this
information may not be available at the
time of filing or would be burdensome
to collect and report. Others questioned
the utility of the information. Another
commenter noted that it will not be
readily apparent whether identified
entities or individuals have overlaps,
supply, or other relationships relevant
to the target.
In regards to identifying certain
creditors, commenters stated that in the
vast majority of credit arrangements, the
creditor’s rights and financial incentives
are distinctly different than those of
equity holders and that many creditors
are unable to control investment
decisions. In addition, one commenter
observed that these disclosure
requirements could impede access to
credit, which would seriously impact
private equity as its deals frequently
rely on third-party financing. Several
commenters also expressed concern
about the burden of identifying and
describing complex credit arrangements,
particularly for infrequent filers.
Regarding the proposed requirement
related to non-voting securities, options,
or warrants, one commenter questioned
the necessity of the information to
examine the anticompetitive effects of
any proposed transaction, noting that, in
exempting acquisitions of non-voting
securities from filing, Congress must
have concluded, based on the legislative
history, that such acquisitions pose no
anticompetitive threat. No specific
comments were received with respect to
the proposed requirement to identify
individuals or entities that have
agreements to manage entities related to
the transaction.
The Commission disagrees with
assertions that information about
individuals or entities that can
influence the acquiring person through
mechanisms such as credit
relationships, non-voting interests, or
management contracts is not relevant to
the assessment of the competitive effects
of a reported transaction. Further, the
Commission notes that the HSR Act
specifically defines voting securities as
securities which at present or upon
conversion entitle the holder the right to
vote for the board of directors.339
339 15
U.S.C. 18a(b)(3)(A).
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Nevertheless, the Commission
acknowledges that the mechanisms of
influence or managerial control are
often bespoke and vary from entity to
entity. The proposed rule was intended
to sweep broadly but in a manner that
was straightforward and relatively
uncomplicated for filers to navigate. The
comments raised issues that warrant
further consideration. Given the other
proposals that the Commission does
adopt, particularly identification of
additional minority interest holders,
information about officers and directors
of entities related to the acquiring
entity, and the collection of additional
documents, the Commission has
decided not to adopt the proposals
related to credit relationships, nonvoting securities, and management
agreements at this time. If these
additional requirements still leave
significant gaps in information that
impede the Agencies’ ability to screen
for transactions that warrant additional
investigation, the Commission may
revisit these proposals in future
rulemakings.
c. Officers and Directors
The Commission proposed adding a
section that would have required the
identification of the officers, directors,
or board observers (or in the case of
unincorporated entities, individuals
exercising similar functions) of all
entities within the acquiring person and
acquired entity. Further, the proposal
required for those individuals, the
identity of other entities for which those
individuals currently serve, or within
the two years prior to filing had served,
as an officer, director, or board observer
(or in the case of unincorporated
entities, roles exercising similar
functions). After consideration of the
comments and in light of the varied
roles that religious or political nonprofit organizations can play, the
Commission has determined to narrow
this requirement to (1) eliminate
reporting related to board observers; (2)
limit reporting to certain entities within
the acquiring person (including officers
and directors of the acquired entity who
will continue to hold one of these
positions post-consummation, if the
acquiring person has filed for the
acquisition of control); (3) only require
identification of officers or directors that
serve in those roles at the target or
entities that are in the same industry as
the target; and (4) exempt any non-profit
entity organized for a religious or
political purpose, even if that entity
carries on substantial commerce, as
described below.
Several commenters wrote in support
of the proposal, recognizing the value to
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the Agencies’ understanding of the
ownership and management structure of
companies involved in the transaction.
One commenter stated that common
board members at intermediate levels of
ownership can influence competition
directly. Another commenter also noted
that private equity minority investment
interests can confer rights to appoint
board members or allow board observers
that create anticompetitive
opportunities to exert coordinated
market power. This comment further
explained that some entities place the
same person on several boards to
coordinate business strategies across
those entities even where they hold only
minority positions. The Commission
agrees that, due to the influential impact
that officers and directors can have on
competitive decision-making of entities
within the acquiring person, this
information is relevant to the Agencies’
initial antitrust assessment of the
acquiring person’s acquisition of
interests in the target. The same
commenter recommended that the
Commission require disclosure of board
membership information for any prior
acquisitions identified in the HSR
Filing. Because this requirement has
been designed to identify potential
competitive concerns between acquiring
person and target at the time of filing
and going forward, the Commission
declines to expand the final rule to
require this historical information.
However, the majority of the
comments related to this proposal
suggested significant modifications,
either by eliminating the requirement in
its entirety or acknowledging the
relevance of the information but urging
revisions to more narrowly tailor the
requirements to achieve the Agencies’
objectives. Critics across both of these
groups raised some common issues.
Some commenters questioned the
Commission’s authority to require
information on common officers and
directors in an HSR Filing to enforce
section 8 of the Clayton Act, pointing to
the absence of any reference to section
8 or interlocking directorates in the HSR
Act or in the Commission’s original
Statement of Basis and Purpose issued
with the final HSR rules in 1978. A law
firm commenter stated that legislative
statements support that Congress
disavowed any intention that premerger
notification be used to allow the
accumulation of information on
businesses for general enforcement
purposes, and the commenter asserted
that the HSR Act is concerned only with
potential violations of section 7.
Another commenter wrote that even if it
was appropriate to enforce section 8
using the HSR Act process, the
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proposed instructions went beyond the
text of section 8 by requiring
information about unincorporated
entities as well as historical
information.
Additionally, several commenters
questioned the Commission’s legal basis
for the requirement to report officers
and directors. For example, one
commenter stated that this requirement
had no bearing on the antitrust analysis
of transactions under section 7 and that
the NPRM does not provide evidence
that the Agencies have missed
anticompetitive interlocks due to lack of
information in HSR Forms. One
commenter stated that the NPRM does
not identify any cases where a court
stated that this information has
relevance for review under section 7 of
the Clayton Act.
The Commission disagrees that the
identity of officers and directors is
immaterial to an analysis of whether an
acquisition may violate section 7. As
described in sections II.B.1 and
VI.D.1.d.ii, and elsewhere, the
structures of entities have become more
complex, allowing for the levers of
influence and managerial control to be
distributed through a variety of
mechanisms beyond controlling equity
stakes, or even minority equity stakes.
The important role of board members in
particular has been recognized in court
cases and the focus of consent decrees
to resolve competitive issues.340
Further, contrary to assertions that the
HSR Act limits the Agencies to
evaluating whether a notified
transaction may violate ‘‘Section 7,’’ the
HSR Act explicitly directs the Agencies
to promulgate rules necessary and
appropriate to determine whether a
notified acquisition may, if
consummated, violate the ‘‘antitrust
laws.’’ 341 The HSR Act amended the
Clayton Act, and the term ‘‘antitrust
laws’’ is defined in the Clayton Act to
include the Sherman Act and the
Clayton Act, including section 8’s
prohibition on interlocking
directorates.342 As discussed in the
NPRM, when the Agencies do become
aware of existing or potential interlocks
340 See, e.g., In re Red Ventures Holdco, LP, No.
C–4627 (F.T.C. Nov. 2, 2017) (complaint)
(overlapping limited partnership holdings that
provided board seats violated section 7); In re TC
Group, L.L.C., No. C–4183 (F.T.C. Mar. 16, 2006)
(complaint) (acquisition involving minority stake
giving two private equity investors seats on the
boards of competitors); In re Time Warner Inc., No.
C–3709 (F.T.C. Sept. 12, 1996) (analysis to aid
public comment) (walling off two individuals and
one entity to prevent them from influencing officer,
directors, and employees of competitor and its dayto-day operations). See also cases cited in section
II.B.1.
341 See 15 U.S.C. 18a(d)(1).
342 See 15 U.S.C. 12.
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created by a reported transaction, they
typically seek to remediate them
consistent with the Agencies’
enforcement authority and before
consummation of the transaction.
Counter to suggestions that the proposal
sought to create a ‘‘dossier’’ on the filing
parties for general enforcement
purposes, this information is relevant to
enforcing the antitrust laws with respect
to the transaction under review.
Moreover, while a notified transaction
could create a violation of section 8 as
described in the NPRM, the same
competitive concerns that underpin
section 8 are also relevant to whether a
transaction would violate section 7. In
fact, as highlighted by some
commenters, section 8 does not
necessarily cover all officer and director
relationships that may give rise to
competition issues. But that does not
mean that these relationships are benign
or that they do not create the same
opportunities or incentives to
coordinate competitive decisionmaking, for example, if the CEO or
director of the acquiring entity serves as
a member of the board of a rival of the
target. In this scenario, section 8’s
thresholds for strict liability may not
capture this relationship, but it would
be relevant to analysis under section 7,
particularly in nascent markets where
one of the entities involved does not
meet the minimum sales trigger for
application of section 8.343 That risk
alone is relevant to the Agencies’
assessment of whether the transaction is
likely to substantially lessen
competition or tend to create a
monopoly in violation of section 7,
regardless of whether the interlock is of
the type that violates section 8. It is in
part because the Agencies cannot rely
on section 8 compliance to capture all
relationships that create interlocks
between entities with competitive
relationships that the Commission
proposed the new section.344
Currently, the Agencies cannot screen
for these relationships unless they are
mentioned in the transaction documents
submitted with the HSR Filing, and
often they are not. This information is
often not publicly available from any
source other than the filers. As
explained in the NPRM, information on
the identity of officers and directors will
help the Agencies identify potential
anticompetitive harms that may arise
from the proposed transaction.
Additionally, identification of these
individuals will assist the Agencies in
determining whether the filers have had
an opportunity to improperly share
confidential information or integrate
their businesses before the HSR Act’s
waiting period expires. For the Agencies
to conduct a thorough premerger
review, the business operations of the
two filing entities must maintain their
premerger competitive status quo until
the HSR waiting period expires. When
the Agencies are aware that there are
common officers and directors, they
may investigate whether there are ongoing communications or interactions
affecting the premerger competitive
status quo, for example, by interfering
with the other filer’s competitive
decision-making or placing executives
from one entity into management
positions at the other.345 The
Commission believes that information
about these relationships is relevant to
ensuring that the parties are complying
with the requirements of the HSR Act to
hold their operations separate and
continue to compete until the expiration
of the waiting period. This is true
regardless of the antitrust risk presented
by the transaction or the possibility that
these relationships are improper
interlocks; parties must wait until the
waiting period has expired to begin
integrating operations. Violations of the
343 Section 8 of the Clayton Act, 15 U.S.C. 19,
prohibits, with certain exceptions, one person from
serving as an officer or director of two competing
corporations if two thresholds are met. Competitor
corporations are covered by section 8 if each one
has capital, surplus, and undivided profits
aggregating more than $10,000,000 with the
exception that no corporation is covered if the
competitive sales of either corporation are less than
$1,000,000. In accordance with section 8(a)(5), the
Commission adjusts these thresholds annually
based on changes in gross national product. The
thresholds in effect for 2024 are $48,559,000 and
$4,855,900 respectively. 89 FR 3926 (Jan. 22, 2024).
344 Commenter International Bar Association
notes that beginning in September 2023, the
European Union requires merging parties to provide
information on any current interlocking
directorships, and that Brazil requires similar
information for both fast-track and regular
notifications. See Comment of Int’l Bar Ass’n, Doc.
No. FTC–2023–0040–0687 at 16–17. While this is
not a basis for the final rule, the Commission notes
that this information is relevant to competition
issues examined in other jurisdictions.
345 The Agencies’ concern about premature
coordination between merging firms, referred to as
‘‘gun jumping,’’ dates back many decades, and they
have brought enforcement actions for violations of
the HSR Act, as well as other antitrust laws that
prohibit competitors from acting jointly prior to
consummation of any acquisition. See also Note by
the United States to the OECD, Suspensory Effects
of Merger Notifications and Gun Jumping (Nov. 27,
2018) (DAF/COMP/WD(2018)94), https://
www.ftc.gov/system/files/attachments/ussubmissions-fjun-2010-present-other-internationalcompetition-fora/gun-jumping_united_states.pdf.
For a discussion of cases prior to 1995, see Mary
Lou Steptoe, Acting Dir., Bureau of Competition,
Fed. Trade Comm’n, Prepared Remarks Before
A.B.A. Sec. Antitrust L. Spring Meeting, 1994 WL
642386 (Apr. 7, 1994).
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stay provisions of the HSR Act are
subject to civil penalties.346
Two commenters objected to
requiring board observer information as
outside the scope of section 8 and not
related to the Agencies’ antitrust
assessment of the transaction. The
Commission is aware that board
observers do not have the same rights
and duties as officers or directors.
Comments submitted in response to the
Commission’s December 2020 Advance
Notice of Proposed Rulemaking stated
that individuals serving as board
observers typically receive the same
information as the board of directors but
there may be ways to exclude them from
reviewing privileged or competitively
sensitive information. Consequently, the
Commission views the risks of sharing
competitively sensitive information or
changing competitive decision making
via board observers to be lower than the
risk present with officers and directors.
As a result, the Commission agrees that
the need for information about board
observers is not as great at this time for
the purpose of the Agencies’ premerger
risk assessment, and the final rule does
not require filers to identify individuals
who have these rights.
In addition to comments related to the
authority 347 and purpose of the
proposed rule, several commenters
raised concerns about the burden of
collecting this information, especially
historical information about individuals
no longer serving in one of these roles,
noting that it has little relevance and
would be burdensome to collect. One
commenter suggested that the requested
information on officers and directors be
limited to any positions they currently
serve or expect to serve in the future.
Another comment agreed, noting that
current and expected future overlaps are
relevant for assessing interlocking
directorships and coordinated effects,
but that detailed and historic
information across all entities of the
company has minimal relevance to the
346 15 U.S.C. 18a(g)(1). See, e.g., United States v.
Legends Hospitality Parent Holdings, LLC, No.
1:24–cv–5927 (S.D.N.Y. filed Aug. 5, 2024) (seeking
civil penalties for obtaining beneficial ownership of
acquired person prior to expiration of HSR waiting
period); United States v. Duke Energy Corp., No.
17–cv–00116 (D.D.C. Apr. 7, 2017); United States v.
Input/Output, Inc., No. 1:99–cv–00912 (D.D.C. May
13, 1999).
347 Comment of A.B.A. Antitrust L. Sec., Doc. No.
FTC–2020–0086–0015 at 10 (board observers
generally receive the same information that a
director would except when there are conflict-ofinterest issues or when the information concerns
competitively sensitive topics); Comment of
Comput. & Commc’ns Indus. Ass’n, Doc. No. FTC–
2020–0086–0002 at 11 (board observers are usually
entitled to the same information as board directors
although companies have more leeway to exclude
observers from privileged or competitively sensitive
information).
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antitrust assessment of a particular
transaction. Citing practical concerns,
another comment noted that there
should be no requirement to collect
post-departure information from former
personnel.
Other commenters stated that the
burden of collecting any information
about officers and directors was not
justified by the benefit to the Agencies’
review of any reported transaction.
Some cited the higher burden of this
requirement for large companies. For
instance, one commenter noted that, in
some instances, the individuals that
would be identified would not be
relevant to the Agencies’ premerger
review because, for small subsidiaries
within a large entity’s corporate
structure, an officer might be someone
who merely drew up the paperwork
forming the entity whose role would not
be relevant to the Agencies’ antitrust
assessment. Another suggested limiting
this requirement to certain revenue
thresholds or entities with overlaps or
other relationships.
Additional commenters objected to
having to report information regarding
any individual’s board membership or
other association. They raised concern
that this requirement could sweep in
memberships with religious, political,
or other non-commercial groups. One
commenter stated that some of these
individuals do not want to share
information about their membership in
certain organizations. The Commission
has no intention of forcing disclosure in
the HSR Filing of any officers or
members of the governing board of noncommercial entities, or other non-profit
entities with a religious or political
purpose. The Form and Instructions that
are part of this final rule counsel filers
not to report any individual’s role as a
director, officer, or member of a nonprofit entity organized for a religious or
political purpose, even if that entity
carries on substantial commerce. Filers
who would otherwise be required to
report these affiliations are excused
from such reporting.
In response to the comments and to
better tailor this requirement to the
purpose of premerger review, the
Commission has further decided to limit
this requirement in several ways. First,
the Commission has eliminated the
requirement to identify officers or
directors of acquired entities; the
requirements of the final rule related to
reporting information for officers and
directors will apply to the acquiring
person only. Second, the Commission
limits the entities within the acquiring
person to entities that (1) have
responsibility for the development,
marketing, or sale of products or
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services that are reported overlaps
identified in the Overlap Description or
supply relationships identified in the
Supply Relationships Description or (2)
directly or indirectly control or are
controlled by the acquiring entity. If any
of these entities is a non-profit entity
organized for a religious or political
purpose, even if that entity carries on
substantial commerce, no reporting is
required for individuals serving as
officers or directors. Third, the
Commission has limited the lookback
periods contained in the proposed rule.
For entities in category (1), filers will
report officers and directors serving
within three months prior to the HSR
Filing. For category (2), there is no
requirement to lookback to any
individual who is no longer serving as
an officer or director at the time of the
HSR Filing but filers must consider
individuals who have not yet officially
taken the relevant positions. Fourth, the
acquiring person will only be required
to report the names of officers and
directors of these entities if those
individuals also serve as an officer or
director of an entity that derives
revenue in the same NAICS code (or is
in the same industry) as the target at the
time of filing and the name of such
other entities. This will result in a list
of only those individuals with the
relevant connection.
As noted elsewhere, the Commission
has carefully evaluated each of the
requirements of the proposed rule in
light of the comments and adjusted the
final rule to calibrate information
requirements to antitrust risk, burden,
and importance to the Agencies’ ability
to screen for transactions that may
violate the antitrust laws. On balance,
the Commission has determined that an
analysis of the board of the target
entities is less probative in analyzing
the potential effects of the transaction
than is an analysis of certain entities
within the acquiring person. Many
filings are for acquisitions of control,
and therefore the officers or directors of
the target often change upon
consummation. For those transactions
where control is not being acquired, the
acquired person may not be a party to
the transaction, making the burden of
collecting the information in the period
of time between when it receives the
required notice letter and when its filing
is required higher than that of the
acquiring person, which generally
controls the timing of its filing. As a
result, the Commission has not adopted
the proposal for the acquired person.
For the acquiring person, as discussed
elsewhere, due to the competitive
significance of entities with products or
services in development that have not
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yet generated any revenue, the
Commission declines to adopt a de
minimis revenue requirement for this
information but agrees that information
related to officers and directors is most
relevant to the antitrust assessment
when the companies have an existing
business relationship or are related to
the entity making the acquisition. Thus,
the Commission modifies this proposal
to look only at those entities within the
acquiring person that are responsible for
the development, marketing, or sale of
the products or services identified in the
Overlap Description or the Supply
Relationships Description, or directly or
indirectly control or are controlled by
the acquiring entity. This modification
addresses commenters’ concern about
potentially needing to report
information on many officers and
directors, especially across larger or
more diffuse organizations with many
subsidiaries irrespective of antitrust
risk. So modified, this requirement
would focus the Agencies’ inquiry on
those entities that would be most likely
to have a competitively important
relationship with the target postconsummation.
The Commission believes that
limiting this information requirement to
those entities for which the acquiring
person and the target have reported
overlaps or supply relationships in the
same sector as well as the entities that
are related to the acquiring entity
provides information the Agencies need
for premerger screening. As modified,
this requirement properly targets the
information that reveals any antitrust
risk that common officers and directors
could act to undermine competition
during the waiting period or postconsummation. The Commission
acknowledges that there may be other
such relationships involving the parties
to the transaction that may be relevant
to the competition assessment under
section 7 or that present section 8
concerns but agrees that the Agencies
can continue to collect this information
only for those transactions that are
flagged for closer review. While the final
rule may impose a higher cost to large
companies with many competitively
relevant business lines, the Commission
believes that the benefit to the Agencies
is necessary and proportionate: it is
more difficult for the Agencies to
discover on their own all the
individuals who serve in these key roles
at different levels of larger companies
when those companies have many
business lines related to the target.
The Commission has also considered
comments related to the proposed
lookback period, and, in light of these
concerns and to minimize the cost of
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collecting historical information about
officers and directors, the Commission
has modified this requirement to
shorten the lookback period to three
months before the filing date. The
Commission believes providing
information about individuals who
served in one of these positions
recently, but not at the time of the filing,
is sufficient to identify those
individuals who would have been in a
position to share competitively sensitive
information during a due diligence or
negotiation phase for the transaction. It
will also serve as a disincentive for
these individuals to step down
temporarily to avoid disclosure on the
HSR Form.
Once the relevant entities and
individuals have been identified (and
excepting any non-profit entities
organized for religious or political
purposes), the acquiring person must
determine whether those individuals
also serve as an officer or director (or in
the case of unincorporated entities, roles
that serve similar functions) of another
entity that derives revenue in the same
NAICS codes as the target. If NAICS
codes are unavailable, reporting should
be based upon the industry overlaps, to
the knowledge and belief of the
acquiring person or the officer or
director. Only if an individual serves in
such capacity does the acquiring person
need to provide the name of that
individual, along with the name of the
entity within the acquiring person they
serve as an officer or director, their title
at that entity, and the name of the other
entity for which they serve as an officer
or director (and excepting any nonprofit entity organized for religious or
political purposes). The Commission
believes that these limitations will allow
the Agencies to have information about
key affiliations with other businesses in
competitive overlap relationships while
limiting the burden on filing parties and
their officers and directors.
Finally, commenters representing the
pharmaceutical industry voiced
concerns about the applicability and
effects of the proposed instruction on
reportable transactions in the
pharmaceutical and biomedical sectors.
For example, one pointed out that
biotech firms generally rely on a small
cadre of qualified directors and officers
who have the appropriate business
background and stated that disclosure of
these positions in an HSR Filing would
discourage highly sought-after experts
and specialists from accepting biotech
leadership roles. Another explained that
many pharmaceutical transactions that
trigger HSR Filings involve only the
acquisition of exclusive licenses, where
the parties remain as independent firms
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post-transaction. This commenter also
objected to reporting this information
for acquisitions of companies with no
sales.
The Commission is aware, from its
own experience and from research done
by others,348 that there are individuals
who serve on the boards of multiple life
science companies. The final rule does
not impose a disproportionate
obligation for companies operating in
this sector; these individuals are
obligated to comply with the antitrust
laws regarding interlocks as much as
individuals serving in other sectors. The
Commission does not agree that there is
a unique risk that disclosure of recent,
current, or future leadership positions
will limit the number of talented and
qualified individuals who are available
to serve as officers or directors in the
biopharma or life sciences sector
beyond whatever limits the antitrust
laws impose. Many sectors prefer
knowledgeable professionals with
distinct credentials and experience to
serve as board members. Moreover, the
cost of reporting these relationships is
directly related to the number of
reportable transactions that occur each
year in this sector and the number of
existing or potential relationships. The
Commission does not believe that HSR
reporting requirements will improperly
deter qualified individuals from serving
on the boards of these or any other
companies.
The Commission believes that the
modifications made to the final rule will
ensure that the Agencies receive the
information about recent, current, and
future officers and directors that may
create opportunities for anticompetitive
harm under any antitrust law, including
section 7 of the Clayton Act, section 1
of the Sherman Act, or the HSR Act
itself. The Commission disagrees that
the instruction will newly create a
chilling effect on lawful and
procompetitive activity or board
membership. When individuals agree to
serve as board members, they take on
fiduciary responsibilities that statutory
and common law require. Separate from
any HSR requirements, these fiduciary
duties require directors to, inter alia, act
in the best interest of the organization
and to ensure that the organization
follows applicable laws.349 Courts have
found that directors may breach their
duty of loyalty if they do not make a
good faith effort to provide adequate
348 See
Lemley, supra note 316.
S. Piccini, ‘‘Director Liability, the Duty
of Oversight, and the Need to Investigate,’’ Bus. L.
Today 1 (Feb./Mar. 2011).
349 Jeremy
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oversight and monitoring.350 A merger
or acquisition that requires reporting
under the HSR Act is not an
insignificant occurrence. When an
organization to which an individual
owes a fiduciary duty is involved in a
reportable transaction, it is reasonable to
expect those individuals to exercise
their duties of care and loyalty by
participating in compliance activities.
Moreover, individuals who serve on
boards must comply with the
prohibitions in the antitrust laws that
relate to interlocks and should be aware
of how their role in a senior leadership
position is relevant to the Agencies’
assessment of proposed transactions.
These risks exist without regard to the
disclosure of their board position in an
HSR Filing. Given the responsibilities
that board members already carry, the
Commission believes that the reporting
requirement is reasonable and
appropriate, particularly when balanced
against the increased transparency and
value it provides to the Agencies’
premerger antitrust analysis.
In sum, the Commission has
determined that the reporting
requirements for UPEs contained in the
final rule are necessary and appropriate
to enable the Agencies to identify
transactions that may violate the
antitrust laws because the acquiring
person and the target have existing
business relationships, including
through shared individuals or entities,
that must be considered as part of that
assessment, and that these
requirements, as modified, have been
tailored to reduce the cost of reporting
as much as practicable.
E. Transaction Information
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This section of the Form and
Instructions reorganizes, clarifies, and
expands the information required in the
initial portion of the current Form as
well as in Items 2, 3, and 5. The
Commission proposed new sections to
facilitate the reorganization,
clarification, and expansion of these
items and received comments on certain
portions of the Transaction Information
section. As discussed below, the
Commission adopts some of these
proposals without change and some
with modifications.
350 See Marchand v. Barnhill, 212 A.3d 805, 824
(Del. 2019) (reversing dismissal of stockholder’s
claims that directors breached their duty of loyalty
by failing to establish a reasonable system of
controls and reporting regarding food safety in
connection with listeria outbreak); In re Boeing Co.
Derivative Litig., No. CV 2019–0907–MTZ, 2021 WL
4059934, at *33 (Del. Ch. Sept. 7, 2021) (finding
that plaintiffs stated a claim that board breached its
duty of oversight by failing to establish a reporting
system for airplane safety).
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1. Parties
This section requires the information
currently mandated by Item 3(a). The
Commission did not propose and does
not adopt any material changes to the
information required by this item.
2. Transaction Details
This section requires the information
currently mandated by Items 2(b), 2(c)
and 2(d). The Commission did not
propose and does not adopt any
material changes to the information
required by these items. The
Commission notes that the requirement
to indicate the notification threshold in
Item 2(c) is not applicable to the
acquired person and is therefore
excluded from the Form and
Instructions for the acquired person.
The Commission did not propose and
does not adopt any material changes to
the information required by this item.
3. Transaction Description
This section requires the information
currently mandated by Items 2(a) and
Item 3(a). The Commission did not
propose and does not adopt any
material changes to information
required by these items. The
Commission also proposed requiring the
acquiring person to describe the
business operations of all the entities
within the acquiring person, which it
adopts with modification, as discussed
below.
a. Business of the Acquiring Person
The Commission proposed requiring
the acquiring person to briefly describe
the business operations of all entities
within the acquiring person to provide
a clear overview of all aspects of the
acquiring person’s pre-transaction
business. The Commission adopts the
proposal with modification.
The Commission received two
comments expressing general support
for the proposal, with one noting that
the change is essential to ensuring that
the Agencies can meet the statutory
deadline. One law firm commenter was
critical of the burden that the proposal
would impose, stating that companies
may have several dozen subsidiaries
and written descriptions as to each of
the respective business operations is not
information readily maintained in the
ordinary course of business and could
be incredibly burdensome to collate.
The Commission adopts a clarified
version of this requirement. The
proposal was intended to require a short
description of the operating businesses
within the acquiring person, not an
entity-by-entity description. The
Commission understands that a single
operating business may comprise
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multiple entities, such as shell entities
or separate entities for each location of
the business. Therefore, the Commission
amends the requirement to remove ‘‘of
all entities within’’ to make clear that
the acquiring person does not need to
describe its operations on an entity-byentity basis.
Understanding the business of the
acquiring person is necessary to
understanding the potential competitive
implications of the transaction.
Investment groups often control
multiple portfolio companies across
many lines of business. Similarly, some
corporations also have multiple and
varied operations. These other
operations may be related to the
operations of the target, even if they do
not directly overlap with it. Therefore,
particularly for acquiring persons with
complex structures or many businesses,
knowing just the business of the
acquiring entity is not sufficient for the
Agencies to evaluate the impact of the
acquiring person merging with or
acquiring an interest in the target. The
scope of the acquiring person’s holdings
is often not publicly available,
necessitating the Agencies receiving the
information from the acquiring person
itself.
b. Business of the Target
This section requires the information
currently required by Item 3(a). The
Commission did not propose and does
not adopt any material changes to the
information required by this item.
c. Non-Reportable UPEs
This section requires the listing of
non-reportable UPEs, which is currently
required by Item 2(a). The Commission
did not propose and does not adopt any
material changes to the information
required by this item.
d. Transaction Description
This section requires the information
currently mandated by Item 3(a). The
Commission did not propose and does
not adopt any material changes to the
information required by this item.
e. Related Transactions
This section requires filing persons to
identify related transactions, and the
Commission proposed a list of common
circumstances in which multiple filings
are required to guide filing parties in
their responses. Although Item 3(a) of
the current Form asks parties to indicate
whether there are additional filings
related to the transaction, filers
sometimes overlook this requirement.
The Commission received three
comments in support of the proposed
changes, with one of these commenters
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noting that they appear to be reasonably
designed to provide potentially helpful
clarification. The Commission adopts
this requirement as proposed.
f. Transactions Subject to International
Antitrust Notification
The Commission proposed creating a
Transactions Subject to International
Antitrust Notification section that
would require parties to identify the
jurisdictions where each filing person
has already filed or is preparing
notifications to be filed as well as a list
of the jurisdictions where it has a good
faith belief it will file. The Commission
adopts this requirement as proposed,
but only for the acquiring person.
Although the Form currently asks
filing parties to voluntarily identify
other jurisdictions in which filings will
be made, most filers do not disclose the
information even though more and more
transactions are subject to review in
multiple jurisdictions around the world.
As noted in the NPRM, in order to fully
benefit from inter-agency consultations,
the Agencies need to know as early as
possible which foreign jurisdictions
may also be evaluating a proposed
transaction.
The Commission received two
comments in opposition to this
proposal. One commenter expressed
concern about the effects of inter-agency
consultations, and another
recommended maintaining the status
quo where filers voluntarily identify
other jurisdictions where the transaction
will trigger premerger notification under
the laws of that jurisdiction. Both stated
that the proposal would only impact
international companies, which might
be forced to speculate about potential
foreign filings. The Commission
acknowledges that the proposed
requirement will have a greater impact
on companies with operations outside
the United States. But the Commission
disagrees that it is asking parties to
speculate about potential foreign filings;
however, it has determined that it is
sufficient for the information to be
provided only by the acquiring person.
As stated in the NPRM, the text of the
proposed rule provides flexibility for
parties who, at the time of the HSR
Filing, may not have yet identified all
the other jurisdictions where they will
file. Indeed, the final rule specifies that
filing parties can respond based on their
good faith belief, which provides filing
parties with the ability to respond based
on their knowledge at the time of filing.
Otherwise, the requirement asks for
facts that are already known: the
jurisdictions where the party has
already filed and the ones for which it
is preparing a filing. The Form also
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affords parties the option to voluntarily
make certain waivers related to other
jurisdictions, as discussed in section
VI.K.3. Accordingly, knowing which
other jurisdictions are reviewing the
transaction can expedite the waiver
process if the parties intend to provide
a waiver after filing.
Given the importance of knowing
which foreign jurisdictions may also be
evaluating a proposed transaction and
the benefits to the Agencies and the
parties of early case-specific cooperation
facilitated by waivers, the Commission
adopts this necessary change as
proposed for the acquiring person.
However, because filing parties often
coordinate their notification to other
jurisdictions and in order to further
reduce the burden on acquired persons,
the Commission does not adopt the
change for acquired persons because it
is sufficient to obtain this information
from only one filing party.
4. Additional Transaction Information
a. Transaction Rationale
The Commission proposed that the
acquiring and acquired person be
required to describe all strategic
rationales for the transaction. These
rationales would include those related
to, for example, competition for current
or known planned products or services
that would or could compete with a
current or known planned product or
service of the other reporting person,
expansion into new markets, hiring the
sellers’ employees (so-called acquihires), obtaining certain intellectual
property, or integrating certain assets
into new or existing products, services,
or offerings. The Commission also
proposed that the filing person identify
which documents submitted with the
HSR Filing support the rationale(s)
described in the narrative. The
Commission adopts the requirement as
proposed but does not require the
information from select 801.30
transactions.
The Commission received several
comments supporting disclosure of
transaction rationales. Individual
commenters described the changes as
common-sense requirements and noted
the need to ensure each party in the
transaction explains the reasoning from
their perspective. One commenter stated
that mergers may be beneficial to an
acquiring company for anticompetitive
reasons that might not be immediately
apparent from a surface-level analysis of
market shares and concentration in a
particular market, and that requiring a
firm to submit its justification for the
strategic wisdom of a particular
transaction would help diminish the
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role of guesswork in the Agencies’
review of a proposed merger.
Commenters opposing disclosure of
transaction rationales focused on the
evolving nature of the information,
which may very well differ across the
various personalities and business roles
that span an organization and which in
some instances may be only discovered
in the course of post-signing diligence.
The Commission understands that there
may be many goals for the transactions
and that different perspectives within
the filing person may be difficult to
resolve. But that is precisely the
problem that this requirement is
intended to resolve. The Agencies are
not in a position to understand which
rationales are predominant nor choose
among different rationales presented in
the other materials submitted with the
notification, such as transaction-related
documents, without additional context.
That is why the Commission believes
that requiring filers to point to
documents or other materials in the
HSR Filing that support the stated
rationale would help resolve any
uncertainty about which rationale (or
rationales) may predominate. The
Commission also understands that
rationales may change throughout the
diligence process. The parties are not
required to wait to file their notification
until they have settled on a single or
predominant rationale.
Others described the request as unfair
because in the past the merging parties’
strategic rationale for the transaction has
only been revealed after the Agencies
have sued to block a deal. The
Commission disagrees that the parties
lack rationales for the transaction until
they are before a court defending a
lawsuit, or that it is unfair to require
them to state each strategic rationale for
the transaction known at the time of
making an HSR Filing. Indeed, each filer
may have different reasons for entering
into the transaction. Whatever the
reasons for agreeing to the transaction,
that is the information the Agencies
seek. Knowing why each party sees the
transaction as beneficial is highly
relevant to the initial antitrust
assessment and may cause the Agencies
to determine, relying on the
documentary support for that rationale,
that the transaction does or does not
warrant additional investigation.
In addition, commenters noted that a
description of transaction rationales
would be burdensome to generate and
duplicative of other materials submitted
in the HSR Filing, particularly
documents responsive to current Item 4.
The Commission acknowledges that
there is some cost to filers to provide a
description of strategic rationales but
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disagrees that it is duplicative. There is
no current requirement that the parties
describe the rationale for the
transaction, and for many transactions,
there are no documents or other
information submitted with the HSR
Filing that reference a rationale. For
these filings, the Agencies do not know
what benefits either party hopes to
achieve through the transaction.
Alternatively, where there are many
different rationales discussed in
submitted materials, the Agencies lack
the context to know which ones
predominate or reflect the views of the
organization. Requiring each filer to
describe each strategic rationale for the
transaction provides the Agencies with
a starting place to understand the
motivation behind the transaction
without having to make judgments
about which ones are still under
consideration. Given the Agencies’
experience with asking this question
during the initial waiting period or
reviewing other white papers that the
parties voluntarily provide, the
Commission believes that the cost of
supplying a transaction rationale will be
minimal and, in any event, is necessary
for the Agencies to determine whether
the transaction may violate the antitrust
laws. Filers are invited (but not
required) to copy and paste text or
provide a summary from documents
produced with the HSR Filing and
reference the specific portions of those
documents where the discussion of that
rationale exists. However, if documents
provide inconsistent rationales, filers
should address these inconsistencies.
The Commission believes that relying
on statements contained in documents
submitted with the HSR Filing will
reduce the burden of preparing the
filer’s description of rationales for the
transaction.
One commenter requested
clarification as to whether the proposal
contemplates a single consistent
response submitted by all parties
notifying the same transaction (in the
context of a simple acquisition, buyer
and seller) or whether it contemplates
that each notifying party submits a
separate narrative, noting that the
motivations of buyers and sellers may
diverge. The Instructions clarify that
each filing party is required to submit a
description of its strategic rationales
because it is important to have such a
description from both sides of a given
transaction.
Another commenter suggested that to
reduce burden the Commission should
only require the acquiring person to
submit its transaction rationale,
reasoning that the acquiring person’s
strategy is the most competitively
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relevant and that the seller’s rationale
for a transaction is often no more than
obtaining cash to distribute to investors
or to use for unrelated business
purposes. The same commenter
suggested that the instruction be limited
to requiring a brief description of the
primary strategic rationale for the
transaction. For the reasons outlined
above, the Commission declines to
adopt these suggestions but notes that a
brief description of the transaction
rationale is sufficient so long as it is
accurate and does not conflict without
explanation with stated rationales in
documents submitted with the HSR
Filing.
b. Transaction Diagram
The Commission proposed a new
requirement that filing persons provide
a diagram of the deal structure along
with a corresponding chart that would
explain the relevant entities and
individuals involved in the transaction.
The Commission adopts this proposal
with modification.
The Commission received many
comments in support of this proposal,
all of which noted the value of such
materials to the Agencies as they work
quickly to assess the transaction. One
commenter stated that without a
diagram of all the entities and their
relationships it can be hard to
understand what’s going on. Another
highlighted that the proposed
requirement would leverage
documentation that often already exists.
Noting that transaction diagrams can
sometimes be incomplete or inaccurate,
a law firm commenter suggested that
this proposed instruction be modified to
require the submission of the most
recent diagram of the transaction, but
only to the extent that such a diagram
already exists and is not materially
inaccurate. Finally, two commenters
expressed general support for the
proposal.
Three commenters opposed the
proposal on the grounds that it would
unnecessarily increase the burden on
filing parties. One commenter stated
that these materials are often not
maintained in the ordinary course of
business or created in the course of a
deal negotiation. Another noted that
deal structure may not be ‘‘set in stone’’
even after signing. In addition, another
commenter pointed out that, besides
burdening the parties, the proposal
would increase the burden on Agency
staff reviewing the information, adding
that the additional information is not
likely to be any more informative to the
Agencies than the information already
required under the current HSR Form.
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Two commenters proposed
modifications in light of the fact that
many times these charts are drafted by
outside tax advisors to show the pretransaction reorganization needed to
achieve the desired tax structure and
benefits and that the charts sometimes
include detailed tax advice that is
protected by the attorney-client
privilege or otherwise commercially
sensitive. A law firm commenter
suggested modifying the instructions to
permit parties to redact, omit, or
simplify any diagram, to exclude
information that relates solely to tax
considerations. Another commenter
noted that where the details of the pretransaction reorganization are irrelevant
to the antitrust assessment of the
transaction, such as where all or a
majority of the outstanding equity of a
target is being acquired, less detailed
diagrams should provide the agencies
with the desired information.
The Commission acknowledges the
cost of having to create both a diagram
along with a corresponding chart
explaining the relevant entities and
individuals involved in the transaction.
Although such information would be
materially useful to the Agencies, the
Commission adjusts the proposal to
require only the acquiring person in
non-select 801.30 transactions to
provide a diagram of the deal structure
and only if one exists. That is, filers are
not required to create a diagram or a
chart solely for the purposes of
submitting an HSR Filing. The
Commission believes that such a
diagram would be useful even if
prepared for other purposes. With
regard to privileged materials, HSR
Rules already accommodate
withholding certain material based on a
claim of attorney-client privilege; if
such a claim is made with respect to
transaction diagrams, the filer can
follow those requirements.
In sum, the Commission has
determined that the transaction
information requirements contained in
the final rule are necessary and
appropriate to enable the Agencies to
fully understand the scope of the
transaction being considered and to
identify those that may violate the
antitrust laws, and that the
requirements, as modified, have been
tailored to reduce the cost of reporting
as much as practicable.
F. Joint Ventures
This section requires information
currently mandated by Item 5(b) of the
Form. As discussed in section VI.J.1.f,
the Commission adopts the proposal to
eliminate the use of 10-digit NAPCS
codes, including in this section. The
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Commission did not propose and does
not adopt any other material changes to
the information required by this item.
The Commission notes that no acquired
person filings are required for joint
ventures, so this section is not included
in the Form or Instructions for acquired
persons.
G. Business Documents
The Commission proposed a Business
Documents section that would require
the submission of documents currently
required by Items 4(c) and 4(d) of the
Form as well as additional categories of
documents. Specifically, the
Commission proposed expanding the
current requirement found in Item 4(c)
to the ‘‘supervisory deal team lead(s);’’
altering the language of current Item
4(d)(ii); requiring the production of
certain ordinary course documents;
requiring drafts of Transaction Related
Documents; and requiring an
organizational chart of authors and
recipients. As discussed below, the
Commission adopts some of these
requirements with modification and
does not adopt others.
As noted in the proposed rule, the
Agencies compared documents they
have received over the years in response
to Second Requests with those
submitted in the HSR Filing and
assessed whether having certain types of
documents at the beginning of the
waiting period would have changed the
Agencies’ determination of whether and
how to move into an in-depth
investigation of the transaction. As a
result of this review, the Commission
identified documents that are not
required by the current Form but would
have been highly probative to the initial
antitrust assessment of the transaction
during the initial waiting period.
1. Transaction-Related Documents
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a. Competition Documents
In the proposed rule, the Commission
proposed expanding the documents
currently required by Item 4(c) of the
Form, which are prepared by or for
officers and directors for the purpose of
evaluating or analyzing the transaction.
Since the beginning of the premerger
notification program, these transactionrelated documents have been a key
screening tool for the Agencies to
determine whether the transaction may
violate the antitrust laws because they
discuss the acquisition with respect to
market shares, competition,
competitors, markets, potential for sales
growth or expansion into product or
geographic markets. The Commission
proposed requiring the filing person to
submit such documents prepared by or
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for supervisors of the team of
individuals working to complete the
transaction, which the Commission
referred to as the supervisory deal team
lead(s).
In response to comments that the
proposal was not clear about whom the
Commission intends for filers to search
for responsive documents and
information in addition to officers and
directors, the Commission has
introduced a definition of supervisory
deal team lead and limited the term to
just one person. As discussed in section
VI.A.1.g., the Commission believes these
changes will provide clarity for filing
parties. The Commission now turns to
comments that were not directed at the
definition of supervisory deal team lead
but concerning the requirement to
submit documents prepared by or for
someone other than officers and
directors.
The Commission received one
comment from State antitrust enforcers
supporting the proposal, but other
commenters expressed concerns about
the costs associated with identifying,
collecting, and producing documents
from the supervisory deal team lead.
Certain commenters stated that
expanding 4(c) to include documents to
and from supervisory deal team lead(s)
would create a significant burden to
filers that is not justified by any benefit
to the Agencies. One commenter said
that adding documents from these
individuals would not likely generate
material that would allow staff to better
assess the need for Second Requests.
The Commission disagrees that
adding documents prepared by or for
the senior leader of the deal team would
not likely generate additional key
documents to help staff better assess
whether to issue Second Requests. Since
the beginning of the premerger
notification program, 4(c) documents
have been a principal source of
information that allows the Agencies to
identify those transactions that may
violate the antitrust laws and that
require a more in-depth review through
the issuance of Second Requests. Based
on documents submitted in response to
Second Requests, it is the Agencies’
experience that someone other than an
officer or director is often in charge of
the deal team and this person typically
has additional documents that would be
responsive to 4(c), but the documents
have not been transmitted to an officer
or director at the time of the HSR Filing.
This is even more likely to be true when
the HSR Filing occurs before due
diligence is complete or a final
agreement is executed. Requiring the
submission of transaction-related
documents prepared by or for the
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supervisory deal team lead would result
in the Agencies receiving additional
probative documents that speak directly
to whether the transaction may or may
not violate the antitrust laws even if the
document has not been shared with an
officer or director prior to filing the
notification. Based on the Agencies’
experience, the analysis of the
transaction’s competitive implications
contained in these documents is
extremely probative.
Certain commenters explained that
the addition of the supervisory deal
team lead to the existing officer and
director custodians, combined with the
other new document requirements,
would require filers to submit a
significantly larger volume of
documents. One commenter estimated
that adding documents from the
supervisory deal team lead(s) as well as
draft documents as proposed in the
NPRM may increase the number of
documents submitted with each filing
by tenfold or greater. Another comment
pointed out that adding supervisory
deal team lead(s) to Item 4(c) could also
add a burden related to internal
document preservation and retention.
The comments did not provide specific
estimates of how many additional
documents or pages of materials adding
a supervisory deal team lead may
generate, however.
As discussed throughout this final
rule, the Commission has taken steps to
lessen the costs identified by
commenters. After careful consideration
of the comments, the Commission has
modified this proposal to reduce the
cost associated with requiring 4(c)
documents by limiting new custodians
to be searched to a single individual, the
supervisory deal team lead. This modest
expansion of custodians by one
individual is necessary because
documents responsive to Item 4(c) are
some of the most relevant material that
staff receives, and based on the
Agencies’ experience there are also
probative documents containing 4(c)
content generated by and for the
supervisory deal team lead that, if
submitted with the HSR Filing, would
allow staff to better gauge the
competitive implications of the
transaction—as understood by the filing
person—and conduct a more informed,
efficient screening analysis.
Another concern articulated by a
small number of commenters was that
documents created by or for the
supervisory deal team lead may convey
information that does not reflect the
actual assessment of the proposed
merger at senior levels. As one
commenter explained, the Agencies may
draw conclusions that do not actually
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align with the documents provided to or
sent by the personnel that can make
final decisions for an entity, such as
officers and directors. The Commission
acknowledges this concern but believes
that the exclusion of these documents
from HSR Filings is often technical and
simply a matter of timing. HSR Rules do
not require filers to complete due
diligence or sign an executed agreement
before filing a notification. Even the
modification discussed in section V.D.
which requires filing parties to have
agreed to key terms of the transaction
still allows parties to file prior to the
completion of all diligence and
negotiation. In the Agencies’ experience,
staff often receives these 4(c)-type
documents in response to a Second
Request and finds that the reason they
were not submitted with the filing was
that they had not been shared with any
officer or director at the time of the HSR
Filing but were eventually shared with
them. Even if such documents were
never shared with an officer or director,
any document that is responsive to 4(c)
and was only shared with the
supervisory deal team lead—the person
who has primary responsibility for
supervising the strategic assessment of
the deal—is still highly probative of
whether the transaction is likely to
violate the antitrust laws.
The Commission believes that by
limiting this requirement to the
individual who has primary
responsibility for supervising the
strategic assessment of the deal, and
who would not otherwise qualify as a
director or officer, it has been tailored
to provide a benefit to the Agencies with
minimal cost to filers. In the situation
where the only individuals supervising
the strategic assessment of the deal are
already either an officer or director, this
requirement will not require searching
for responsive documents from anyone
new. As discussed above, to the extent
that the supervisory deal team lead has
responsive documents, it is just often a
matter of timing that the document is
not submitted with the HSR Filing.
Rather than requiring parties to
complete their due diligence and
provide all responsive transaction
assessments provided to key decision
makers prior to filing, the Commission
has determined that also requiring
documents provided to the supervisory
deal team lead is the most direct way to
obtain these highly relevant assessments
of the transaction with the HSR Filing.
The cost associated with searching one
additional individual for these
documents is necessary and appropriate
given their importance to the Agencies
in quickly identifying those transactions
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that warrant a closer look. Thus, the
Commission adopts this proposal as
modified in the final rule.
b. Drafts
The Commission proposed requiring
drafts of responsive transaction-related
documents if that draft document was
provided to an officer, director, or
supervisory deal team lead(s). The
Commission does not adopt the
proposal at this time.
As explained in the NPRM, filers are
currently required to submit draft
versions of documents responsive to
Items 4(c) or 4(d) only if there is no final
version or if the draft was sent to the
board of directors. Under this guidance,
if a not-final version of a document is
sent to the board of directors, it ceases
to be a ‘‘draft’’ and must be submitted,
even if a final version is also submitted.
Based on the Agencies’ experience with
receiving other drafts of documents
during a Second Request investigation,
in some cases prior draft versions have
been edited to remove candid
assessments of factors relevant to
competition prior to circulation to
officers or directors.
The Commission received numerous
comments on this proposal, raising four
principal issues: (1) the burden of
producing draft transaction-related
documents is not justified by the benefit
to the Agencies; (2) such drafts do not
reflect sufficient deliberation to be
probative of antitrust risk; (3) the term
‘‘drafts’’ is not defined in the NPRM and
has no common meaning; and (4)
requiring the production of drafts would
chill internal discussions related to the
strategic assessment of the transaction.
These concerns are discussed in turn.
First, some commenters emphasized
the burden of producing drafts, noting
that filing parties will need assistance
from counsel and may have to use ediscovery or forensic collection tools to
capture all drafts. Requiring drafts, one
commenter stated, would significantly
increase the volume of documents
produced; another commenter noted
that it is not uncommon for the authors
of these documents to prepare many
discrete drafts as part of the drafting
process. Some commenters underscored
that Agency staff would also face the
challenge of reviewing these additional
documents. Another commenter pointed
out that the proposal would
disproportionately affect smaller
businesses, which may not have staff
lawyers or the ability to incur hundreds
of thousands of dollars in legal fees.
In addition, some commenters
expressed doubt regarding the probative
value of drafts. Drafts may be
duplicative, they noted, and often
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include boilerplate language that may
not be accurate as well as incomplete
thoughts, dummy slides, and
placeholders. One commenter observed
that the Agencies do not typically
request drafts during the initial waiting
period, and that it is exceedingly rare
for Agency staff to use a draft document
as a deposition exhibit or in any
subsequent litigation.
Commenters also sought guidance
from the Agencies regarding what
constitutes a ‘‘draft’’ transaction-related
document. In the context of a shared
document platform, where several
contributors may be working on a
document simultaneously, one
commenter asked if each saved iteration
would be considered a draft that must
be produced. Another commenter asked
whether a document is considered to be
‘‘submitted’’ to an officer, director, or
supervisory deal team lead if that
individual simply has access to the
document via a collaborative drafting
tool. As a result of such vagueness,
commenters noted, merging parties will
face the enormous practical challenge of
preserving all versions of documents,
even at highly preliminary, incomplete
stages. Moreover, such vagueness will
lead to arbitrary and capricious
enforcement of the requirement to
submit drafts if Agency staff later
discovers a draft document that they
believe should have been submitted
with the HSR Filing, according to one
commenter.
Finally, some commenters raised
concerns about the implications for
internal deliberation during the drafting
process. One commenter stated that the
proposed requirement would chill open
discussion ‘‘for fear of creating
documents that do not reflect the final
thoughts of the company.’’ Another
commenter warned that it might cause
some risk-averse businesses to remove
officers, directors, and supervisory deal
team leads from the document-drafting
process.
Although several commenters
recommended eliminating the proposed
requirement entirely, the Commission
did receive a few suggestions for ways
to narrow the proposal. One suggestion
was to limit drafts to specific types of
documents identified by the Agencies as
likely to contain probative information.
Another commenter suggested requiring
filers to submit the first draft, the last
draft, and the final document.
Alternatively, one commenter proposed
that only the initial draft version
submitted to an officer, director, or
supervisory deal team lead be produced.
None of the commenters supported the
alternative proposed in the NPRM,
which would require filing parties to
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withhold drafts and submit them within
48 hours only if requested to do so by
the Agencies.
Having carefully considered the
comments, the Commission has decided
not to adopt the proposed change to
require draft documents at this time.
However, in light of concerns that the
Agencies are receiving documents
edited to remove candid assessments of
the transaction and market competition,
the Commission modifies its informal
guidance regarding drafts that were
shared with the board of directors or
similar body. Currently, a document,
even in draft form, that is shared with
the board of directors (or similar) is
responsive and no longer considered a
‘‘draft.’’ This distinction is based on the
belief that if a document is shared with
the board of directors, it is sufficiently
reliable to be submitted with the HSR
Filing. However, this guidance has
sometimes been limited to require that
the document be shared with the entire
board. The Commission now clarifies
that any Transaction Related Document
(currently referred to as 4(c) and 4(d)
documents) that was shared with any
member of the board of directors (or
similar body) is responsive and should
not be considered a draft; rather, it
should be treated as a final version and
submitted with the HSR Filing as a
Competition Document.
As explained in the NPRM, draft
versions of responsive documents can
contain highly relevant, probative, or
candid statements about the
transaction’s competitive impact not
reflected in the final version of the
document, and in some cases, it appears
that the final document has been edited
to remove candid assessments of factors
relevant to competition prior to
circulation to officers or directors. The
Agencies’ experience is buttressed by
multiple commenters, who similarly
acknowledged that ‘sanitizing’ these
documents in anticipation of antitrust
investigation by the Agencies is a
legitimate concern. The Commission
believes that modifying its informal
guidance, as well as obtaining
additional documents and information
as outlined in this final rule, including
those shared with the supervisory deal
team lead, will help ensure that the
documents the Agencies review contain
factual, accurate assessments of the
strategic and competitive implications
of the transaction.
c. Confidential Information Memoranda
This section requires information
currently collected in by Item 4(d)(i) of
the current Instructions. The
Commission did not propose and does
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not adopt any material changes to the
information required by this item.
d. Third-Party Studies, Surveys,
Analyses, and Reports
This section requires information
currently required by Item 4(d)(ii) of the
current Instructions. The Commission
did not propose and does not adopt any
material changes to this item.
e. Synergies and Efficiencies
The Commission proposed a
Synergies and Efficiencies section to
collect the information currently
required by Item 4(d)(iii) of the
Instructions, with a proposed
modification to clarify that forwardlooking analyses are responsive.
Although one comment expressed
general support, some objected to the
proposed modification, noting that it
would expose firms’ proprietary
information. More generally, another
commenter expressed concern that the
burden of identifying the documents
that relate to potential synergies or
efficiencies would increase greatly if
expanded to include supervisory deal
team lead(s) and drafts, because synergy
analyses in particular can generate a
large number of drafts.
In light of the comments and to
reduce the overall cost of the final rule
as compared to the benefit this
information would provide to the
Agencies, the Commission does not
adopt the proposed modification.
However, the Commission declines to
repeal the requirement to provide
documents that reflect expected
synergies and efficiencies, as the
Agencies find these analyses to be
relevant to understanding any such
expected benefits of the transaction.
Parties often provide more information
about potential efficiencies than is
strictly required by the Rules if they
want the Agencies to consider such
information during their initial review.
Thus, the current language in the
Instructions regarding synergies and
efficiencies remains in effect as part of
the final rule.
2. Plans and Reports
The Commission proposed requiring
filers to submit two sets of plans and
reports not created specifically for
analyzing the filed-for transaction. First,
it proposed requiring the submission of
periodic plans and reports that discuss
market shares, competition,
competitors, or markets of any product
or service that is provided by both the
acquiring person and acquired entity, if
those documents were shared with a
chief executive officer of an entity
involved in the transaction, or with
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certain individuals who report directly
to such a CEO. Second, the Commission
proposed requiring the submission of all
plans and reports submitted to the board
of directors (or, in the case of
unincorporated entities, individuals
exercising those functions) that discuss
market shares, competition,
competitors, or markets of any product
or service that is provided by both the
acquiring person and acquired entity.
The NPRM called for all such plans and
reports that went to the board, not
merely those prepared on a periodic
basis, because it is the Commission’s
experience that any report sent to the
board reflects market intelligence that is
important to the top decision-makers.
As proposed, the Commission limited
this document requirement to those
materials prepared or modified within
one year of the filing date of the
notification. The Commission adopts
the proposal with modifications
explained below.
As explained in the NPRM, plans and
reports prepared in the ordinary course
often contain detailed assessments of
core business segments, markets,
competitors, other acquisition targets,
and projections about future
competitive dynamics—insights that
have direct bearing on the Agencies’
antitrust assessment of the transaction
in the initial waiting period. Staff at the
Agencies frequently request these
documents voluntarily from filing
parties early in their review to better
understand and analyze the relevant
markets at issue.
The Commission received several
comments on these proposals. Some
comments stated that the proposed
requirement was overly broad and
would create a significant burden for
filers without commensurate benefit to
the Agencies. In particular, for example,
some comments said that this
requirement would mean that filing
company personnel must identify,
collect, and produce responsive material
from several individuals who are not
currently searched for documents or
materials submitted with an HSR Filing.
These comments disagreed with the
NPRM’s statement that companies
frequently collect these documents as
part of the due diligence process for
transactions. In addition, one
commenter stated that, even if such
documents were collected, the
collection process would not occur in a
systematic way to ensure compliance
with HSR requirements. In order to
effectively collect and produce
responsive material, some comments
contended that filers would need to use
e-discovery and other forensic discovery
tools, which are expensive and add
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additional time. Certain comments
explained it would be
counterproductive and burdensome for
the Agencies’ staff to review and assess
the significant volume of documents
this new request will likely yield.
The Commission acknowledges that
this proposal would have increased the
costs for certain filers and has tailored
the final rule to minimize these costs.
For instance, commenters suggested that
there would be additional costs to
collect these types of documents, such
as interviewing additional personnel,
collecting additional documents for
production, and having those
documents reviewed by counsel, among
other tasks. In response to these
concerns, the Commission notes the
revised requirement is very targeted: it
applies only to documents that already
exist and are dated within one year of
filing, and that discuss overlapping
products and services. But in response
to concerns that a search for even this
limited set of documents could require
forensic document technology or other
investments in discovery tools, the
Commission modifies this requirement
to limit the business executives whose
files need be searched, dropping the
need to collect and produce documents
from any person who reports directly to
the relevant CEO. As a result, this
requirement will not require documents
from any new custodians. With this
modification, the Commission believes
that the number of responsive
documents will be reduced so that the
burden on the parties to submit and the
burden on staff to review these
documents will be manageable.
The Commission believes that
limiting responsive plans and reports to
those shared with the CEOs and with
the Boards of Directors of the entities
involved in the transaction will still
provide the Agencies with sufficient
context necessary to determine whether
the transaction is likely to violate the
antitrust laws. Importantly, these
individuals are often involved in
preparing the HSR Filing and are the
same individuals who are searched for
other responsive documents, such as
Competition Documents. From the
Agencies’ experience, those that report
directly to the CEO typically collect and
retain the types of reports that contain
important and relevant business facts so
that documents provided to the CEO
contain important market analyses and
facts that are highly relevant to the
Agencies’ initial antitrust assessment.
They can be especially important for
determining the scope of any
investigation, potentially narrowing the
areas of inquiry or identifying areas of
emerging competition that are not
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otherwise discussed or described in
documents generated in connection
with evaluating the reported
transaction.
The Commission has determined that
at this time, requiring reports provided
to lower-level executives who report to
the CEO, as proposed in the NPRM,
would add cost for filers, even those
with known overlapping business lines
who may expect that the Agencies will
be taking a close look at the documents
submitted with the HSR Filing.351 The
Commission is also mindful of the
burden to the Agencies of receiving HSR
Filings with many additional
documents that must be reviewed
during the initial waiting period. The
Commission believes that getting
ordinary course plans and reports from
the Board of Directors and CEOs should
be sufficient to provide staff with highly
relevant information with important
market context for other submitted
documents and information, including
the Overlap Description, without
overwhelming the current level of
staffing devoted to premerger review.
In addition to limiting the people who
must provide plans and reports, the
Commission has also determined that
these documents are not required for
select 801.30 transactions. As discussed
above, select 801.30 transactions are
those where the Commission believes
that certain requirements of the final
rule are unlikely to provide information
necessary to determine whether that
transaction may violate the antitrust
laws. Not requiring plans and reports for
HSR Filings of select 801.30
transactions is another way the
Commission is lessening cost based on
the lower likelihood that the transaction
may violate the antitrust laws.
Other commenters mentioned that
responsive plans and reports are
unlikely to contain only information
about the specific products or services
offered by the other filers and this
351 In the final rule, the Commission adopts the
suggestion of one commenter to limit plans and
reports to those provided to the CEO but declines
to seek another round of public comment before
finalizing this requirement as modified. Another
commenter suggested that the Commission only
require these documents that were provided to the
board and not to the CEOs. The Commission
declines to adopt this suggestion because it believes
that excluding CEOs would prevent the Agencies
from having the type of relevant information that
is routinely provided to senior leaders related to
markets with overlapping products and services.
Based on its cumulative experience in collecting
these types of documents during merger
investigations, the Commission has determined that
it is necessary and appropriate to collect a limited
set of plans and reports that were provided to the
highest level of decision-makers, including the
CEOs, because they contain important context for
conducting the Agencies’ initial antitrust
assessment of the transaction.
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requirement would thus sweep in
irrelevant information. One such
comment noted that the material
received would contain much irrelevant
material that would lack sufficient
probative value. The Commission
disagrees that requiring the plans and
reports at issue will generate irrelevant
documents. Based on the Agencies’
experience, plans and reports, taken as
a whole, are highly relevant to staff’s
analysis of the nature and scope of
product or service markets, geographic
markets, competitors and competitive
dynamics in the industry, new or
potential entrants that could mitigate
competition concerns, among other key
considerations that could determine
whether the transaction may violate the
antitrust laws. Documents that were
created in the ordinary course of
business and not solely for the purpose
of evaluating the transaction frequently
contain important discussions about
development efforts for non-commercial
products or services or explain
competitive dynamics in a broader way
that would reveal ways that the
transaction could impact non-horizontal
competition. In addition, they may
identify potential entrants or emerging
threats, or discuss other potential
acquisition targets. In the Agencies’
experience, such plans and reports
provide market facts and long-range
assessments that bear directly on
whether the transaction is one that may
violate the antitrust laws in ways
described in section II.B.4. Staff has
routinely requested that filers provide
these documents on a voluntary basis
during preliminary-phase
investigations, however, because of the
voluntary nature of the request there is
no requirement that filers produce all or
even any of these materials.
Moreover, the modifications the
Commission has made to the final rule
ensure that the plans and reports are
relevant to understanding the nature
and extent of existing competition
between the merging parties. The only
filers who must provide these
documents are those involved in
transactions in which both parties
provide the same types of products or
services or that are known to be under
development. The Commission
acknowledges that these plans are also
important to investigate competitive
effects in transactions involving supply
relationships but has limited this
request in the interest of
administrability, efficiency, and
reducing cost. Transactions between
two entities that currently compete (or
have pre-revenue products in
development that will result in direct
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competition soon) typically warrant a
close look during the initial waiting
period. For these transactions, filers
need provide only the plans and reports
that discuss market shares, competition,
competitors, or markets for those
overlapping lines of business created
within a year of filing. This is exactly
the kind of information the Agencies
rely on to determine whether to
investigate a transaction during the
initial waiting period because it
provides key information about the
competitive landscape at issue in the
transaction. While the Commission
acknowledges there may be select
portions of these responsive documents
that do not contain relevant
information, it is often the case that
responsive documents contain nonresponsive portions. Therefore, the
Commission adopts this requirement
with a clarification that the relevant
products and services are those that
both the acquiring person and target
produce, sell, or are known to be
developing.
One commenter explained that this
requirement means filers must selfassess the products and services in
which they overlap, and filers may
disagree on the existence or degree of
the overlap. The Commission agrees that
this requirement requires a selfassessment by each party and does not
expect that the products and services
that are identified in the Overlap
Description by each filer will always
align, since the acquired person may not
have complete information about all the
products and services that the acquiring
person offers or is developing. The
Commission expects that the acquiring
person, through its normal diligence of
the target, will have a more fulsome
understanding of the target’s products
and services, including those under
development. However, as discussed in
section VI.I.1., filers should not
exchange information with each other
when responding to the Overlap
Description and each filer may refer to
any submitted business document that
supports the analysis of overlaps
contained in the Overlap Description. In
this way, the Commission expects that
the analysis of markets reflected in the
submitted plans and reports will be
reflected in each party’s assessment of
overlaps contained in the Overlap
Description. As is currently the case
with a filer’s identification of
overlapping NAICS codes and for the
new requirement to provide an Overlap
Description, the Commission will rely
on the good faith of the filer to provide
accurate information.
Another commenter explained that
ordinary course documents not
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prepared for the transaction are arguably
outside the HSR statutory mandate
because the Commission had previously
declined to adopt a proposal to include
such ordinary course documents. The
Commission’s 1976 proposal had
contemplated filers providing, among
other items, copies of studies, surveys,
analyses, and/or reports prepared by or
for the company in the three years
before filing, which contain information
regarding market shares, competition,
competitors, markets and more in
relation to any product or service
currently made or sold by the other
filing party. The Commission states that
merely because it declined to require
the submission of ordinary course
documents with the HSR Filing in the
past does not mean it lacks the authority
to do so now. The Commission believed
that it had the statutory authority to
require ordinary course documents in
1976 when it first set up the premerger
review program but determined that
excluding these types of documents was
unlikely to impede effective premerger
review.
The Commission believes that it is
now necessary and appropriate to
require such documents to be submitted
with the HSR Filing. As discussed in
section II.B., many aspects of the
economy, deal structure, and technology
have changed dramatically since
Congress passed the HSR Act. Based on
their experience, the Agencies know
that ordinary course documents often
contain important horizon-scanning
discussions, including market
intelligence about other competitors in
the market or emerging competitive
threats, and that these high-level plans
and reports provide important
information about the competitive
dynamics that may be affected by the
transaction. Indeed, these documents
often identify other competitors,
including their strengths and
weaknesses, and this information is
highly probative of the competitive
assessment of the transaction. Moreover,
with the practical limitation to collect
and submit only documents that were
shared at the highest levels of
management—those provided to the
CEO or the Board of Directors—the
Commission believes the final rule
carefully balances the burden of this
requirement (for the parties and the
Agencies) in light of their clear
relevance to the antitrust assessment of
the transaction.
One comment noted that requiring
plans and reports would be inconsistent
with international jurisdictions’ merger
control regimes. However, the
Commission does not find the issue of
varying international jurisdictions’
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document requirements for government
merger review dispositive. Each
jurisdiction establishes, for itself, the
information needed for the particulars
of their laws, economies, and priorities.
The Commission relies on its own
experience in enforcing the U.S.
antitrust laws, in light of binding
precedent, to assess the most relevant
and probative information to determine
whether an acquisition may violate
those laws. Based on its own experience
and expertise in enforcing the U.S.
antitrust laws, the Commission has
determined that due to the changes in
corporate structure and market
dynamics described in section II.B., it is
now necessary and appropriate to
collect a limited set of plans and reports
with the HSR Filing.
A smaller set of comments stated that
the terms used in the new proposed
requirements were vague and unclear.
For example, one comment said that the
proposed instructions do not provide a
clear definition of ‘‘semi-annual and
quarterly’’ or ‘‘plans and reports,’’
which creates uncertainty and
compliance risks for filers. Another
comment said that the expanded
requirements will create uncertainty
because they do not directly reference
the transaction under review or
documents shared during the due
diligence process, which would lead
filers to make subjective determinations
as to which materials are responsive.
The Commission disagrees that there
is uncertainty or ambiguity about what
is responsive. As stated in the NPRM,
regularly prepared plans and reports are
high-level strategic business documents
created not in contemplation of the
transaction but in the ordinary course of
business within one year of filing and
that are prepared at regular intervals.
Responsive plans and reports will
discuss market shares, competition,
competitors, or markets of any product
or service that is provided by both the
acquiring person and acquired entity, if
those documents were shared with a
CEO of an entity involved in the
transaction, or of any entity it controls
or is controlled by. Targeting documents
that discuss market shares, competition,
competitors, or markets tracks similar
language in Item 4(c) of the current HSR
Form, which in the Commission’s
experience is familiar to many filers and
uses phrases that are known to
businesspeople. The NPRM references
to semi-annual and quarterly rely on
standard terms that are routinely used
in document requests sent to filers and
third parties by the Agencies during
their investigations. In the interest of
clarity, however, the Commission notes
that regularly prepared documents
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include those that are produced at
regular intervals, such as ‘‘annual’’
(once a year), ‘‘semi-annually’’ (two
reports or plans each year), and
‘‘quarterly’’ (once every quarter or every
three months). To help resolve any
remaining uncertainty, the Commission
clarifies that regularly prepared plans
and reports are those that are prepared
by the filers in the ordinary course and
at regular intervals and does not include
special reports prepared for a specific
purpose. Filers should submit one year’s
worth of annual, semi-annual, or
quarterly plans or reports provided to a
CEO but do not need to submit plans or
reports that are produced more
frequently, such as monthly or weekly.
The Commission clarifies that filers
should submit all plans and reports
provided to the Board of Directors and
not only those that are regularly
prepared. These documents, which were
shared at the highest level of decisionmaking, may include special reports if
they contain responsive material.
Yet other commenters were concerned
that requiring plans and reports would
raise confidentiality concerns, forcing
filers to disclose potential transactions
to employees before they are ready to do
so. As modified, this requirement alone
would not lead other personnel to
become aware of the transaction
prematurely. The Commission believes
that plans and reports can be obtained
from these CEOs and Board members in
a way that does not necessitate
divulging the transaction to other
executives and businesspeople who do
not otherwise know about the pending
transaction. Finally, the Commission
notes that plans and reports are also not
required in filings for select 801.30
transactions.
Certain comments that opposed the
requirement to submit plans and reports
also offered suggested modifications.
One of these comments recommended
that the Commission tailor the
requirements to clarify that it is limited
only to the filing party’s products and
services in the United States and that
filers need only produce documents, or
portions thereof, that discuss
specifically identified subject matter.
Certain comments agreed that the
Commission should allow filers to
redact non-responsive materials from
these documents. The Commission
declines to adopt these suggestions
because it finds that allowing filers to
redact non-privileged information or
information related solely to matters
outside the United States on the basis of
relevance would introduce too much
uncertainty into the value of these
documents, leaving Agency staff with
incomplete, piecemeal material. Agency
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staff is experienced with reviewing
documents that contain relevant as well
as non-relevant content and the
Commission believes it is important for
documents be produced as they were
shared with the relevant decisionmakers, properly redacted for privilege
only.
The Commission also considered
alternatives proposed by commenters.
One commenter explained that the
Agencies could request filers to submit
these documents on a voluntary basis,
because those requests are narrowly
tailored and have historically followed
initial substantive discussions between
filers and Agency staff. When used in
combination with withdrawing and
refiling, this process would provide the
Agencies, the commenter said, with at
least 30 days to review and analyze
strategic plans before issuing Second
Requests. The Commission disagrees
that it is sufficient to continue to obtain
plans and reports on a voluntary basis
after staff has identified that they are
needed because there is no obligation
for filers to comply, substantially or
minimally, with such a request for
information prior to the expiration of
the initial waiting period. In the
Agencies’ experience, even when parties
are asked to provide these documents
on a voluntary basis, they are often do
not provide them prior to the end of the
first review period (either 30 or 15 days)
and often choose to pull and refile their
notification in order to submit these and
other materials that were requested on
a voluntary basis. Moreover, in the
Agencies’ experience, these particular
documents contain important
information that is currently missing
from the HSR Filing that would identify
the transaction as one that requires a
closer look.
Another comment suggested that
Agencies could get these documents
using Second Requests as they do now.
While either Agency can obtain these
documents through the issuance of
Second Requests, the Commission
believes that the probative value of
these documents makes them necessary
for staff’s initial screening assessment,
both because they can identify different
areas of antitrust risk, including for
areas of future competition, and because
they may contain additional information
about the business lines of interest that
may alleviate the need to issue Second
Requests or narrow their scope. As
discussed above, because issuing
Second Requests is time- and resourceintensive for both the parties and the
investigating agency, is it not a
substitute for having additional
information in the HSR Filing that
minimizes the need to issue Second
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Requests at all. Having additional
relevant and targeted information on the
front-end benefits both the Agencies and
the parties because it allows the
Agencies to focus on the most
concerning transactions, and allows
parties to avoid Second Requests when
they are not warranted, and thereby
avoid unnecessary expense and delay.
Finally, certain comments discussed
earlier also suggested not adopting the
proposed requirement at all. In light of
the Agencies’ experience with the
probative value of high-level ordinary
course documents and their belief that
having them would provide necessary
context to other material submitted with
an HSR Filing, the Commission declines
to dismiss the requirement altogether.
The Commission believes this final rule,
as modified, reflects a reasonable
balancing of the importance of these
documents to a premerger assessment
and the burden of requiring them for
any transaction where filers have
overlapping business lines. The
Commission has in considered the
specific concerns raised by comments
and tailored the requirement to preserve
the important benefit to the Agencies
while mitigating the cost to filers (and
to the Agencies).
3. Organizational Chart of Authors
As the final part of its Business
Documents section, the Commission
proposed requiring an organizational
chart(s) that would reflect the
position(s) within the filing person’s
organization held by identified authors
and, for privileged documents,
recipients of each document submitted
with the HSR Filing. The Commission
also proposed requiring the filer to
identify the individuals searched for
responsive documents. The Commission
does not adopt this proposal.
The Commission received several
comments opposing this proposed
instruction, with commenters noting
that many companies do not maintain
these types of organizational charts in
the ordinary course of business, and to
the extent they do, such charts are often
incomplete or inaccurate. According to
one commenter, such charts would need
to be prepared solely for the purpose of
the HSR Filing, which would be timeconsuming. Other commenters pointed
out that authors of certain documents
may not even be employees of the filing
entity, thereby complicating the
certification of the filing.
In addition, multiple commenters
questioned the Agencies’ need for
organizational charts to determine
whether to issue a Second Request. As
one commenter noted, it is unclear why
organizational charts will assist staff in
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assessing whether a particular
transaction merits further review as
opposed to their value for identifying
potential custodians for a potential
Second Request.
As to the proposed requirement to
identify the individuals searched for
responsive documents, one commenter
stated that parties may claim privilege
on information regarding whose files
were searched. Another commenter
observed that, for the majority of HSR
filings, documents are identified
through targeted self-collection, directed
and overseen by legal counsel, rather
than running Second Request-style
searches through custodial files. The
same commenter cautioned that the
proposed disclosure requirement would
disincentivize companies to err on the
side of over-collection so as not to raise
a red flag to the Agencies or suggest that
the persons searched should be
custodians in a Second Request.
Finally, as an alternative to providing
an organizational chart, one commenter
suggested requiring parties to identify
the person who supervised the drafting
and the person to whom that drafter
directly reports.
After considering the comments and
weighing the benefit to the Agencies
during the initial waiting period in light
of the cost of complying, the
Commission does not adopt this
proposal. As discussed in section
VI.A.3., elsewhere the final rule requires
filers to identify authors of documents
if the filer has identified a NAICS
overlap, product or service overlaps in
the Overlap Description, or a supply
relationship in the Supply Relationships
Description. The Commission has
determined that author information is
not relevant for all filers and that
limiting author information in this way
provides sufficient benefit to the
Agencies while reducing the cost for
filings without such relationships.
In sum, the Commission has
determined that the requirements to
submit business documents contained
in the final rule are necessary and
appropriate to enable the Agencies to
identify transactions that may violate
the antitrust laws and to provide
important information about each
party’s view of market realities and that
these requirements, as modified, have
been tailored to reduce the cost of
submitting responsive documents as
much as practicable.
H. Agreements
The Commission proposed an
Agreements and Timeline section to
require filing persons to provide a term
sheet or draft agreement that reflects
sufficient detail about the proposed
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transaction to demonstrate the
transaction is more than hypothetical, if
a definitive agreement has not been
executed. In addition, the Commission
proposed additional changes to require
the submission of the entirety of all
agreements related to the transaction
and a new requirement to submit other
agreements between the filing persons
that are not related to the transaction, as
well as a timetable for the transaction.
As discussed below, the Commission
adopts some proposals with
modification and does not adopt the
requirement to submit a timeline.
1. Transaction-Specific Agreements
The Commission proposed requiring
filing persons to produce all documents
that constitute the agreement between
the acquiring person(s) and the
person(s) whose assets, voting
securities, or non-corporate interests are
to be acquired, inclusive of schedules,
exhibits, and the like, that relate to the
transaction, regardless of whether both
parties to the transaction are signatories.
Further, consistent with the proposed
changes to § 803.5, the Commission
proposed requiring the most recent draft
agreement or term sheet, if filers were
not submitting a definitive agreement.
The Commission adopts the
requirements with modification.
Currently, only the production of
certain schedules is required, although
many filers do provide schedules
regardless. As noted in the NPRM, in
the Commission’s experience, the
structure of transactions has become
increasingly complex, often comprising
not only multiple agreements between
the filing persons but also agreements
with third parties. Understanding the
entirety of the transaction, including but
not limited to non-competition and nonsolicitation agreements and other
agreements negotiated with key
employees, suppliers, or customers in
conjunction with the transaction, is
crucial to determining the totality of the
transaction and assessing during the
initial waiting period the transaction’s
potential competitive impact.
The Commission received one
comment in support of this proposal.
The State antitrust enforcers wrote in
support of the request for noncompetition agreements, noting that
non-compete clauses that bind
employees post-employment prevent
new businesses from emerging and stifle
entrepreneurship and innovation. One
commenter opposed the proposal,
noting that this requirement will
significantly increase the burdens for
filers and recommended requiring that
notifying parties provide a descriptive
index of such agreements from which
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investigating staffs could identify
specific agreements that they require
(with translations if needed). Another
commenter expressed the concern that,
as written, the proposed instruction
would capture clean-team agreements,
used by merging parties to reduce the
antitrust risk associated with
exchanging competitively sensitive
information, as well as confidentiality
agreements that include similar antitrust
safeguards, and that in doing so this
proposal might have unintended effects.
The commenter cautioned that in
response some parties might forgo using
clean-team agreements entirely, on the
thinking that including a clean-team
agreement in the HSR filing would
signal a larger competitive concern than
actually exists.
The Commission finds that having the
complete set of documents that will
govern the transaction is necessary to
understand the potential effects of ‘‘the
transaction.’’ Therefore, it does not
adopt suggestions to provide an index in
lieu of the actual documents that
constitute the agreement. In the
Commission’s experience, voluntary
production of documents can delay the
review of transactions within the initial
waiting period. The Commission does
limit the requirement to those
agreements that will be in effect on and
after closing, with the intention of
excluding agreements such as clean
team agreements. The Commission also
adopts the clarification, discussed in
section V.D., that the requirement
relates to the transaction that the parties
intend to consummate.
The Commission also proposed
requiring that, if there is no definitive
executed agreement, the filing parties
provide a copy of the most recent draft
agreement or term sheet that provides
sufficient detail about the scope of the
entire transaction that the parties intend
to consummate. As discussed in section
V.D., the Commission is modifying the
proposed instructions in response to
certain comments that requested
clarification. One commenter sought
clarity on what constitutes ‘‘sufficient
detail’’ about the scope of the
transaction, noting that certain
transaction details are often not fully
determined at the time of signing a
definitive agreement or filing HSR, but
also may not be necessary to determine
whether to issue Second Requests. The
same commenter cautioned that the
proposed requirement will likely cause
undue delays and risk unnecessarily
increasing the overall timing to close a
transaction especially in instances
where parties intend to file on the basis
of a letter of intent.
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To address this concern, the
Commission has revised the Instructions
to describe what would be sufficient:
some combination of the following terms: the
identity of the parties; the structure of the
transaction; the scope of what is being
acquired; calculation of the purchase price;
an estimated closing timeline; employee
retention policies, including with respect to
key personnel; post-closing governance; and
transaction expenses or other material terms.
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The Commission notes that these
examples are meant to be illustrative
and not exhaustive.
2. Other Agreements Between the
Parties
The Commission proposed requiring
filing persons to submit all agreements
between any entity within the acquiring
person and any entity within the
acquired person in effect at the time of
filing or within the year prior to the date
of filing. The Commission adopts the
proposal with a significant modification
to reduce the burden that would have
been associated with producing copies
of these agreements with the HSR
Filing.
As explained in the NPRM,
understanding the scope of any existing
contractual relationships between the
filers, such as an existing customersupplier relationship, would materially
assist the Agencies’ review by revealing
any business interactions or
relationships that exist prior to the
transaction and that may be affecting
premerger competition, which is
material to assessing how the
transaction may affect post-acquisition
competition.
The Commission received two
comments in support of the proposed
requirement. The State antitrust
enforcers noted that it would shed light
on any licensing or supply agreements,
as well as any non-compete agreements,
between the parties. A union
commenter also supported the request
and suggested expanding it for certain
non-compete and non-solicitation
agreements. The commenter noted that
the filing parties might have such
agreements related to the products, but
these agreements might be with third
parties and not between the filing
persons. In addition, the same
commenter suggested requiring parties
to submit copies of collective bargaining
agreements, at least with any common
unions.
Several commenters, however,
objected to the burden the proposed
requirement would impose, particularly
in industries where companies rely
heavily on agreements with other
industry participants to do business.
One commenter noted that broadband
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and telecommunications providers
routinely have myriad agreements with
each other, covering a wide range of
aspects of the services they offer. The
commenter stated that many, if not
most, of these agreements have little
potential to create competition
concerns, and in fact many are procompetitive. Another commenter stated
that, in the wireless communications
industry, some pairs of wireless carriers
might have up to 1,000 agreements to
which they are both parties.
A few commenters recommended
modifications of the proposed
instruction to reduce the burden. One
commenter suggested relying on the
Competition Descriptions or excluding
de minimis agreements and only
requiring ‘‘Material Other Agreements,’’
which would be defined as exceeding in
value some percentage of entity
revenues. Another commenter
recommended only requiring the
production of three categories of preexisting contracts between the acquiring
person and the acquired entity or assets:
(i) noncompete agreements in effect
within one year of filing, (ii) nonsolicitation agreements in effect within
one year of filing, and (iii) supply or
license agreements that generated
annual revenue of $10 million or more
within one year of filing. The
commenter also suggested clarifying
that purchase orders do not need to be
produced, nor do contracts that have
expired or terminated before the filing
date. A third commenter also
recommended limiting the requirement
to contracts that are material in terms of
dollar value. In addition, the commenter
proposed that notifying parties be
permitted to exclude standard-form
agreements that they use with numerous
other counterparties.
In light of the comments, the
Commission has made significant
modifications to this proposal. First, the
Commission has determined that only
one party need provide this information;
in accordance with its general approach,
the Commission has determined to
require only the acquiring person to
indicate if there are existing agreements
between the parties. Second, the
acquiring person will not be required to
provide the agreements, but rather only
to answer whether any such contractual
agreements exist and, if so, to indicate
via checkbox which types. The
Commission has identified specific
types of agreements that reflect a
significant business relationship that is
relevant to the premerger assessment:
agreements with non-compete or nonsolicitation terms; leases, licensing
agreements, master service agreements,
operating agreements, or supply
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agreements. If the there are other types
of agreements, the acquiring person
should indicate ‘‘other.’’ The
Commission clarifies that these are
agreements that the parties have with
one another and which may affect the
antitrust assessment of the reported
transaction.352 Third, the Commission
has limited the requirement to those
agreements that are between the
acquiring person and the target, rather
than the acquired person. This is the
specific relationship that is of interest to
the Agencies for the premerger
assessment and should limit the
information to those agreements most
relevant to that analysis. These
limitations should provide the Agencies
with sufficient information to screen for
transactions that may require further
review due to existing contractual
obligations, while relieving much of the
cost associated with the requirement.
3. Timeline
The Commission proposed that filing
persons provide a narrative timeline of
key dates and conditions for closing.
After careful consideration of concerns
raised by commenters, the Commission
does not adopt this proposal.
In the NPRM, the Commission
reasoned that, just as it is critical for the
Agencies to understand the totality of
the transaction during the initial waiting
period, it is critical to understand the
timing of key milestones and the
conditions to closing, which are often
complex and not easily understood from
the transaction documents themselves.
The Commission suggested that this
basic information would help the
Agencies understand key deal
milestones and better manage the timing
and focus of the investigation during the
initial waiting period.
The Commission received a few
comments expressing general support
for the proposal; however, one
commenter raised concerns regarding
the burden, noting that the proposed
352 For example, a non-compete or nonsolicitation agreement between two otherwise
independent companies is indicative that the
parties may have a competitively significant
relationship, and in certain situations, may violate
the antitrust laws. See, e.g., United States v. Brown,
936 F.2d 1042 (9th Cir. 1991). In a merger context,
non-compete restrictions can implicate post-merger
competition in ways that violate the antitrust laws.
See, e.g., In re ARKO Corp., No. C–4773 (F.T.C. Aug.
9, 2022) (final decision and order); In re DTE Energy
Co., No. C–4691 (F.T.C. Nov. 24, 2021) (decision
and final order). Other agreements between the
parties, including those related to distribution or
licensing, can limit competition post-merger in
ways that may violate section 7, including by
increasing the risk of foreclosure. See, e.g., FTC v.
Tempur Sealy Int’l, Inc., 4:24–cv–02508 (S.D. Tex.
filed July 2, 2024) (complaint) (alleging that buyer
attempted to use existing distribution relationship
to exclude rival mattress brands premerger).
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requirement is broader and more
onerous than the interrogatory that staff
routinely requires during in-depth
investigations. The same commenter
suggested that this instruction be
limited to requiring a brief description
of the timetable for the transaction and
a brief description of any termination
fees, break-up fees, ticking fees, or
similar arrangements.
After considering the comments and
weighing the benefit to the Agencies of
requiring a deal timeline in light of the
cost of compliance presented by
commenters, the Commission is not
adopting this proposal. Even though the
Agencies would benefit from knowing
the timeline for the transaction to help
manage their time and investigative
resources during the initial waiting
period, the Commission does not adopt
the proposed change to require one. In
the Agencies’ experience, these
timelines can change throughout the
course of an investigation, although not
typically within the initial waiting
period. The decision not to require a
timeline is one of the ways in which the
Commission aims to lessen cost on all
filers of preparing an HSR Filing and
staff can continue to ask for (or parties
can choose to provide) this relevant
information when warranted.
In sum, the Commission has
determined that the requirements for the
transaction agreement and information
about other types of agreements between
the parties contained in the final rule
are necessary and appropriate to enable
the Agencies to understand the scope of
the transaction as well as any existing
business relationship that might be
affected by the transaction and that
these requirements, as modified, have
been tailored to reduce the cost of
reporting as much as practicable.
I. Competition Descriptions
The Commission proposed a new
Competition Analysis section in the
Instructions to require filers to provide
three categories of narrative responses:
(1) an Overlap Narrative, (2) a Supply
Relationships Narrative, and (3)
Information related to Labor Markets. As
proposed, filers would provide, among
other things, a description of their basic
business lines as well as product and
service information for all related
entities; identify current and potential
future overlaps and supply relationships
between the filing persons; and provide
information about their employees and
what services these employees provide
in areas where both parties employ the
same types of workers. As noted in the
NPRM, this information would supply
crucial information about existing and
future competitive relationships
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between the filing parties, which is the
starting point for any assessment of
whether the transaction may violate the
antitrust laws.
As discussed in detail below, in the
final rule the Commission does not
adopt requirements related to Labor
Market Information, and adopts
requirements to submit an Overlap
Description and a Supply Relationships
Description with significant
modifications. On the Form, this section
is now labeled Competition
Descriptions.
The Commission received several
comments that supported the
introduction of narrative responses. One
commenter strongly supported the
collection of information in narrative
form related to products, services,
workers, supply and distribution
relationships, licensing, and industry
and geographic overlaps, believing that
this information is necessary to help the
Agencies evaluate the effects of an
acquisition more thoroughly and
efficiently, and identify potential threats
to competition. Another commenter
suggested that pre-acquisition
disclosure of vertical linkages is
necessary for antitrust agencies to
effectively assess the potential
anticompetitive impact of these nonhorizontal acquisitions. Another noted
that, while HSR rules have always
required parties to identify downstream
products and revenues by NAICS and
NAPCS codes, they have never required
the disclosure of any information at all
about input markets, including those for
labor. It stated that this lack of
information leaves initial filing
screeners at a loss to spot these
competition issues and potential
violations, and further noted that this
omission forces investigatory staff
scrambling to ask companies to
volunteer such critical input market
information. The same commenter
stated that the proposed rule would
help narrow this information asymmetry
and empower the Agencies to clearly
identify impact in both output and
input markets.
The Commission also received several
comments that objected to the collection
of this information in narrative form. In
general, comments asserted that
expansive narrative requirements are
arbitrary and capricious because they
would change HSR notification from an
objective task to a subjective task,
creating delays, disputes, and
uncertainty with no countervailing
benefit especially for those deals where
no antitrust issues are present. For a
number of reasons discussed in detail
below, the Commission disagrees, but
has nonetheless modified these
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requirements as appropriate to tailor
them to their relevance in determining
whether the transaction may violate the
antitrust laws and warrant a Second
Request.
Experience With Narratives
The Agencies have extensive
experience reviewing narrative
responses to requests for voluntary
submissions from the filing parties
during the initial waiting period (and to
other types of investigative demands
where responses can be compelled) and
are aware of the effort required to
produce them. From this experience, the
Commission knows that when the
parties submit this information on a
voluntary basis during the initial
waiting period—and it is complete and
timely—narratives that discuss existing
business relationships between the
parties are critically important to
determining whether there is a need to
issue a Second Request. In the Agencies’
experience, voluntary narrative
responses are especially helpful in
focusing any potential Second Request
on the areas of competition most in
need of in-depth review but just as often
can lead staff to conclude that no
Second Request is necessary. As
discussed above in section III.A.2.,
when the Agencies engage with the
parties during a withdraw-and-refile
investigation, which typically involves
the submission of some narrative
responses from the parties, the
transaction is more likely to proceed
without the need for a Second Request.
But voluntary narrative responses
often come late in the initial waiting
period and are frequently incomplete.
More importantly, staff only asks for
additional information on a voluntary
basis when it has determined, on the
basis of other information contained in
the HSR Filing, that the transaction may
alter existing competitive conditions in
a way that may violate the antitrust laws
but that more information is needed. As
discussed in section II.B., the current
information requirements do not surface
the facts that would flag transactions for
certain types of violations, and for those
filings staff has no basis to know that
additional information is needed. Where
there are deficiencies in the initial
information requirements, resorting to
collecting information on a voluntary
basis does not cure the deficiency
because staff will not know that relevant
facts exist to flag the transaction for
follow up.
The Commission believes that
requiring additional information with
the HSR Filing that would reliably
reveal any existing business
relationships between the filers is
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necessary and appropriate to enable the
Agencies to determine whether an
acquisition may, if consummated,
violate the antitrust laws. Because the
information called for in the
Competition Descriptions is provided
directly by the parties to the transaction
and is reflective of each filer’s business
operations, it is highly probative and
reliable for the purpose of conducting a
quick and thorough premerger
assessment of existing and future
business relationships between them.
The information collected on the
current Form does not reveal these
relationships, yet these are the
relationships that are foundational to
flagging whether the transaction is one
that warrants a closer look. As discussed
in sections II.B.3. and 4., the need is
especially great for information related
to potential non-horizontal concerns
because there is currently no
information that specifically identifies
existing supply relationships.
Information about existing supply
relationships will fill critical
information gap in the current Form and
provide a factual basis for the Agencies
to screen for potential non-horizontal
impacts during the initial waiting
period.
Nonetheless, to make clear that the
Commission does not require the parties
to submit an antitrust analysis akin to a
‘‘white paper,’’ or hire counsel or
experts simply to create narratives for
the purpose of an HSR Filing, the
Commission eschews the use of the term
‘‘narratives’’ and instead adopts the
term ‘‘description’’ to better reflect the
type of answer that is required. Filers
should rely on business personnel to
describe the products and services they
offer (or that are under development)
using terms and language that is natural
in the marketplace. Given the breadth
and tone of the objections to the
proposed narratives, the Commission
believes that commenters
misunderstood what is sought. The
Commission intends to collect factual
information about overlaps and supply
relationships via a written answer (as
opposed to documents or data) but is
not seeking opinions or arguments about
what those facts should imply. While in
other contexts a narrative response may
contain opinions, tell a story, or take a
position, the final rule does not require
any of that from filers. Instead, filers
should collect and report the type of
information it provides to customers,
suppliers, investors, or the public for
purposes other than an antitrust
analysis—to simply describe the
products or services it offers for sale.
This is the type of basic business
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description required by the final rule,
and the Commission adopts with terms
Overlap Description and Supply
Relationships Description to address
concerns that the final rule requires
something other than that. Moreover,
the Instructions ask filers to provide a
brief description in an attempt to
discourage lengthy responses or
unnecessary commentary beyond what
is strictly required. 353
The Overlap Description is a key
reform and is motivated by the
Commission’s experience over time
with relying on NAICS codes to identify
areas of horizontal competition. Based
on its experience reviewing narrative
responses submitted on a voluntary
basis during the initial waiting period,
the Commission has identified problems
with relying exclusively on NAICS code
overlaps as the basis for screening
whether the merging parties are current
competitors. While NAICS codes are
well suited for reporting in some
sectors, the Commission agrees that
NAICS codes can be both overinclusive
and underinclusive in reflecting
whether the parties offer competing
products or services to any set of
customers. As discussed in section
II.B.4., when it comes to certain sectors
of the economy that are undergoing
technological change or growth,
including through the introduction of
novel products or services, NAICS codes
are especially unhelpful, and have not
been updated to reflect current market
offerings.
The mismatch between existing
NAICS codes and market realities can be
most acute in new sectors of the
economy, for which there are not many
codes. For instance, NAICS code 518210
is for companies that provide computing
infrastructure, data processing, web
hosting, and related services, which
covers businesses as diverse as those
providing data entry services, cloud
storage services and cryptocurrency
mining.354 Included in this six-digit
NAICS code are a whole array of
businesses offering complex and
353 A significant number of filers who report
NAICS overlaps initiate contact with the Agencies
to provide supplemental information (often in the
form of white papers) that supplies context for how
they view competition, regardless of NAICS
reporting. In the Agencies’ experience, these
presentations often contain descriptions of the
parties’ respective business operations as well
conclusions that the parties would like the
Agencies to reach to dismiss concerns about the
transaction. The former is now required by the final
rule while the latter is not.
354 See U.S. Census Bureau, North American
Industry Classification System, 51280 Computing
Infrastructure Providers, Data Processing, Web
Hosting, and Related Services (rev. Sept. 10, 2024),
https://www.census.gov/naics/?input=518210&
year=2022&details=518210.
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evolving products, some of which may
compete for the same customers but
some of which surely do not. Adding
further complexity, the Census Bureau
provides cross-references to fourteen
other NAICS codes with related
business lines. This single category is
very broad, potentially reflecting
‘‘competition’’ between the parties that
does not exist in the marketplace. As a
result, each filer in a transaction may
report revenues in 518210 reflecting an
‘‘overlap’’ in their respective business
lines, when in reality they offer very
different products or service.
These cross-references create a
different but equally vexing problem.
For instance, NAICS code 541511 is for
companies that offer custom computer
programming services to meet the needs
of a particular customer while NAICS
code 513210 is for companies primarily
engaged in software publishing. Here, a
company that provides both standard
and custom solutions may report
revenues only in 513210 even if some of
the companies it competes with would
only report revenues in 541511,
reflecting its focus on custom products.
Overall, companies select their own
NAICS codes for revenue reporting,
introducing discretion into the use of
this ‘‘objective’’ system of classification,
which was established for a purpose
other than identifying companies that
offer competing products or services. As
a result, companies that may regularly
compete against one another may not
identify any overlapping NAICS codes.
Despite these shortcomings, the
Commission will continue to rely on
NAICS code reporting for revenues and
the identification of overlaps to give
filers some common system of reference
and because the identification of
horizontal overlaps is a key screening
step in the Agencies’ initial antitrust
assessment. But new sectors have
emerged over the years and NAICS
codes have not been refined or updated.
Accordingly, the Commission has
determined that receiving overlap
information in description provided by
the filer is necessary and appropriate to
enable the Agencies to determine
whether an acquisition may, if
consummated, violate the antitrust laws.
The Agencies may also use the Overlap
Description to conclude that the parties
are not current or future rivals because
the exercise provides filers with an
opportunity to correct any ‘‘false
positives’’ that result from inaccurate
reporting of NAICS revenue overlaps.
As a result, the Overlap Description may
contain a factual basis for the Agencies
to determine, solely on the basis of
information contained in the HSR
Filing, that the transaction is not likely
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to violate the antitrust laws at that time.
In the Overlap Description, a filer can
make clear that further investigation is
unnecessary. Allowing the agencies to
reach these conclusions at the outset is
more efficient than having the parties
provide the information at a later stage
or requiring the Agencies to discover
this information indirectly through
document requests.
As the Commission acknowledged in
the NPRM, the cost to filers to create
these descriptions could be significant,
especially for transactions involving
close competitors with multiple
overlapping product or service lines or
those who operate in the same supply
chain. But identifying those transactions
that present broad and complex
competition issues is a critical first step
for the Agencies, and information from
these descriptions is highly relevant to
flagging the transaction as one that may
violate the antitrust laws. Thus, the cost
of providing these descriptions is
proportional to the likelihood that the
transaction is one that warrants a close
look: the more extensive the existing
competitive relationship between the
parties, the more relevant these
relationships are in identifying the
transaction as one that warrants further
investigation. It is also possible that
these descriptions will provide
important context for other information
contained in the HSR Filing that would
allow the Agencies to narrow any
potential investigation to those areas of
important existing or future competitive
interaction, or to conclude that the
transaction is not one that is likely to
violate the antitrust laws. Thus, the
descriptions are necessary and
appropriate for the Agencies to assess
the potential for anticompetitive
impacts, including some indication of
their scope. This information will also
permit the Agencies to manage their
resources appropriately, increasing
overall efficiency. For example, if the
Overlap Description identifies hundreds
of products or services, the Agencies
can devote sufficient staff resources to
reviewing those areas of overlap to
determine whether any rise to the level
of requiring a Second Request
investigation. On the other hand, if the
notification identifies no areas of
overlap, the Agencies may be able to
quickly determine whether there are
other materials in the filing that would
nonetheless raise concerns about the
competitive impact of the transaction.
It is appropriate for the filers to bear
the burden of providing basic business
information that they possess. It is
unreasonable and inefficient to require
the Agencies, who do not possess basic
information about the filers’ businesses,
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to expend resources gathering the
information from outside sources, or to
require the Agencies to issue a separate
request for this critical information
which only delays the review process
and in turn the filers’ ability to
consummate transactions. Yet the status
quo requires the Agencies to obtain
basic business facts that are needed to
evaluate transactions through voluntary
requests to the parties or Second
Requests. As one commenter noted, the
Federal Rules of Civil Procedure
encourage Federal courts to order civil
discovery based on the obvious
principle that the person already in
possession of the information is in the
best position to provide it, and properly
so.355 This principle is apt here.
The Commission also believes that
parties will be able to reduce the cost of
creating descriptions by drafting them
during the period of due diligence when
the companies are learning more about
their respective business operations.
Discovering the extent of existing
business operations is key to the
diligence process, and companies often
create descriptions of their operations as
part of the process.356
The Commission has made every
effort to calibrate its need for the
requested information and the
availability of that information from the
parties or from others, including the
cost to filers associated with collecting
information and creating the descriptive
responses. For this reason, as discussed
below, the Commission has decided to
significantly modify certain aspects of
the proposed descriptions, for instance
when the information is duplicative of
other information in the notification or
when the information is available from
a source other than the parties. In taking
this approach, the Commission rejects
alternatives suggested by commenters to
reduce the cost by excusing transactions
below a certain value or without a
NAICS overlap, because it has found no
basis for doing so. In the Agencies’
experience, deal value is not a reliable
indicator of the potential for antitrust
harm,357 especially when the
355 Fed. R. Civ. P. 26(b)(1) advisory committee
note (2015) (identifying information asymmetry as
a justification for placing a heavier burden on the
party who has the information).
356 When establishing the premerger regime, the
Commission acknowledged that requiring
information in the notification may actually reduce
the cost associated with compiling it. 42 FR 39040,
39043 (Aug. 1, 1977).
357 See, e.g., United States v. Neenah Enterprises,
Inc., No. 1:21–cv–02701 (D.D.C. Oct. 14, 2021)
(complaint) ($110 million asset purchase); In re
Global Partners LP, No. C–4755 (F.T.C. Mar. 2,
2022) (decision and final order) ($151 million
acquisition); In re ANI Pharmaceuticals, Inc., No.
C–4754 (F.T.C. Jan. 12, 2022) (decision and final
order) ($210 million acquisition); United States v.
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transaction involves multiple business
lines or when competition occurs in
local markets.358 Instead, the
Commission has determined to excuse
select 801.30 transactions from the
requirement to provide Competition
Descriptions. As discussed in section
VI.A.1.f., these transactions rarely
involve entities with existing
competitive relationships and do not
confer control, and thus the
Commission has determined not to
require these filers to provide
descriptions of any existing business
relationships, should they exist.
The Commission now turns to a
discussion of both the general and
specific objections to the Competition
Descriptions requirements.
General Objections to the Competition
Descriptions
Several commenters questioned the
general utility of these requirements.
One commenter suggested that
burdening all filers with these
descriptive requirements is not
particularly well targeted to identifying
acquisition-related antitrust concerns.
Another stated that the information
called for is duplicative of documentary
materials that are now also required.
Two other commenters suggested that
the Commission continue to ask for this
information on a voluntary basis and
only for deals that have been flagged for
closer review.
The Commission disagrees that the
information required by the
Competition Descriptions would be of
little use or contain repetitive
information. Requiring filers to provide
a description of their existing
competitive relationships is a key
reform of the final rule to make the
premerger review process more effective
and efficient. Such descriptions should
contain a factual summary of the
parties’ existing business relationships,
which is critical information for
identifying those transactions that
require a closer look. This is
information that is known to filers and
bears directly on whether the
transaction may violate the antitrust
laws. The Commission has determined
Grupo Verzatec S.A. de C.V., No. 1:22–cv–01401
(N.D. Ill. Mar. 17, 2022) (complaint) ($360 million
acquisition). Note that the value of the transaction
is considered by some filers to be confidential
information and is not always disclosed in public
filings. See FTC v. IQVIA Holdings Inc., No. 1:23–
civ–06188 (S.D.N.Y. Dec. 29, 2023); In re Lifespan
Corp., No. C–9406 (F.T.C. Feb. 17, 2022)
(complaint).
358 See, e.g., In re The Golub Corp., No. C–4753
(F.T.C. Jan. 20, 2022) (decision and final order)
(divestiture of 12 supermarkets); United States v.
B.S.A. S.A., No. 1:21–cv–02976 (D.D.C. Mar. 15,
2022) (divesture of two business lines).
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that it is necessary to require this
descriptive information from filers
because other information in the HSR
Filing is not sufficient to screen
transactions for all types of potential
harm, and, as discussed above, staff
cannot rely solely on voluntary
collection of this information to flag the
transaction for a closer review.
Moreover, as discussed elsewhere, the
Commission intends to rely on
information in the Competition
Descriptions as the basis for
determining whether the filer also has to
provide other information required by
the final rule. The Commission has
determined that, for many additional
information requirements, these
descriptions (in addition to the NAICS
code overlap reporting) will determine
the scope of most of the other
information requirements in the HSR
Filing. It is appropriate for the
Commission to condition additional
information requests on the
identification of an existing business
relationship as the most effective way to
calibrate the cost of reporting the
antitrust risk associated with each
transaction. In order to reduce the cost
for filers whose transactions raise little
to no antitrust risk, it is necessary that
all filers go through the exercise of
determining whether they are in a
horizontal or supply relationship with
the other party. Those filers who do not
have such relationships will so indicate
by responding ‘‘none’’ and will be
relieved of the obligation to respond to
other questions that are conditional on
an affirmative response. Relying on this
conditional response format is a key
feature of the final rule to ensure that
filers who do not have an existing
business relationship with the other
party (e.g., as a competitor or supplier)
have a lower cost associated with
submitting an HSR Filing.
One commenter stated that because
these descriptions are not prepared in
the ordinary course, they cannot be
required to be submitted with the
notification. Further, this commenter
stated that Congress only intended the
Commission to collect information and
documentary materials reasonably
available to the reporting companies,
suggesting that anything not kept in the
ordinary course of business runs afoul
of Congressional intent. The
Commission disagrees with the
commenter’s reading of both the statute
and the legislative history. The
rulemaking provision in 15 U.S.C.
18a(d) contains no ordinary course
limitation. To the contrary, it states that
HSR filings shall be in such form and
contain such documentary material and
information relevant to a proposed
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acquisition as is necessary and
appropriate to enable the Agencies to
determine whether an acquisition may,
if consummated, violate the antitrust
laws. The commenter quotes the
Commission’s 1977 Notice of Proposed
Rulemaking for the premerger
notification rules when making this
assertion, but in that notice, the
Commission did not state that
information reasonably available was
limited to ordinary course
documents.359 Further, the Competition
Narratives as adopted do not require any
information that is not kept in the
ordinary course of business of the
acquiring or acquired person. These
descriptions require parties to gather
and present this information in a format
that will permit the Agencies to
understand their lines of business, areas
in which the parties offer similar
products and services, and relationships
in the relevant supply chains.
The Commission also disagrees that
businesses do not develop an
understanding of their business
operations in comparison to those of the
other merging party ‘‘in the ordinary
course.’’ In the Agencies’ experience,
businesses routinely conduct
competitive assessments in which they
compare their operations to those of
others. These internal assessments of
other market participants are often done
long before any specific assessment of a
particular transaction and may be
contained in documents such as plans
and reports. In the specific context of a
proposed transaction, parties (especially
those that are publicly traded) conduct
due diligence assessments of
prospective targets. These comparative
assessments may be done specifically
for the purpose of analyzing the filed-for
transaction, and the Commission
considers those to be in the ordinary
course of acquisition planning. The
descriptions required by the final rule
would summarize these types of
assessments and reflect their underlying
business facts. In the Commission’s
view, this is exactly the type of
materials the House conferees intended
would be submitted with the
notification: ‘‘the very data that is
already available to the merging parties,
and has already been assembled and
analyzed by them. If the merging parties
are prepared to rely on it, all of it should
be available to the Government.’’360
Compliance Concerns
Some comments expressed concern
that the descriptions would create HSR
359 42
FR 39040, 39043 (Aug. 1, 1977).
Cong. Rec. 30877 (1976) (remarks of Rep.
Rodino).
360 122
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Act compliance issues, noting that,
because the descriptions require
subjective judgments, the Agencies have
no objective standards or precedent
against which compliance or substantial
compliance could be judged. One
commenter suggested that each of the
descriptions may generate
disagreements between the Agencies
and the merging parties regarding the
accuracy or completeness of the
information provided, leading the
Agencies to retroactively declare a
notification to be incomplete and
restarting the initial waiting period. One
commenter stated that the descriptive
responses will require extensive
iterative discussions with PNO to
determine compliance, which will delay
the start of the waiting period. Others
asserted that the Commission could
deem a descriptive answer to be
incomplete simply because staff
disagrees with the assessment, or that
the Agencies may be tempted to secondguess or nitpick the parties’ responses,
leading to uncertainty about deal
timelines.
As discussed above, the Agencies
have decades of experience with
reviewing descriptive responses,
including those submitted on a
voluntary basis during the initial
waiting period and in response to
Second Requests. In fact, staff routinely
seeks this information as the first
supplement to the information
contained in the HSR Filing for any
transaction that is identified as
requiring a closer look. But the current
practice of permitting parties to submit
descriptive responses on a voluntary
basis while the waiting period is
underway has encouraged parties to
submit incomplete responses or submit
them at a time when staff is unable to
verify the information before it must
make a determination whether to issue
Second Requests. Any deficiency in a
voluntary descriptive response prevents
staff from being able to quickly
determine whether the Agency should
issue a Second Request to require a
more complete narrative answer.
The Commission believes that
requiring Competition Descriptions to
be submitted with the HSR Filing
provides the proper incentive for filers
to submit a complete and accurate
response, one that is certified by the
responsible executive who signs the
notification and that is available at a
time when the information can be
reviewed and assessed by staff. The
certification allows the Commission to
accept filings containing descriptive
responses and to start the waiting
period. If, upon reviewing the
notification, staff determines that the
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descriptive responses are directly
contradicted by other information
submitted with the notification, staff
may request supplementary information
to explain the contradictions, which
could require a restarting of the waiting
period. If the notification contains no
such materials that call into question
the reliability of the descriptions, any
supplementary submissions to clarify or
correct them would likely not require a
restarting of the waiting period under
the Act.
Other comments raised compliance
concerns related to who must help
prepare the information. Some
comments stated that the descriptive
responses will require filers to hire
expensive antitrust counsel, and
possibly an expert economist, to draft
the descriptions prior to filing.
According to one commenter, filing
parties will be forced to engage antitrust
counsel, economists, and other
professional class consultants on every
deal, regardless of its impact on
competition. Another commenter
suggested that hiring consultants to
draft narratives may be prohibitive for
some parties that may be most in need
of a merger or affiliation. One comment
noted that, as a practical matter, the
only people who are eligible to certify
the notification often lack personal
knowledge necessary to opine about
things like the relevant product market
definition or the competitive effects of
a transaction. The Commission
disagrees that filers need to hire outside
personnel, who do not know the filer’s
business operations and would need to
be given the very information that the
Competition Descriptions call for in
order to draft them. As noted in the
NPRM, those who author the descriptive
responses should be the individuals
who best know the business of the filing
person. The Commission reiterates that
the Competition Descriptions should be
based on a businessperson’s
understanding of the filer’s business
operations and consistent with other
business documents and materials
submitted with the HSR Filing.
Other comments raised a related
point, stating that the type of detailed,
competitively sensitive information
necessary to draft these narratives is
often deliberately kept away from the
business executives, which would
require certain filing parties to employ
antitrust safeguards to collect
information without sharing
confidential business information with
or about one another. Several
commenters asserted that providing
customer contact information, including
identifying specific individuals for
Agency outreach, would create
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significant uncertainty and further
increase the risk that confidential
acquisition plans would be known more
widely, or increase the risk of insider
trading.361
As discussed in the section below, the
Commission agrees that it is important
to reduce the need to share information
about the transaction more broadly than
is necessary to complete an HSR Filing,
but rejects the idea that companies are
unfamiliar with managing these risks or
that the rule would significantly
increase them. Also, complying with
securities laws to prevent insider
trading in public shares is an obligation
of every publicly traded company, and
the rule does not increase the risk that
those with knowledge of the deal will
violate those laws. Nonetheless, in
response to these concerns, as discussed
below, the Commission has determined
to modify certain requirements for the
Competition Descriptions in order to
reduce the need for filers to share
information outside of the company, for
instance with customers or suppliers.
The Commission agrees that the process
required to collect information for the
notification should not require
information-sharing beyond what is
absolutely necessary. Specifically, the
Commission has added to the
instruction a statement that the parties
should not exchange information for the
purpose of responding to the Overlap or
Supply Relationships Descriptions. The
acquiring and acquired persons should
each respond on the basis of
information known to them in the
ordinary course of their business or
through normal transaction diligence.
The Commission understands that,
unlike the NAICS overlap identification,
the filings may not identify the same
products and services in the
Competition Descriptions. This may
require those contemplating a
transaction to plan for limits on the flow
of information about the deal, including
‘‘clean teams’’ and data rooms with
limited access, but the Commission
361 Commenter American Securities Association
states that certain aspects of the proposed rule
would require public companies to announce and
file details with the SEC about signed deals,
‘‘creating additional hurdles that will test investor
confidence.’’ Comment of Am. Sec. Ass’n, Doc. No.
FTC–2023–0040–0682 at 2. Because the final rule
does not change who is required to file notification
under the Act, there are no new obligations to
disclose transactions nor to make statements to the
SEC. To the extent that this comment is based on
a concern that the Agencies may flag additional
deals as requiring Second Requests because they
may determine that a particular transaction may
violate the antitrust laws, that is the intention of the
final rule and well within the Commission’s
authority under the Act, regardless of filers’
obligations to make statements required by the
securities laws.
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believes filers have experience with
managing these risks and employ
protections to prevent the sharing of
information or disclosing knowledge of
the deal beyond these limits. The
Commission has determined that the
requirement to prepare descriptive
responses does not increase the risk that
those protections will be breached or
that filers will be required to change
their approach to comply with the final
rule. To the extent that this process
reveals existing business relationships
of which either or both parties were not
aware, this is an appropriate outcome of
requiring this analysis to be done prior
to filing.
Another group of comments raised
compliance concerns related to taking
an affirmative position on specific
elements of an antitrust violation, such
as the definition of relevant markets and
any competitive effects, impermissibly
shifting the burden of proving such
elements of an antitrust violation to the
parties. For instance, one commenter
read the rule as not requiring filers to
define a relevant market or provide
market shares but nonetheless objected
that filers lack the benefit of established
competition law principles to guide the
scope of their responses. Others
suggested that the Commission adopt
the practice of the European Union and
other regimes and make available
written decisions about market
definitions.
As stated in the NPRM, the
Commission does not intend for the
Competition Descriptions to contain an
assessment of relevant markets or
reference any ‘‘market.’’ The
Commission understands that the
determination of a relevant antitrust
market is a fact-bound process that is
the result of extensive information
gathering, including from third parties
(who may be other participants in the
‘‘market’’). Information contained in the
notification has never been, and never
could be, sufficient to determine
whether a relevant antitrust market
exists in which the transaction could
potentially cause harm. Rather, the
Commission intends the identification
of competing products or supply
relationships to be a statement of
business fact, not a conclusion that
there is a relevant antitrust market that
comprises an area of effective
competition.362 The Agencies recently
362 A party responding to an interrogatory under
Rule 33 of the Federal Rules of Civil Procedure
‘‘must furnish information that is available to it and
that can be given without undue labor and
expense,’’ and a party must ‘‘provide relevant facts
reasonably available to it but should not be required
to enter upon independent research in order to
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released updated Merger Guidelines that
contain a detailed discussion of how
and why the Agencies undertake the
exercise of defining markets.363 Thus,
the Commission disagrees that filers are
unable to understand how information
about whether and to what extent the
merging parties are direct competitors
factors into the Agencies’ initial
antitrust assessment.
Comparison to Other Jurisdictions
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Some comments suggested that the
Commission is improperly attempting to
model the U.S. premerger notification
regimes on those in other jurisdictions.
The Commission rejects this suggestion.
The purpose of this rulemaking is to
maintain a premerger notification
regime that fulfills the Agencies’
congressional mandate to vigorously
enforce the U.S. antitrust laws and
prevent undue concentration in its
incipiency. As the Commission noted in
the NPRM, many other jurisdictions rely
on submissions from the parties that
contain basic information about
business lines or company operations,
and several require the parties to selfreport overlaps.364 The Commission
expects that the burden on filers (or
their counsel) with experience drafting
these submissions for other jurisdictions
will be comparatively low because of
their familiarity with such drafting. This
does not mean that the Commission is
relying on the experience of other
jurisdictions in enforcing their laws.
Rather, the Commission is simply
noting that the prevalence of descriptive
requirements among other competition
enforcers supports its belief that, for
some filers, preparing descriptive
responses is not a new exercise or
overly burdensome. The Commission
further notes that other businesses
might be familiar with preparing a
business plan or conducting a market
research and competitive analyses,
which would contain much of the same
information as is required by the
narratives.365
acquire information merely to answer
interrogatories.’’ Lynn v. Monarch Recovery Mgmt.,
Inc., 285 FRD. 350, 357 (D. Md. 2012) (citation and
internal quotations omitted). Filers should take a
similar approach to providing business facts here.
363 See Dep’t of Justice & Fed Trade Comm’n,
Merger Guidelines 4.3 (2023).
364 NPRM at 42180.
365 The Small Business Administration provides
guidance for how to conduct market research and
find a competitive advantage, including links to free
government databases and resources to help with
that assessment. See U.S. Small Bus. Admin, ‘‘SBA
Business Guide, Market research and competitive
analysis’’ (last updated May 31, 2024), https://
www.sba.gov/business-guide/plan-your-business/
market-research-competitive-analysis#id-usemarket-research-to-find-customers.
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One commenter stated that
pharmaceutical transactions are not
acquisitions of other companies but
instead involve exclusive licenses,
which are not reportable in other
jurisdictions. As a result, according to
this commenter, the descriptive
requirements introduce an entirely new
and significant burden that will fall
disproportionately on parties to
pharmaceutical transactions. The
Commission disagrees that there will be
a measurably different impact on
pharmaceutical companies. As
discussed above, the requirement to
submit Competition Descriptions is not
dependent on having prepared similar
materials for other jurisdictions, and
there are many kinds of transactions
that are not reportable in other
jurisdictions for which the parties will
now be required to submit a descriptive
response. In addition, the Commission
has no reason to exempt pharmaceutical
licensing deals from any requirements
of the Act because these transactions,
like other reportable transactions, can
raise antitrust concerns.366 As the D.C.
Circuit found when it upheld the
Commission’s authority to require the
reporting of pharmaceutical licensing
transactions, the Act does not prevent
the Commission from adopting rules of
general applicability and the
Commission can rely on its experience
in reviewing HSR Filings to adjust the
HSR rules.367 Certain sectors have more
reportable transactions, but the
Commission is not imposing different
requirements on any sector. Nor should
it remove information reporting
requirements for those sectors where
there are more reportable transactions
merely because more companies in
those sectors are involved in reportable
transactions. Moreover, the Commission
believes that complying with the
Competition Description requirements
for transactions involving licensing
agreements will be less costly than for
other types of transactions because
those transactions are fairly limited in
purpose as they relate to uses for the
licensed technology.
After careful consideration of the
comments raising general objections to
requiring descriptions of existing
business operations of the merging
parties, the Commission has determined
to require Competition Descriptions in
the final rule due to the benefit they
would provide to the Agencies. These
366 See, e.g., In re Sanofi Corp., No. 9422 (F.T.C.
Dec. 11, 2023) (complaint) (transaction abandoned);
FTC v. Mallinckrodt ARD Inc. (f/k/a Questcor
Pharms., Inc.), No. 1:17–cv–120 (D.D.C. Jan. 30,
2017) (stipulated order for permanent injunction
and equitable monetary relief).
367 PhRMA, 790 F.3d at 201.
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responses will provide the Agencies
with key information that is necessary
to determine whether an acquisition, if
consummated, may violate the antitrust
laws. It is appropriate for filers to
provide this information because they
are in the best position to do so.
Competition Descriptions will allow the
Agencies to conduct a fact-based
assessment of the antitrust risks posed
by each transaction, rather than expend
time and resources issuing voluntary
access letters and Second Requests for
information that bears directly on the
determination that further investigation
is warranted. Nonetheless, in light of the
concerns expressed by commenters, the
Commission has made significant
modifications to these requirements to
better calibrate the information that
would be most beneficial to the
Agencies while reducing the cost as
much as practical, including excusing
select 801.30 transactions from these
requirements.
1. Overlap Description
The Commission proposed a new
Overlap Narrative section that would
require each filing person to provide an
overview of its principal categories of
products or services (current and
planned) as well as information on
whether it currently competes with the
other filing person. The Commission
further proposed that each filing person
would describe its current and planned
principal categories of products and
services in a way that those business
lines are referred to in the company’s
day-to-day operations, and identify any
documents submitted with the HSR
Filing that support information
contained in the narrative. For each
identified overlapping product or
service, the Commission proposed that
the filing person would also provide
sales, customer information (including
contacts), a description of any licensing
arrangements, and a description of any
non-compete or non-solicitation
agreements applicable to the employees
or business units related to the product
or service.368
The Commission received numerous
comments on this requirement. As one
commenter noted, the Commission’s
original proposal in 1977 would have
required a filer to identify its top five
most significant competitors for
overlapping operations. The
Commission did not adopt this
proposal, as well as other proposals, not
because they were improper, as
suggested by this commenter, but
because the Commission determined at
the time that it was important to reduce
368 NPRM
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the overall burden of complying with
notification requirements,369 which
were unfamiliar to the M&A business
community at that time. After forty-five
years of experience with reviewing
thousands of transactions each year, the
Agencies are now well aware of the
importance of understanding who the
parties view as their competitors,
especially if that group includes the
other merging party, because it is
relevant to whether the transaction may
violate the antitrust laws.370 The need
for this self-identification of competitors
has grown over time as NAICS codes
and other information do not always
provide a consistent and reliable
benchmark for filers, resulting in overor under-reporting of competitive
overlaps. In this rule, filers are merely
required to describe each of the
principal categories of products and
services they offer, and list and describe
each product or service that they both
provide to the market. The Commission
believes that in light of the
shortcomings of other more objective
reference points, it is necessary to
require filers to identify whether they
offer products or service that compete
with the other filing party.
Several comments pointed to the
burden of providing an Overlap
Description for all filings. For instance,
one commenter stated that the proposal
lacks a relevance test or de minimis
threshold so that companies will be
required to delve deep into complex
corporate structures to identify
individual products and services offered
by their subsidiaries. Another raised
concerns that providing a detailed
analysis of competitive dynamics in
each of these theoretical segments,
particularly in transactions that are
occurring in manifestly competitive
environments, is wasteful and unduly
burdensome.
As discussed above, in light of
concerns about the cost this requirement
places on all filers, the Commission has
modified its proposal in several ways to
reduce the cost on filer. First, it has
decided to limit the requirement to
report planned or future products to
those referenced in another document
submitted with the HSR Filing. The
Commission has also eliminated the
requirement to provide an estimate of
how much of the product or service
each customer category purchased or
used monthly for the last fiscal year.
And rather than require reporting for the
369 See
42 FR 39040, 39043 (Aug. 1, 1977).
e.g., Illumina, Inc. v. FTC, 88 F.4th 1036,
1049 (5th Cir. 2023); FTC v. Whole Foods Market,
Inc., 548 F.3d 1028, 1045 (D.C. Cir. 2008) (Tatel, J.,
concurring in judgment).
370 See,
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two most recent fiscal years, the
Commission has limited reporting to the
most recent fiscal year. In addition, the
Commission has decided not to require
sales information in units—only dollars.
It has also eliminated the requirement to
provide individual contact information
for customers. Additionally, the
Commission has eliminated the
requirement to describe licensing
agreements and non-compete or nonsolicitation agreements in this section.
These changes are discussed in greater
detail in the sections that follow.
Finally, the Commission has decided
not to require Overlap Descriptions for
select 801.30 transactions. In the
Commission’s experience, these filings
almost never report overlaps on the
basis of NAICS codes and there is no
reason to think that requiring this class
of filers to provide a descriptive
confirmation would provide a benefit to
the Agencies that would enhance
premerger screening of this particular
set of transactions.
At this time, the Commission lacks a
basis to excuse other categories of filings
either on the basis of complexity of the
filer’s corporate structure or the general
robustness of competition in the
markets in which the filers compete. In
fact, complex corporate structures can
make it much harder for the Agencies to
discover competing lines of business
from any source other than the filers.
When information in the HSR Filing is
inconclusive, staff often must try to
discover these existing relationships
based on imperfect information from
public sources, the parties’ submitted
documents, and other sources of market
information, such as third parties.
Requiring filers to provide a description
of any overlap is a much more direct,
efficient, and reliable way to get this
critical information because it will be
coming from the parties. If the parties
are aware of other companies that also
provide products or services that
compete, they can (but are not required
to) provide that information as part of
their descriptive response. If this
requirement creates a significant cost to
filers, it is due to their significant preacquisition business relationships,
meaning that the effort to provide the
description is directly proportional to
the risk that the transaction may violate
the antitrust laws.
After careful consideration of the
comments, the Commission has made
significant modifications to the Overlap
Description to reduce the cost to filers
while also providing a factual basis for
identifying whether the filing parties are
actual or potential competitors. This
information will improve Agency
decision-making during the initial
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89315
waiting period. Modifications reflected
in the final rule are discussed below.
a. Identification of Current or Future
Overlaps
The Commission proposed that each
filing person provide a brief overview of
its principal categories of products and
services (current and planned) as well
as information on whether it currently
competes with the other filing person.
As noted in the NPRM and discussed
above, such information is core to the
Agencies’ substantive antitrust analysis
during the initial waiting period and is
not readily accessible from sources
other than the filers themselves.371 A
comment from State antitrust enforcers
supported the requirement for
additional information about present
and potential horizonal competitive
overlaps, noting that State antitrust
enforcers are particularly concerned
with acquisitions of potential or nascent
competitors and the protection of
rivalrous innovation. As fellow
enforcers of the Federal antitrust laws,
they noted that most research and
development (‘‘R&D’’) pipelines are
known only to the companies and that
disclosing current or known plans,
including R&D efforts, up front would
ensure effective deal reviews. They
noted that, at times, deals that appear
benign may mask significant
anticompetitive effects lurking below
the surface. Sophisticated incumbent
companies have a greater incentive and
more developed means to detect
industry developments—and a
correspondingly far-reaching ability to
curb competition in ways that harm
consumers.
As discussed in section II.B.4., the
Agencies currently lack a sufficient
basis from information in the
notification to determine if the
transaction is likely to violate the
antitrust laws by eliminating on-going
innovation competition, a potential
competitor, or a nascent competitive
threat that has yet to make sales.
Without information that indicates there
are known areas of competition based
on expected revenues, this will continue
to be a blind spot that results in lessthan-optimal enforcement on this basis.
Because these areas of potential or
emerging competition are typically not
well-known to others uninvolved in the
transaction, the Agencies do not have a
source for this information other than
the filing parties.
The need for information related to
planned products and services is
especially important for transactions in
which one (or both) filers already have
371 NPRM
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a dominant position and the other party
has planned products that could soon be
introduced to the market to provide
some level of competition to the
dominant player. According to the State
antitrust enforcers, acquisitions of
potential or nascent entrants may
empower already dominant incumbents
to discontinue either the target firm’s or
its own innovation, thereby eliminating
existing and future competition between
the merging parties and information
supplied by the Overlap Description is
critical for the Agencies to analyze
acquisitions affecting potential
competition or present rivalrous
innovation.
Other commenters object to the
requirement to identify overlaps based
on planned products or services under
development by the other party. One
pointed out that many companies have
a pipeline of product ideas that may or
may not result in an actual product sold
to customers. Others indicated that in
the pharmaceutical and biotechnical
sectors, this information would be
speculative at best for many ongoing
R&D initiatives. The Commission
acknowledges that the assessment of
when a planned product or service will
start generating revenues is likely
imprecise, and that products in
development often do not meet
important deadlines for commercial
release. But the Commission disagrees
that companies with extensive R&D
pipelines are unfamiliar with these
drawbacks or that imprecision prevents
them from having target launch dates
based on their best information. In the
Agencies’ experience, companies with
ongoing product development efforts
routinely adjust expected timelines to
commercialization based on new
information. In particular, as part of
preparing for the transaction, many of
these companies prepare an assessment
of the target’s products, including
products in development. Products in
development can compete with other
products in various stages of
commercialization, forming the basis for
antitrust liability in certain
circumstances.372
Nonetheless, to provide an objective
reference point that would determine
whether a filer would need to include
a product in development as part of its
descriptive response, the Commission
modifies this requirement to limit the
reporting of current or known planned
products or services to those that are
reflected in documents submitted with
the filing. This limitation should serve
to reduce the cost and increase the
certainty that the planned product or
372 See,
e.g., Illumina v. FTC, 88 F.4th at 1050.
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service is likely to be introduced. In
particular, plans and reports provided to
the CEOs and Boards of Directors and
submitted with the HSR Filing would
likely provide a solid reference point for
filers to determine if the planned
product is sufficiently likely to meet
targets for commercial introduction
because it is discussed in these highlevel reports shared with key decisionmakers.
In addition to the objections
discussed above, several commenters
objected to the specific requirements of
identifying overlaps or customers based
on sales information, which might
include sales generated in markets
outside the United States. One
commenter stated that the requirement
to provide historical information should
be limited to sales and customers from
U.S. operations and should be further
limited to sales information based solely
on sales by dollars, not additionally by
units. The Commission declines to limit
the Overlap Description to U.S. sales
information. Many transactions every
year involve industries whose
companies compete on a global basis
such that the relevant antitrust markets
in which they compete are broader than
the United States or involve facilities or
customers that are located outside the
United States.373 Having this
information is critical to the Agencies’
assessment during the initial waiting
period.
The Commission agrees with the other
modification suggested by one
commenter to limit this requirement by
reporting revenues only based on sales
by dollars and not also by units. As the
commenter notes, in many service
sectors such as healthcare or
professional services, the concept of
‘‘units’’ is arbitrary and estimates would
be both burdensome and unreliable. The
Commission believes that it is less
costly for filers to rely on only one
measure of sales and that reporting by
other measures in addition to sales often
does not lead to different results. Thus,
the Commission does not adopt the
requirement to report sales based on
units in addition to dollars and limits
373 See, e.g., Polypore Int’l, Inc. v. FTC, 686 F.3d
1208 (11th Cir. 2012); FTC v. Wilh. Wilhelmsen
Holding ASA, 341 F. Supp. 3d 27 (D.D.C. 2018);
FTC v. Tronox Ltd., 332 F.Supp.3d 187 (D.D.C.
2018); In re Nvidia Corp., No. 9404 (F.T.C. Dec. 2,
2021) (complaint); United States v. ZF
Friedrichshafen A.G., No. 1:20–cv–00182 (D.D.C.
Jan. 23, 2020) (complaint); United States v. United
Techs. Corp., No 1:18–cv–02279 (D.D.C. Oct. 1,
2018) (complaint); United States v. Novelis, Inc.,
No. 1:19–cv–02033 (N.D. Ohio Sept. 4, 2019)
(complaint); In re Corpus Christi Polymers LLC, No.
C–4672 (F.T.C. Feb. 20, 2019) (decision and final
order): In re Quaker Chem. Corp., No. C–4681
(F.T.C. Sept. 9, 2019) (decision and final order).
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the reporting of sales and customer
information only to dollar sales.
To further reduce the cost of
collecting data to support the Overlap
Description, the final rule requires the
reporting of sales data only for the most
recent fiscal year, down from the last
two years as proposed. This limitation
parallels other reporting requirements
that are similarly limited to the most
recent fiscal year.
The commenter also suggested that, in
order to prevent the sharing of
information between existing
competitors that would inadvertently
increase the risk of anticompetitive
coordination, the information required
by the Overlap Description be limited to
information within the knowledge,
information, or belief of the person
filing. The Commission confirms that
filers should prepare the Overlap
Description based on the knowledge and
belief of the filing person.
b. Customer Information
The Commission proposed that, for
each principal category of products and
services and each overlapping product
or service, filers (a) describe all
categories of customers, including an
estimate of monthly sales or purchases
in each category; (b) contact information
(including the individual’s names, title,
phone, and email) for the top 10
customers (based on units and sales) for
the last year, and the top 10 customers
in each customer category.
Some individual commenters
supported this proposal, urging the
Agencies to take steps to better
understand the impact of acquisitions
on those most affected by them,
including customers. Other comments
raised concerns about the type and
amount of information collected about
customers, as well as the risks
associated with identifying them in an
HSR Filing, including providing
individual contact information. One
commenter asserted that the Agencies’
stated intention to contact customers
during the initial waiting period raises
serious confidentiality concerns and
places a transaction at considerable risk.
Another commented that there may be
legitimate business justifications for not
disclosing a potential transaction
internally or to commercial partners at
the time of filing, and requiring specific
contact information practically
necessitates such disclosures to
maintain employee and customer
relations. According to another
commenter, for the vast majority of
transactions, customer information is
not required to make an assessment that
the transaction requires Second
Requests, and thus the Agencies should
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continue to ask for customer contact
information on a voluntary basis only
when it may be necessary.
After considering these comments and
others, the Commission modifies the
amount of information required in the
Overlap Description related to
customers but has determined that some
information related to customers is
important for the initial antitrust
assessment of the transaction. The
Agencies will continue to reach out to
customers in order to get their input and
reactions to reportable transactions as
time and resources allow during the
initial waiting period regardless of
whether they are referenced in the
notification. Contacting customers to
learn about the business lines of the
filing parties is often the very first thing
staff does to begin the investigation of
a potentially problematic transaction.
As discussed in section III.C.1., the
Agencies routinely contact many
customers of the filing parties, often
without the filing parties’ knowledge,
during the course of an investigation,
especially if the initial waiting period is
prolonged by a withdrawal and refile.
There is nothing improper about the
Agencies’ contacts with third parties to
learn facts about the industry or the
operations of the filing parties. The HSR
Act contains strict limits on the
disclosure of information submitted or
collected during an investigation,374 and
unauthorized disclosure carries criminal
penalties.375 At all times during the
investigation, Agency staff comply with
these requirements. For example, when
contacting customers or other market
participants, Agency staff may disclose
that the agency is conducting a
nonpublic investigation of the proposed
transaction, but Agency staff will not
disclose any information contained in
an HSR Filing without a waiver.
Although collecting more information
from filers in the HSR Filing should
reduce the Agencies’ reliance on
contacting third parties to learn basic
business facts about the merging parties,
conducting outreach with third parties
is an essential task of premerger
screening to ensure that the Agencies’
antitrust assessment fully considers any
potential impact of the transaction on
other market participants.376 Because
transactions may not have been publicly
disclosed, it is imperative that the
Agencies initiate contact with third
parties and not wait for them to reach
out. The Agencies routinely conduct
374 15
U.S.C. 18a(h).
18 U.S.C. 1905, 15 U.S.C. 50.
376 Some commenters believe that the Agencies
have been insufficiently attentive in the past to
those most affected by harmful consolidation.
375 See
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public research to learn about customers
for potential outreach, regardless of
whether the filing parties have provided
their contact information. Moreover,
customer information is typically in the
agency’s first request to filers to submit
additional information on a voluntary
basis during the initial waiting period.
At times, filers have anticipated this
voluntary request and provide this
information quickly, sometimes the
same day. However, this is not
universally true and any delay in
obtaining this information about top
customers is inefficient and undermines
the Agencies’ ability to conduct thirdparty outreach. While the Agencies may
be able, on their own, to identify some
customers of the filing parties, it is
important that such third-party outreach
also include those customers most
affected by the transaction, that is, those
customers who are most reliant on the
filing parties to conduct their own
business.
Nonetheless, in light of concerns
about identifying particular individuals
as customer contacts, the Commission
does not adopt that requirement as
proposed. Instead, the Commission
modifies the requirement so that filers
must identify customers by company
name without providing contact
information for any individual
employed by the company. The
Commission believes that company
contact information has value even
without knowing the name or title of the
individual at the customer business that
is most knowledgeable about the
existing business relationship with the
filer. Moreover, knowing which
companies are top customers provides
important context to determining
whether any particular customer may be
affected by the elimination of
competition between the parties and is
additional information beyond knowing
what the overlapping product or service
is.
To further reduce the cost of
providing information related to
customers, the Commission has
modified this requirement so that filers
do not have to estimate monthly
purchases or sales by customer category
as proposed. Filers will be required to
describe all categories of customers
without providing specific sales or
purchase estimates by category. Simply
describing categories of customers will
enable the Agencies to determine if
there are unique end-uses for the
product, possibly reflecting some degree
of non-uniform demand that would
indicate limits on substitutability across
different customers. Qualitative
descriptions of customer categories are
sufficient for the Agencies to determine,
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89317
at a preliminary stage, whether demand
is segmented, a fact that is important for
gauging potential competitive effects of
the transaction. Relatedly, this
additional information may help
eliminate or reduce antitrust concerns if
the parties serve very different
customers or customer categories.
With these significant modifications,
the Commission adopts the requirement
that filers providing an Overlap
Description also include some
information about customers for those
products or services.
c. Descriptions of Agreements With the
Other Filing Party
The Commission proposed that as
part of the Overlap Description, for each
overlap product or service identified,
filers would provide a description of
certain competitively significant
agreements between the filing parties,
such as licensing arrangements and any
non-compete or non-solicitation
agreements applicable to employees or
business units related to the product or
service.377
One commenter supported the
collection of information related to
existing agreements between the filing
parties because it may be relevant to an
assessment of whether something short
of a full merger may be sufficient to
enable the parties to realize the
potential procompetitive benefits of a
transaction without potential
competitive harm. No commenter
specifically objected to this particular
requirement of the Overlap Description.
However, in light of objections to the
overall cost of the final rule, the
Commission does not adopt this
proposal at this time. Instead, the
Commission believes that the
requirement, discussed in section VI.I.1,
to indicate via check boxes whether
certain types of agreements exist
between the acquiring person and target
will alert the Agencies to transactions
that may require further investigation.
2. Supply Relationships Description
The Commission proposed to require
each filing person to provide
information about existing or potential
purchase or supply relationships
between the filing persons. This
description would require filers to
describe each product, service or asset
(including data) that the filer sold,
licensed or otherwise supplied, to the
other party or to any other business that,
to the filer’s knowledge or belief, uses
its product, service, or asset to compete
with the other party’s products or
services, or as an input for a product or
377 NPRM
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service that competes with the other
party’s products or services.378 Similar
information is required for purchases
from the other party. According to the
NPRM, this information would allow
the Agencies to identify whether the
transaction would create opportunities
for post-acquisition foreclosure of rivals
arising from vertical or diagonal
relationships.379 As discussed in section
II.B.3., current information requirements
do not provide a factual basis to alert
the Agencies that there is an existing
supply relationship that might require a
closer look to determine whether the
transaction is likely to violate the
antitrust laws.
As noted in the NPRM, in the past the
Commission had required filers to
provide similar information about
vertical vendor-vendee relationships,
but the requirement was eliminated in
2001; since that time, filers have
provided no specific information related
to existing vertical or other supply
relationships. Several commenters
objected to including this information
again, noting that vertical concerns will
not be a feature of most transactions,
and information related to these issues
is more appropriate for a Second
Request once the Agencies have
determined that the transaction
genuinely raises vertical foreclosure
concerns. One commenter stated that
information about sales to and
purchases from non-transacting parties
has limited, if any, relevance to the
transaction and is thus outside the
scope of the Act. Another noted that
concerns about unwinding alreadyconsummated transactions that
motivated the Act are not present in
non-horizontal transactions, and urged
the Agencies to exempt purely nonhorizontal transactions from the
reporting requirements of the Act on
that basis.
Other commenters supported the
reintroduction of the requirement to
report information related to key supply
relationships, suggesting that
descriptive responses should provide a
more accurate and complete basis for
screening transactions. One commenter
commended the Commission for
recognizing the need to request
information about input markets and
noted the historical lack of such
information has resulted in an
information asymmetry between the
Agencies and filing parties. Others
identified industry-specific concerns
related to non-horizontal implications of
acquisitions. One commenter cited the
378 Id.
at 42196–97.
Dep’t of Justice & Fed Trade Comm’n,
Merger Guidelines 2.5 (2023).
379 See
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example of the seed industry,
commenting that to understand market
power in that industry the Agencies
must have information regarding the
unique supply, distribution, and
licensing dynamics that are present.
Another commenter discussed the
proposal’s impact on private equity
firms, claiming it is common for firms
to have portfolios that include upstream
and downstream segments, a structure
that can incentivize preferential
treatment between portfolio companies
in ways that disadvantage rivals.
State antitrust enforcers also
supported the need to better understand
any supply relationships, including
through the collection of information
regarding data assets. They explained
that the merger of two firms’
complementary data sets can create,
augment, and maintain market power.
As antitrust enforcers, they stated that
they also seek to understand how the
target’s data can be combined with the
buyer’s, and whether the combined data
can be used to leverage power into
further applications. To fully account
for the potential that the combination of
the buyer’s and seller’s data could be
leveraged into additional applications,
the State antitrust enforcers
recommended the Commission consider
whether these requests should be
expanded beyond the related purchases
and related sales narrative.
After considering the concerns raised
by commenters on both sides, the
Commission has determined that the
final rule will require, once again, the
submission of information related to
supply relationships. Contrary to
assertions that the Agencies rarely
challenge, and even more rarely prevail
against, non-horizontal acquisitions, the
Agencies have blocked several nonhorizontal mergers since 2021 and have
another challenge pending review.380
The Commission specifically rejects the
suggestion that the final rule exempt
non-horizontal mergers from the
380 See Press Release, Fed. Trade Comm’n,
‘‘Statement Regarding Illumina’s Decision to Divest
Grail’’ (Dec. 18, 2023), https://www.ftc.gov/newsevents/news/press-releases/2023/12/statementregarding-illuminas-decision-divest-grail; In re
Lockheed Martin Corp., No. 9405 (F.T.C. Jan. 25,
2022) (complaint alleging merger would enable
missile systems manufacturer to use control over
missile propulsion systems to harm rival defense
prime contractors) (transaction abandoned); In re
Nvidia Corporation, No. 9404 (F.T.C. Dec. 2, 2021)
(complaint alleging merger would give chip
manufacturer the ability and incentive to use
control over microprocessor design technology to
undermine competitors) (transaction abandoned); In
re Microsoft Corp., No. 9412 (F.T.C. Dec. 8, 2022)
(complaint). See also FTC v. Procter & Gamble Co.,
386 U.S. 568, 577 (1967) (whether classified as
horizontal, vertical, conglomerate or other, all
mergers tested by the same standard under section
7).
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reporting requirements of the Act. Such
an exemption would abrogate the
Agencies’ direct Congressional mandate
not to ignore mergers that do not
involve horizontal competitors. With
the 1950 amendments to the Clayton
Act, Congress made clear that section 7
applies not only to mergers between
actual competitors but also to vertical
and conglomerate mergers.381
The Commission observes that
mergers that create a risk of nonhorizontal concerns are more varied in
their effects, with the over-arching
concern being the risk that the
transaction provides the merged firm
with the ability and incentive to
foreclose rivals. According to
controlling precedent, there are myriad
ways in which the merged firm could
engage in foreclosing behavior, such as
by making late deliveries or subtly
reducing the level of support
services.382 In light of that variety of
potential mechanisms, it is important to
have some basis to assess whether the
transaction creates a risk that the
merged firm may limit access to
products or services that its rivals use to
compete.383
Some commenters questioned
whether, as a practical matter, filers will
be able to gather the information
required by the Supply Relationships
Description. For instance, one
commenter stated that providing this
information would require filers to
create a new tool for tracking related
sales and purchases, while another
noted that, especially for retailers who
are often ‘‘price takers,’’ there may be no
need internally for conducting this type
of analysis, meaning it would be
undertaken solely to comply with the
Act for reporting transactions. Two
other commenters stated that this
narrative is duplicative of document
requests and thus should be eliminated.
The Commission disagrees that the
new Supply Relationships Description
requires special reporting tools or is
duplicative of document requests. In the
Agencies’ experience, documents
submitted with the HSR Filing often do
not contain references to key suppliers
or purchasers, or the documents do not
381 Brown Shoe Co. v. United States, 370 U.S. 294,
317 (1962) (explaining that by the deletion of the
acquiring-acquired language in the original
statutory text, Congress hoped to make plain that
section 7 applied not only to mergers between
actual competitors, but also to vertical and
conglomerate mergers whose effect may tend to
lessen competition in any line of commerce in any
section of the country). See also H.R. Rep. No. 1191,
at 11 (1949).
382 See Illumina, Inc. v. FTC, 88 F.4th 1036, 1053
(5th Cir. 2023).
383 See Dep’t of Justice & Fed Trade Comm’n,
Merger Guidelines 2.5 (2023).
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provide sufficient context to understand
whether the merged firm will have the
ability to foreclose key inputs in
violation of the antitrust laws. Nor does
the Commission agree that companies
are unaware that they are in an existing
supply relationship or that there would
be no records for a company to
determine that it has purchases from or
sales to another company. As with the
Overlap Description, requiring filers to
provide a brief description of any sales
or purchase relationship is a much more
direct, efficient, and reliable way to get
this critical information because it will
be coming from the parties and does not
require staff to interpret references in
documents to these types of
relationships. Even given the expansion
of document requirements in the final
rule, this specific information that
describes an existing business
relationship in the same supply chain is
unlikely to be revealed in transactionspecific documents or those generated
in the ordinary course. This is
especially true because the Supply
Relationships Description requires each
filer to identify whether it supplies not
just the other party but a different
company that competes with the other
party.
Two commenters urged the
Commission to narrow the scope of the
required information by adopting a
limitation for de minimis levels of
related sales or related purchases, for
example by restricting requirements to
those related sales or purchases
generating over $10 million in U.S.
revenue in the past fiscal year. One
commenter noted that the pre-2001
reporting for vendor-vendee information
was limited to transactions between the
parties and to purchases or sales over $1
million, and stressed the need for the
Agencies to establish a similar objective
criteria to guide filers and avoid
reporting thousands of routine or
competitively benign purchases.
Another commenter questioned the
need for the Commission to revive a
request that it deemed insufficient as a
screen for potential non-horizontal
relationships.
After careful consideration of these
comments, and in light of the
Commission’s intention to reduce cost
wherever practical, the Commission has
made several modifications to the
Supply Relationships Description. As
with the Overlap Description, the
Commission declines to exclude
information related to sales outside the
United States. Here too, such an
exclusion is not justified for the
significant number of transactions for
which sales occur outside the United
States and yet the transaction has
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sufficient nexus to the United States to
require reporting. Nonetheless, the
Commission has determined that the
rule should include a de minimis
exclusion to reduce the cost of
collecting information related to
competitively insignificant sales or
purchases. The final rule excludes
reporting unless the product, service, or
asset (including data) represented at
least $10 million in revenue. In order to
ensure that the de minimis exclusion
does not cause filers to underrepresent
their own production or capacity to
supply the market, the de minimis
amount is inclusive of internal transfers
within the filing person. That means
that when applying the de minimis
exclusion, the filer should include the
value of the product that it supplies to
itself because that reflects the filer’s
ability to meet the demand for the
product. For example, if the acquiring
firm sells Product X to the target, when
calculating the total revenue for Product
X to determine whether Product X
represents at least $10 million in
revenue, the filer must include its own
consumption of Product X and sales of
Product X to anyone else. If all of the
filer’s sales (including internal sales) of
Product X represent less than $10
million in revenue, the filer does not
need to respond to the Supply
Relationships Description for sales of
Product X.
As with the Overlap Description,
several commenters objected to the
Supply Relationships Description on the
grounds that it is subjective and
burdensome and that it would require
premature disclosure of the deal or
improperly shift the burden of proving
an antitrust violation from the Agencies
to the filing parties. Accordingly, the
Commission has determined to make
similar modifications to the Supply
Relationships Description as it did for
the Overlap Description, in order to
reduce the cost of reporting.
Specifically, the final rule limits the
reporting period to the most recent
fiscal year and requires reporting for
sales only in dollars, not also in units.
It also eliminates the requirement for
contact information for individuals at
customers or suppliers, requiring only
the identity of the company to limit the
risk of inadvertent disclosure. With
these modifications, the Supply
Relationships Description will provide a
factual basis to determine whether the
transaction requires a closer look to
assess the risk of foreclosure, while
minimizing the cost as much as
practicable.
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3. Labor Markets Information
The Commission proposed creating a
new Labor Markets Information section
within the Instructions that would
require each filing person to provide
certain information about its workers in
order to screen for potential labor
market effects arising from the
transaction. As noted in the NPRM, the
Agencies have increasingly recognized
the importance of evaluating the effect
of mergers and acquisitions on labor
markets.384 Yet, as noted in section
II.B.2., the Agencies’ HSR Form does not
collect information from filers about
their employees or the type of work that
their employees do that would allow the
Agencies to identify the parties as
competitors for certain labor services,
raising challenges for the effective
enforcement of section 7 to protect
competition that benefits workers.385
Within the Labor Markets section, the
Commission proposed requiring each
filing person to (1) provide the aggregate
number of employees for each of the
five largest 6-digit Standard
Occupational Classification (SOC)
codes; (2) identify the top five largest 6digit SOC codes in which both parties
employ workers, and for each of these
SOCs, list the overlapping ERS-defined
commuting zones and the total number
of employees within each commuting
zone; and (3) identify any penalties or
findings that were issued against the
acquiring person or acquired entity by
the DOL’s Wage and Hour Division,
NLRB, or OSHA during the five-year
period before the filing.386
The Commission received many
comments focused on the labor market
proposals. Several commenters,
including hundreds of individual
commenters, supported the Agencies’
attention to the potential for mergerinduced harm in labor markets and the
requirement that parties submit
information about their employees for
premerger screening. Supportive
commenters stated that filers have
sophisticated legal and accounting
personnel and systems to minimize the
burden on the companies of collecting
and reporting employee information.
Other commenters asserted that
requesting labor market information in
the earlier stages of merger review
would lead to a more efficient and
uniform process that could result in the
Agencies’ termination of the HSR
waiting period prior to the end of the
initial 15 or 30 days in a greater number
of mergers where no labor market issues
exist.
384 NPRM
at 42197.
U.S.C. 18.
386 NPRM at 42197–42198.
385 15
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Other commenters, including law
firms, private equity and venture capital
groups, and industry groups, raised
broad objections to the Commission’s
proposal to collect labor market
information in the HSR Form. These
organizations argued that the effort
required by the Labor Markets section
would be significant and would greatly
increase costs for companies wishing to
engage in reportable transactions.
Moreover, they argued that this
increased burden was not justified by
the utility of the employee information
required by the proposed rule for
antitrust screening. Some commenters
stated that the increased burden of
complying with these reporting
requirements would have a chilling
effect on transactions.
In light of the comments, as well as
the Agencies’ recent experience in
identifying and investigating
transactions that may harm competition
for workers, the Commission has
determined not to require specific
information about employees at this
time. After considering several options
to collect worker information that
would be specific enough to allow the
Agencies to screen for potential labor
market effects without unduly
burdening filers, the Commission has
determined that the Agencies will rely
on other information required by the
final rule to identify transactions that
require an in-depth investigation for
potential labor market effects. This
includes the new Competition
Descriptions, which together will
provide the Agencies with a better
understanding of the premerger
competition between the merging
parties. The Commission believes that
this information is likely to reveal those
transactions where the filers are likely
to compete for workers that do the same
or similar types of jobs because they
supply similar or related products or
services. In addition, the new document
requirements, including plans and
reports and additional transactionrelated documents, should reveal
whether the parties view themselves as
competing for labor services. From these
documents, as well as a description of
the rationale for the transaction from the
buyer, the HSR Filing should reveal
whether the buyer anticipates any
impact on workers or labor costs as a
result of the transaction.
The Commission acknowledges the
need to obtain detailed information
about employees for some transactions
during the merger review process and
will continue to consider whether it is
appropriate, on a case-by-case basis, to
require the production of such
information in a Second Request.
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a. Worker and Workplace Safety
Information
The Commission proposed to create a
Worker and Workplace Safety
Information section that would require
filing persons to identify any penalties
or findings that were issued against the
acquiring person or acquired entity by
the U.S. Department of Labor’s Wage
and Hour Division, the National Labor
Relations Board, or the Occupational
Safety and Health Administration
during the five-year period before the
filing. Several commenters supported
the inclusion of the Worker and
Workplace Safety Information, noting
that the information could prove
indicative of a concentrated labor
market and market power. One
commenter stated that it had previously
alleged that repeated and widespread
labor law violations constituted direct
evidence of labor market dominance
that could be relevant to merger
analysis. Others noted that this
information is often known to the filers
and may be indicative of a concentrated
labor market.
Some commenters urged the
Commission not to require the
submission information about past
workplace violations due to the lack of
a clear nexus between labor law
violations and merger analysis. Other
commenters stated that labor law
violations may be tied to issues that are
irrelevant to market power, such as the
presence of an organized labor group
that is more inclined to report potential
violations, and the requirement should
be limited to the industries where
violations are more prevalent. Some
stated that the existence of labor law
violations was government data that was
already available to the Agencies
without placing the obligation on
parties to report such violations.
The Commission acknowledges that
information regarding some of these
violations may be publicly available or
otherwise available to the Agencies. The
U.S. Department of Labor and the
National Labor Relations Board
maintain public accessible databases
containing labor enforcement case
information on their respective
websites.387 In addition, the Agencies
have each established Memoranda of
Understanding (MOUs) with the
Department of Labor and the National
Labor Relations Board that would allow
for the Agencies to obtain relevant nonpublic information regarding labor law
387 See U.S. Dep’t of Labor, ‘‘Enforcement Data,’’
https://enforcedata.dol.gov/Enfdata/search.php;
Nat’l Labor Relations Bd., ‘‘Case Search,’’ https://
www.nlrb.gov/search/case.
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violations.388 Accordingly, when the
Agencies identify potential harms to
labor market competition through
information contained in the HSR Filing
or through other means, they can seek
information on labor violations from
publicly available sources, from the
Department of Labor and the National
Labor Relations Board under their
respective MOUs, and when
appropriate, from the filers on a
voluntary basis or in response to Second
Requests. Because this information may
be available to the Agencies through
means that would not require filers to
provide this information in the HSR
Filing, the Commission does not adopt
the requirement for filers to submit
information on worker and workplace
safety, and it is not required by the final
rule.
b. Requests To Expand Requirements for
Information Related to Labor Markets
Some commenters encouraged the
Commission to request more
information about employees, including
the merging companies’ histories of
labor law violations dating back ten
years rather than only five years;
information about their remote,
temporary, or contract workers; and the
merging companies’ union avoidance
activities and expenditures. Certain
commenters encouraged the Agencies to
consider the role of unions and
collective bargaining to accurately
assess employer market or monopsony
power. In particular, commenters
suggested that the Agencies could
collect the following information to
animate such an analysis: (1) a list of
unions at controlled entities, associates,
and franchisee/cooperatives; (2) copies
of collective bargaining agreements, at
least with any common unions; and (3)
a narrative describing any opposition to
388 See Press Release, Fed. Trade Comm’n, ‘‘FTC,
Department of Labor Partner to Protect Workers
from Anticompetitive, Unfair, and Deceptive
Practices’’ (Sept. 21, 2023), https://www.ftc.gov/
news-events/news/press-releases/2023/09/ftcdepartment-labor-partner-protect-workersanticompetitive-unfair-deceptive-practices; Press
Release, Fed. Trade Comm’n, ‘‘Federal Trade
Commission, National Labor Relations Board Forge
New Partnership to Protect Workers from
Anticompetitive, Unfair, and Deceptive Practices’’
(July 19, 2022), https://www.ftc.gov/news-events/
news/press-releases/2022/07/federal-tradecommission-national-labor-relations-board-forgenew-partnership-protect-workers; Press Release,
U.S. Dep’t of Justice, ‘‘Justice Department and
National Labor Relations Board Announce
Partnership to Protect Workers’’ (July 26, 2022),
https://www.justice.gov/opa/pr/justice-departmentand-national-labor-relations-board-announcepartnership-protect-workers; Press Release, U.S.
Dep’t of Justice, ‘‘Departments of Justice and Labor
Strengthen Partnership to Protect Workers’’ (Mar.
10, 2022), https://www.justice.gov/opa/pr/
departments-justice-and-labor-strengthenpartnership-protect-workers.
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efforts to unionize, including union
avoidance activities and expenditures.
The Commission acknowledges the
utility of collecting this information for
some transactions during the merger
review process but does not believe that
this information is necessary for all
filings at the screening stage. As a result,
the Commission has not included
requirements for this information in the
final rule but will continue to consider
whether it is appropriate, on a case-bycase basis, to request such information
during the investigation of the
transaction.
In sum, the Commission has
determined that the requirements of the
final rule to provide descriptions of
areas of competitive interaction between
the parties are necessary and
appropriate to enable the Agencies to
identify transactions that may violate
the antitrust laws and that the
requirements, as modified, have been
tailored to reduce the cost of reporting
as much as practicable.
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J. Revenues and Overlaps
The Commission proposed a
Revenues and Overlaps section to
collect information currently required
by Items 5(a), 6(c), 7, and 8, subject to
proposed modifications. The
Commission proposed substantive
changes to the reporting of revenue by
NAICS code, how NAICS overlaps of
controlled entities are reported, which
minority-held entities must be reported,
and which prior acquisitions must be
reported. As discussed below, the
Commission adopts some of the changes
as proposed, adopts others with
modifications, and does not adopt
others.
1. NAICS Codes
In the NPRM, the Commission
proposed several changes related to
revenue reporting. One of the changes
was ministerial in nature—adopting the
2022 version of the NAICS codes. This
proposal received no comments, and the
Commission adopts it as proposed.
The Commission proposed other, nonministerial changes to revenue reporting
that reflect a substantively different
approach to revenue information by: (1)
eliminating the requirement that filing
persons provide the precise amount of
revenue attributed to each NAICS code
and instead report revenues within
ranges; (2) reporting NAICS codes on a
descriptive basis through engagement
with individuals familiar with the
business operations of each operating
company and providing additional
information if more than one code
would be appropriate; (3) requiring
acquiring persons and acquired entities
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with more than one operating company
or unit to identify which entity(s)
derives revenue in each code; (4)
requiring acquiring and acquired
persons to report NAICS codes for
certain pipeline or pre-revenue
products; (5) clarifying that the acquired
person must report the NAICS codes
relevant to the acquired entity(s) at the
time of closing; and (6) eliminating the
requirement for filing persons engaged
in manufacturing to provide revenue by
NAPCS-based codes. As discussed
below the Commission adopts some of
these changes, adopts a modified
version of others, and does not adopt
certain of these proposed changes.
a. Reporting Revenues in Ranges
The Commission received several
comments in support of the proposal to
eliminate the requirement that filing
persons provide the precise amount of
revenue attributed to each NAICS code
and instead report revenues within one
of five ranges. One commenter stated
that the introduction of levels proposed
in the NPRM will simplify compliance
with the NAICS allocation requirement.
Two other commenters expressed
general support for the proposed set of
reorganized revenue information. The
Commission did not receive any
comments opposed to this change and
adopts it as proposed.
b. Reporting Revenues on a Descriptive
Basis
Regarding the proposal to report
NAICS codes on a descriptive basis
through engagement with individuals
familiar with the business operations of
each operating company and provide
additional information if more than one
code would be appropriate, two
commenters objected on the grounds
that it would be overly burdensome.
One commenter noted that many NAICS
codes are broad and disconnected from
the modern economy, making it difficult
to determine whether a particular code
applies. The other commenter objected
to the proposal to list all the codes that
describe the products or services
offered, explaining that it would be
extremely difficult to comply with when
relying on personnel at various
operating companies that have varying
familiarity with the NAICS system. The
same commenter noted that if the
Agencies are concerned about missing
potential overlaps, the Overlap
Description is a more effective way to
address that concern.
The Commission acknowledges the
concerns about cost and adopts this
proposal with modifications. As noted
in the proposed rule, in the
Commission’s experience, reliance on
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89321
financial records often results in underreporting or reporting revenues in codes
that may not actually be descriptive of
the products or services provided.
Having knowledgeable business
personnel select the appropriate NAICS
codes that best describe the filer’s
business lines is the best way to ensure
that the NAICS code revenues contained
in the HSR Filing reflect the full range
of products and services offered from a
business perspective. However, the
Commission will not require a
particular methodology to collect
NAICS codes and notes that the intent
of this change is to have filers report
codes that descriptively represent their
revenues, and not need to rely on how
they are captured in financial systems.
c. Identifying Entities That Derive
Revenues in Each Code
Two commenters objected to the
proposed requirement to report NAICS
information separately by operating
entity. Each of the commenters asserted
that this additional requirement would
likely create significant new burdens, in
particular for larger companies with
numerous subsidiaries. While this type
of reporting may be more difficult for
those with numerous subsidiaries, these
are exactly the filings for which the
Agencies cannot determine which
entities generate revenues that are
related to those of the other party. When
parties report revenues by entity, the
Agencies can quickly home in on which
business lines are competitively
relevant. The Commission notes that
some filers already provide revenues in
this way and it is extremely useful to
the Agencies when they do. Although
the Commission acknowledges that this
proposal may be more difficult for some
filers, it is necessary for the Agencies to
have at the outset a clear picture of how
revenues are generated within the filing
person. The Commission adopts this
change as proposed.
d. Reporting Revenues for Pre-Revenue
Products or Services
The Commission received several
comments regarding the proposal to
require acquiring and acquired persons
to report NAICS codes for certain
pipeline or pre-revenue products. A
group of State antitrust enforcers
supported the proposal, noting that they
are particularly concerned with
acquisitions of potential or nascent
competitors and the protection of
rivalrous innovation. Critics of the
proposed requirement expressed
concerns about compliance. One
commenter pointed out that the
Commission did not provide a clear
standard for what ‘‘under development’’
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means or what information the
acquiring person must have to ‘‘know’’
about the target’s product pipeline.
Other commenters noted that classifying
pre-revenue products or products under
development is inherently speculative
and that the NAICS classifications
sometimes lag changes in technology
and business.
The Commission acknowledges the
potential challenges in complying with
this change and believes it is sufficient
for the Agencies to rely on the
Competition Descriptions section for
information related to pre-revenue
products or services. In the Overlap
Description, filers are required to list
and briefly describe each current or
known planned products or services
that compete or could compete with
those of the other party. As a result,
similar information related to potential
NAICS code revenues would be largely
duplicative. Given the Commission’s
interest in reducing the cost of
complying with the final rule where the
additional information provides little
benefit to the Agencies, the Commission
does not adopt this proposal.
e. Overlap Reporting Revenues as of
Time of Closing
Regarding the proposal to clarify that
the acquired person must report the
NAICS codes relevant to the acquired
entity(s) at the time of closing, the
Commission did not receive any
comments. The Commission adopts this
item as proposed.
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f. Eliminating Reporting by NAPCS
Codes
Regarding the proposal to eliminate
the requirement for filing persons
engaged in manufacturing to provide
revenue by NAPCS-based code, the
Commission did not receive any
comments. The Commission adopts this
item as proposed.
2. Controlled Entity Geographic
Overlaps
Information about the geographic
areas related to overlapping products
and services is currently required by
Item 7. The Commission proposed
modifying these requirements to: (i) add
a requirement to provide the name(s) by
which entities have done business
within the last three years, (ii) require
the filing person to identify the
overlapping entity within its own
person, rather than the other filing
person, (iii) update the NAICS codes
that require geographic reporting at the
street address level, (iv) require the
identification of locations of franchisees
for certain NAICS codes, and (v) add a
requirement to provide geolocation data.
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As discussed below, the Commission
adopts the some of the proposals as
proposed, some with modification, and
does not adopt others.
a. NAICS Overlaps of Controlled
Entities
The Commission proposed several
changes to the information concerning
NAICS overlaps of controlled entities.
First, the Commission proposed
requiring the acquiring person to
identify the entity(s) within its own
person that has operations in the same
NAICS code as the acquired entity(s),
and the acquired person to identify the
entity(s) within the acquired entity(s)
that has operations in the same NAICS
codes as the acquiring person. Second,
it proposed requiring the identification
of ‘‘doing business as’’ or ‘‘formerly
known as’’ names used within the last
three years by entities with U.S.
operations in overlapping NAICS codes.
Finally, the Commission proposed that
filing persons be required to identify the
entity(s) that have U.S. operations in the
overlapping NAICS code(s).
Regarding the proposal to require the
identification of ‘‘doing business as’’ or
‘‘formerly known as’’ names used
within the last three years by entities
with U.S. operations in overlapping
NAICS codes, the Commission received
two comments. One commenter
expressed support for the proposal,
noting that information regarding how
private equity portfolio companies are
commonly known in the marketplace is
necessary for the Agencies to assess
potential anticompetitive overlaps.
Another commenter, however, stated
that the new requirement may be
difficult for filing parties to meet if they
do not maintain such records, meaning
they would need to recreate the
information for the HSR filing. The
same commenter questioned the value
of the information for entities beyond
those that either (i) generate revenue
that results in a NAICS overlap or (ii)
are parties to Material Other
Agreements.
The Commission believes ‘‘doing
business as’’ names will be of great
value to the Agencies in the initial
waiting period and thus adopts the
proposal to require filing parties to
identify names by which entities do
business at the time of filing. However,
as part of its overall efforts to lessen
costs, the Commission does not adopt
the proposal to require ‘‘formerly known
as’’ names.
Regarding the proposal to have each
filing person only report entities within
its own person that derive revenue in
the overlapping NAICS codes, the
Commission did not receive any
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comments. The Commission adopts this
change as proposed.
Finally, regarding the proposal to
require filing persons to identify the
entity(s) that have U.S. operations in the
overlapping NAICS codes, the
Commission did not receive any
comments. The Commission adopts this
change as proposed.
In addition, one commenter suggested
that the Commission require
identification of overlaps at the 3-digit,
rather than 6-digit level, stating that 6digit NAICS codes are too narrow.
While the Commission agrees that some
6-digit NAICS codes are too narrow to
identify products or services that
effectively compete in the market, it also
finds that other codes are overly broad.
Further, identification of overlaps also
triggers the reporting of additional
information, including geographic
information, identification of authors of
documents, production of certain
annual reports, information about
certain officers and directors,
identification of certain prior
acquisitions, and certain defense and
intelligence contracts. Thus, the
Commission declines to adopt this
suggestion but notes that this final rule
includes a Competition Descriptions
section, as discussed in section VI.I, to
address the shortcomings of revenue
reporting by NAICS codes.
b. Geographic Market Information
The Commission proposed two
changes related to geographic markets.
First, the Commission proposed
updating the list of NAICS codes for
which locations need only be identified
at the State level and NAICS codes for
which street-level information would be
required. These adjustments reflect the
Commission’s periodic review of which
NAICS codes need more granular street,
city, and State address information, and
which NAICS codes need only be
reported at the State level. Information
about where each filer generates
revenues is important to determining
whether the parties sell or supply
products or services in the same local
markets. Geographic market information
often provides a factual basis for the
Agencies to conclude that the merging
parties do not sell the same products in
the same local areas. Keeping this
information up-to-date allows the
Agencies to rely on geographic market
information to conclude that the
transaction does not warrant the
issuance of Second Requests.
The Commission received two
comments regarding this requirement,
one in support of it and one opposed.
The supportive comment emphasized
the need for street-level information in
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the agriculture industry, where the
relevant markets for evaluating
competition tend to be local and
regional due to the perishable nature of
agricultural products. The Commission
agrees that street-level information is
key in local and regional markets and
articulated this as the basis for the
expansion of the requirement in the
NPRM.
The comment in opposition to the
proposal stated that it would impose
additional costs on filing parties given
the wide range of industries for which
street-level information would be
required. The Commission
acknowledges the cost, but for the
reasons discussed above, believes that
street-level geographic information is
necessary to the Agencies’ ability to
conduct appropriate premerger
screening of transactions that are most
likely to affect competition at a local
level. The Commission adopts this
change as proposed.
The Commission also proposed
requiring filers to list locations where
franchisees of the acquiring or acquired
person (as appropriate) generate revenue
in overlapping NAICS codes that require
street-level reporting. The Commission
did not receive any comments on this
change and adopts it as proposed.
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c. Geolocation
The Commission also proposed
requiring filers to report latitude and
longitude information for street
addresses. The Commission received
comments both in support and in
opposition to this requirement. The
supportive comment stated that many
companies already keep lists of latitude/
longitude waypoints, while the
comment opposed stated that
exceedingly few businesses maintain
geolocation data in the ordinary course
of business.
As helpful as this information would
be to the Agencies, especially during the
initial waiting period when the
Agencies need to determine whether
there are any geographic markets in
which the parties compete, in its overall
effort to reduce costs to filing parties,
the Commission does not adopt this
proposal. Agency staff can continue to
pursue sources for this information
when necessary and as time permits
during the initial waiting period.
3. Minority-Held Entity Overlaps
The Commission proposed creating a
Minority-Held Overlaps section to
collect information related to minority
holdings that is currently required by
Item 6(c). Item 6(c) requires the
identification of holdings of the
acquiring person and its associates or
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the acquired entity (as appropriate) of
greater than 5% but less than 50% if
such holdings derive revenue in any of
the same 6-digit NAICS codes (or
industries) as the other party. In the
NPRM, the Commission proposed
eliminating the option to list all the
minority-held entities, rather than just
those that are in overlapping NAICS
codes or industries. The Commission
also proposed requiring filers to provide
the names by which the listed entities
do business, if known. The Commission
adopts these changes as proposed.
Regarding the proposal to eliminate
the option to list all minority-held
entities, the Commission received three
comments, one comment in support of
the proposed change and two comments
opposed to it. The supporter of the
proposal stated that it is critical to
understand a company’s minority
holdings, which may allow it to exercise
a level of competitive control in a
market. One commenter questioned the
probative value of information about
minority interests generally but did not
address this specific proposal. Another
commenter expressed concern that the
proposal could lead to greater scrutiny
of ‘‘growth equity’’ firms that primarily
take minority stakes in companies, and
asserted that it could have a chilling
effect on certain investments.
The Commission addresses concerns
that increased transparency may lead to
more enforcement actions in section
III.C.1. and states that the identification
of overlapping minority holdings is a
key reform of the final rule because
where these relationships exist, the
Agencies should scrutinize them as part
of their premerger review. The
Commission also emphasizes that filers
are currently required to identify
overlapping minority holdings.
However, the current Instructions allow
filers to identify all minority holdings
rather than only those that overlap. The
Commission has found that lists not
limited to the overlapping entities
hinder efficient screening for
transactions that may require further
investigation, resulting in extra effort
even when it would not be required if
the overlaps were known as well as not
surfacing transactions that do have such
overlaps. In contrast, when filers submit
a list of only those minority-held
entities that derive revenue in the same
NAICS code, or are in the same industry
as the other party, the Agencies can
quickly focus in on holdings that could
create a competitive concern.
Additionally, as minority interest
holders, the filers are in a better position
than the Agencies to identify which, if
any, of their holdings operate in the
same space as the other party. Given the
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importance of this information to the
Agencies, the Commission adopts this
change as proposed.
Regarding the proposal to require
filers to provide the names by which the
listed entities do business, if known,
one commenter supported the proposal
while another stated that it may be
difficult for filing parties to comply with
if they do not maintain such records. As
discussed in sections VI.D.1.d.(i) and
(iii) and VI.D.2.a., the legal names of
entities are not always directly related
to the name by which the entity is
known to the marketplace. Knowing the
public-facing names of entities
facilitates efficient review of
transactions by the Agencies because
those names may be better known to
other market participants. For investors
of 5% or more, the Commission believes
this information should be readily
available to filers. However, if this
information is not known, a statement of
non-compliance can be submitted with
the filing, as discussed in section
VI.A.5. Accordingly, the Commission
adopts this requirement as proposed.
In sum, the Commission has
determined that the reporting
requirements for revenues and overlaps
contained in the final rule are necessary
and appropriate to enable the Agencies
to identify transactions that may violate
the antitrust laws in any line of
commerce or section of the country and
that the requirement, as modified, has
been tailored to reduce the cost of
reporting as much as practicable.
4. Prior Acquisitions
The Commission proposed creating a
Prior Acquisitions section within the
Instructions to collect information
required by Item 8 of the current Form,
as well as additional information. First,
the Commission proposed requiring
both the acquiring person and the
acquired entity to provide information
about prior acquisitions, expanding the
current requirement that is limited to
the acquiring person. Second, the
Commission proposed extending the
time frame to report prior acquisitions
from five years to ten years. Third, the
Commission proposed eliminating the
dollar threshold for listing prior
acquisitions, which currently limits
reporting to only acquisitions of entities
with annual net sales or total assets
greater than $10 million in the year
prior to the acquisition. Fourth, the
Commission proposed treating asset
transactions involving the prior
acquisition of substantially all of the
assets of a business in the same manner
as prior acquisitions of voting securities
or non-corporate interests. The
Commission also proposed requiring
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filers to report whether all or
substantially all of the acquired voting
securities, non-corporate interests, or
assets are still held at the time of filing.
As discussed below the Commission
declines to adopt several of these
proposals and modifies others.
As noted in the NPRM, information
about prior acquisitions has always been
important for the Agencies, allowing
them to identify strategies to gain
market share through acquisitions rather
than internal expansion or more
vigorous competition. Filers have been
required to provide information about
prior acquisitions from the beginning of
the premerger notification program. As
discussed in section II.B.5., the
Commission believes that additional
information about prior acquisitions
will reveal roll-up or serial acquisition
strategies that have become increasingly
prevalent in certain sectors as well as
among certain investors and acquirors,
and that have been an effective strategy
for increasing concentration. A history
of prior acquisitions in the same sector
can provide an independent basis for
the Agencies to take a closer look at the
filed-for transaction to ensure that
merger enforcement takes place at a
time when it can be effective in
preventing undue levels of market
concentration.
Several comments provided general
support for the Commission’s efforts to
expand this item. According to a group
of State antitrust enforcers, details about
a filing entity’s prior acquisitions are
vital for evaluating mergers and
industry concentration trends. They
contend that, in an era of so-called
‘‘stealth acquisitions,’’ premerger tools
used by antitrust enforcers require
sharpening. Another commenter also
expressed this concern, observing a rise
in serial acquisition strategies that are
potentially aimed at sidestepping
regulatory scrutiny.
Other commenters provided research
supporting the proposed expansion of
information about prior acquisitions.
One commenter offered that his research
supports claims made in the NPRM that
prior acquisitions have important
consequences for competition. He
explained that even minor deals can
produce major changes in market
structure, firm behavior, and consumer
welfare. Other commenters described
their research or experience with roll-up
acquisitions that have occurred in
various sectors of the economy,
explaining that more expansive
disclosures of prior acquisitions will
allow the Agencies to better identify
serial acquisitions and their potentially
anticompetitive effects.
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But several comments raised broad
objections to the Commission’s proposal
to collect additional information on
prior acquisitions. Several comments
broadly asserted that the burden of
providing this additional information
about prior acquisitions would be too
high. One commenter asserted that
expanding the information required
would create a chilling effect that could
discourage acquisitions of startups, as
many potential acquirers of startups are
likely to have made several small
acquisitions in the technology sector.
Similarly, some comments explained
that the expansion of information
related to prior acquisitions would have
particular impact on specific industries
or financial sectors, including
pharmaceuticals, technology,
agriculture, and private equity. Other
commenters said that providing more
complete information about prior
acquisitions would reduce investments
in startup companies. Finally, certain
comments suggested that the proposed
changes would adversely affect venture
capital and funding acquisitions.
The Commission has addressed some
of these general concerns in section
III.C., as well as more detailed concerns
about the cost to complete this
requirement, below. It believes that
many of these broad concerns are either
not directly relevant to this rulemaking
or otherwise in tension with historical
reporting practice.389 Nonetheless, the
Commission has determined not to
adopt most of the expansions contained
in the proposed rule, including the
extension of the lookback period from
five to ten years or the elimination of
the $10 million exception. Instead, the
Commission adopts modest adjustments
to the current requirements and extends
the reporting requirement to prior
acquisitions of the target. The adopted
adjustments contained in the final rule
include: (1) the elimination of the $1
million threshold for revenue when
determining which overlapping NAICS
codes are relevant; (2) the requirement
to include prior acquisitions of assets or
entities that also provide competing
products or services listed in the filing
person’s Overlap Description; and (3)
the proposal to treat prior acquisitions
of substantially all of the assets of a
business in the same manner as prior
acquisitions of voting securities or noncorporate interests.
389 The Commission previously required
information about prior acquisitions for a full ten
years. The Commission is not aware of any
evidence, and commenters did not point to any, of
any noticeable impact on the level of startup
activity or venture capital funding during that
period.
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This information related to prior
acquisitions will better reflect current
market dynamics in the very lines of
business that will be the focus of the
Agencies’ premerger assessment. The
final rule does not require reporting on
all prior acquisitions, only those in in
business lines which the parties have
identified as areas of overlapping
current or future competition, either on
the basis of NAICS code reporting or in
the Overlap Description. This limitation
focuses the required information on the
specific antitrust risk that one or both
parties have a pattern or strategy of
rolling up competitors. It also alerts the
agencies to potential changes in the
competitive environment that may not
be publicly available, which is valuable
information in assessing whether or not
the filed for transaction may violate the
antitrust laws. In addition, parties are
required to report only those
acquisitions of U.S. entities or assets
and foreign entities or assets with U.S.
sales, thus targeting acquisitions that are
likely to affect local markets within the
United States. With these limitations,
information collected about prior
acquisitions is properly focused on the
antitrust risk that the merging parties
are pursuing a roll up strategy that is
harming or could harm competition in
the United States in violation of the
antitrust laws.
As discussed in section II.B.5., the
antitrust laws have always applied to
anticompetitive serial acquisitions. In
light of the increased use of these
strategies and evidence of their harmful
effects in certain sectors, there is a clear
benefit to antitrust enforcement from
disclosing prior acquisitions that may
reveal a pattern or strategy of rolling up
competitors in violation of the antitrust
laws. This risk can be especially acute
when the transaction involves a merger
between ‘consolidators,’ with both firms
having many prior acquisitions in the
same lines of business. The final rule is
properly tailored to focus on the risk
that the transaction is part of such a
strategy. Information about prior
acquisitions need only be submitted for
business lines that the parties have
identified as areas of current or future
competition. Moreover, any burden
imposed by the additional reporting
requirements would be limited. Based
on the Agencies’ experience,
information about prior acquisitions is
well-known to companies that are
parties to an acquisition agreement, as
this information is often collected as
part of the due diligence process for the
pending transaction. Other companies,
even relatively small companies,
routinely provide this information to the
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Agencies in response to a Second
Request.
The Commission acknowledges that
this requirement imposes a new
obligation on acquired companies but
believes this information is necessary
and appropriate for the Agencies to
conduct their premerger review.
Information about prior acquisitions is
specifically targeted to uncover prior
acquisitions where the parties have
existing or emerging overlaps; if the
acquired person completed many
acquisitions over the past five years in
these overlapping business lines, that
information would be highly relevant to
assessing the transaction’s likely effect
on future competition in those overlap
sectors. Moreover, serial acquisition
strategies may be going on
simultaneously in a particular business
line, and the acquired person’s history
would reveal whether the acquiring
person is acquiring a firm that was also
pursuing such a strategy.
The benefit to the Agencies from
collecting this information from both
parties is directly related to the number
of prior acquisitions in the same
business lines: the more acquisitions
recorded during the prior five years, the
more relevant is the information about
them. Both the acquiring person and the
acquired entity can and do make
acquisitions that have an impact on the
relevant competitive landscape. In
addition, requiring this information
from both filers may help deter
acquisition strategies whereby a target
buys several related companies that fall
under the HSR thresholds and then the
acquiring person purchases the target;
the current rule does not reveal this
history of prior acquisitions in the same
business lines. Being able to clearly
understand this history from the time a
filing is made assists the Agencies in
identifying a potential pattern of
acquisitions in a particular industry that
has contributed to a trend toward
concentration or vertical integration that
affects the competitive dynamics for the
parties to the transaction, as well as the
commercial realities of post-merger
competition. One commenter suggested
that parties report prior acquisitions
only from the point in time when the
current UPE acquired control of the
acquiring or acquired entity, but this
would limit the Agencies’ ability to
fully understand patterns and current
competition. Thus, the Commission
declines to further limit the requirement
in this way.
The Commission also proposed
expanding the time frame for reporting
prior acquisitions from five to ten years
to allow the Agencies to have a more
complete understanding of how past
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acquisitions in the affected business
lines affect the competitive landscape of
the current transaction under review.
Even though the Commission has
required ten years of prior acquisition
information on the HSR Form in the
past, commenters questioned the
expansion of the requirement now.
Some comments focused on the added
burden, noting that individuals who
have institutional knowledge of past
acquisitions may no longer be employed
by the filing entity. Another comment
pointed out that the Commission
previously recognized that a ten-year
lookback period was unduly
burdensome when it reduced the
information request from ten years to
five years in 1987. The Commission
acknowledges the cost associated with
reporting many prior acquisitions, and
after careful consideration of the
comments, has determined not to
require reporting for prior acquisitions
occurring more than 5 years prior to
filing.
But the Commission disagrees that
concerns about roll-up strategies are not
well-grounded in antitrust law. As
discussed in section II.B.5., U.S.
antitrust law clearly addresses concerns
about the acquisition or maintenance of
market power through serial
acquisitions. As stated above, it is
precisely this information that allows
the Agencies to fairly measure the
competitive landscape and on-going
trends toward concentration in certain
business lines, making the information
relevant to the Agencies’ initial antitrust
assessment of the transaction. The
Commission also disagrees that the HSR
Act does not permit the Agencies to use
section 7 of the Clayton Act to challenge
serial acquisitions. Section 7 clearly
prohibits acquisitions that were
preceded by a series of acquisitions that
rendered the market(s) under review
concentrated,390 and it is not improper
for the Commission to require the
reporting of prior acquisitions to better
detect a pattern of acquisitions that may
also violate other antitrust statutes, such
as section 2 of the Sherman Act or
section 5 of the FTC Act. Although the
Commission agrees that the information
submitted with the HSR Form must be
used to examine the potential
competitive impact of the filed-for
transaction, it disagrees that the scope of
section 7 is so limited as to prevent the
Agencies (or other enforcers of the
Federal antitrust laws) from alleging
harm that derives from a cumulation of
390 See United States v. Phila. Nat’l Bank, 374
U.S. at 367. See also Credit Bureau Reps., Inc., v.
Retail Credit Co., 358 F. Supp. 780, 794 (S.D. Tex.
1971), aff’d, 476 F.2d 989 (5th Cir. 1973).
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similar acquisitions in the same
market.391
The Commission also proposed
eliminating the $10 million threshold
for identifying prior acquisitions and
received several comments on this
point. One comment urged the
Commission to keep the existing
limitation that requires reporting only
those acquisitions of more than $10
million in total assets and annual net
sales in the year prior to the acquisition
as a way to eliminate the burden of
reporting a large number of extremely
small transactions that are competitively
insignificant. One comment suggested
maintaining the current $10 million
threshold for prior acquisitions but
exempting certain, specified NAICS
codes related to emerging technology
sectors from the threshold.
Yet another commenter suggested the
Commission broaden its proposed rule
to include prior acquisitions based on
three-digit NAICS codes, rather than
relying on six-digit NAICS code
overlaps, which the commenter found to
be often too narrow or imprecisely
defined. The Commission acknowledges
that three-digit NAICS codes would
include more prior acquisitions and
present a broader picture of the
competitive landscape. But because
prior acquisitions also include products
or services described in the Overlap
Description, which in some instances
may encompass a broader set of
acquisitions than reliance on NAICS
codes alone, the Commission declines to
use three-digit NAICS codes as the
standard.
In sum, the Commission has
determined that the reporting
requirements for prior acquisitions
contained in the final rule are necessary
and appropriate to enable the Agencies
to identify transactions in which the
merging parties are engaged in a pattern
or strategy of roll-up acquisitions and
that the requirement, as modified, has
been tailored to reduce the cost of
reporting as much as practicable.
K. Additional Information
1. Subsidies From Foreign Entities or
Governments of Concern
While the Commission did not receive
any comments objecting to the proposed
new defined terms ‘‘foreign entity or
391 See Brown Shoe Co. v. United States, 370 U.S.
294, 334 (1962) (citing S. Rep. No. 81–1775, at 5
(1950) and H.R. Rep. No. 81–1191, at 8 (1949)). In
particular, S. Rep. No. 81–1775, at 5 noted that
where several large enterprises are extending their
power by successive small acquisitions, the
cumulative effect of their purchases may be to
convert an industry from one of intense competition
among many enterprises to one in which only a few
large concerns supply the market.
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government of concern’’ and ‘‘subsidy’’
discussed in section IV.B., it did receive
several comments about the reporting
requirements included in the proposed
Instructions. One commenter objected
that the Committee on Foreign
Investment in the US (‘‘CFIUS’’) already
is tasked with the review of certain
transactions involving foreign
investment in the United States and that
requiring information about foreign
subsidiaries in the HSR form would add
to the burden of notifying parties (and
the Agencies) without providing
concurrent value for the substantive
antitrust analysis. In response to this
comment, the Commission notes that it
must defer to Congress in implementing
the requirement to report information
about foreign subsidies in the HSR
Form.
Another commenter suggested
introducing a de minimis threshold so
that the reporting obligation is limited
to only those subsidiaries from foreign
governments and entities of sufficiently
large amounts to potentially distort the
competitive process in markets in the
United States in which the merging
parties compete. Citing the EU Foreign
Subsidies Regulation as an example,
this commenter claimed that such a
threshold would save merging parties
the burden of compiling small subsidy
amounts that could not be expected to
result in competition concerns. The
Commission acknowledges that a de
minimis requirement may indeed make
sense as part of the information
required, but Congress did not provide
for a de minimis threshold, and the
Commission does not yet have sufficient
data to make that determination or
establish an amount at this time. Once
the Agencies have begun to receive
information about foreign subsidies, the
Commission can revisit this issue, if
warranted.
Finally, a comment from a senator
and a representative noted that
information about the financing
activities of merging parties would also
be useful in addressing a host of
national security challenges and
encouraged the Agencies to share such
information with other governmental
bodies, including Congressional
committees. The Commission agrees the
Agencies should facilitate this kind of
information sharing to the extent
permitted by current law, regulations,
guidelines, and practices governing
information sharing within the Federal
government.
2. Defense or Intelligence Contracts
The Commission proposed creating a
Defense or Intelligence Contracts section
that would require filing persons to
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report information related to certain
contracts with defense or intelligence
agencies to speed up outreach to those
agencies related to the reported
transaction. As proposed, both the
acquiring and acquired person would
have been required to identify whether
they have existing or pending
procurement contracts with the
Department of Defense (‘‘DoD’’) or
Intelligence Community (‘‘IC’’), as
defined by 10 U.S.C. 101(a)(6) and 50
U.S.C. 3003(4), valued at $10 million or
more, and provide identifying
information about the award and
relevant DoD or IC personnel. The
Commission reasoned that for filings
from companies that supply DoD or IC
with products or services, this
information would greatly enhance the
Agencies’ ability during the initial
waiting period to identify and contact
appropriate stakeholders within DoD or
IC to seek their input as customers that
might be impacted by the proposed
transaction and to speak to
knowledgeable experts about the
products or services provided to the
government by the parties. As discussed
below and in response to concerns
raised in public comments, the
Commission adopts the proposal with
modification.
The Commission received several
comments on this proposal. One
commenter stated that the Commission
provides limited explanation of its
authority or justification for this
proposed requirement and that it does
not explain its focus on these agencies.
The Commission responds that it
proposed special reporting requirements
for the defense and intelligence agencies
because they are often the only
customer for products and services
offered by defense companies, and a
thorough review of these transactions is
a priority for the Agencies. Products and
services sold to DoD or the IC are often
unique and not sold to any other
customer. As noted in the NPRM, the
Agencies regularly review filings from
companies that supply the DoD or the
IC with products or services, and it is
important for them to be able to quickly
contact DoD and IC staff to collect key
insights and information to prevent
mergers that may have an
anticompetitive impact. A recent study
by the General Accountability Office
highlights the importance of DoD’s
input to the Agencies regarding
potential competition risks to the
defense industrial base and DoD
programs.392 The Agencies have relied
on interactions with DoD personnel, and
to a lesser extent IC personnel, to
investigate and challenge defense
mergers over the years. Without
information about specific DoD or IC
contracts or knowledge of which unit
handles that contract, the Agencies
often face difficulty and delay in
identifying appropriate relevant
personnel or stakeholders with
knowledge of the contracts, programs, or
products or services at issue.
Any delay in identifying the right
DoD or IC personnel with deep
knowledge of complex and highly
sensitive programs hinders the
Agencies’ ability to identify and fully
assess competition issues in the
reported transaction that would impact
DoD or IC programs or budget. The
Commission has determined that to be
fully proactive about these concerns,
and to seek DoD or IC input at an early
stage of the inquiry, parties with certain
pending or current DoD or IC contracts
need to provide that information with
their notification. Although the
Agencies are also attentive to any
merger that may affect purchases by
other parts of the government, these
transactions involve products and
services that are also sold to commercial
customers and can be investigated using
our standard approach.
Beyond this comment on the general
focus of the requirement, commenters
addressed three primary areas of
concern: vagueness, confidentiality, and
the burden of compliance. First,
commenters expressed concern about
the lack of clarity in the proposed rule,
for instance pointing out that neither the
NPRM nor the cited statutes define what
constitutes a ‘‘pending’’ procurement
contract. This commenter suggested
that, to avoid this ambiguity, the new
rule should apply only to active
procurement contracts, not pending
contracts. The Commission agrees there
is a need to clarify which contracts
should be reported and modifies the
Final Rule to require reporting for (1)
pending proposals submitted to the U.S.
Department of Defense or any member
of the U.S. intelligence community, as
defined by 10 U.S.C. 101(a)(6) or 50
U.S.C. 3003(4), and (2) awarded
procurement contracts with the U.S.
Department of Defense or any member
of the U.S. intelligence community, as
defined by 10 U.S.C. 101(a)(6) or 50
U.S.C. 3003(4). The Commission
declines to limit the reporting
requirement to active contracts only.
Submission of a proposal indicates that
the filer is a competitor, regardless of
392 See U.S. Gov’t Accountability Office, Defense
Industrial Base: DOD Needs Better Insight into
Risks from Mergers and Acquisitions 28 (Oct. 2023)
(GAO–24–106129).
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whether it is ultimately awarded the
contract. The Commission believes that
these changes address some of the
ambiguities raised by commenters.
According to one commenter, it is not
clear what method of valuation should
be used to determine if a contract is
valued at $10 million or more,
particularly for open-ended supply
contracts. First, as discussed below, the
Commission increases the threshold to
$100 million. Second, the Commission
clarifies that filers should use the
maximum estimated quantity or value
in their proposed or awarded prices to
determine the estimated value of the
contract. Otherwise, filers should use
reasonable judgment in determining
how to value their contracts and may
explain the method of valuation used.
With respect to confidentiality
concerns, one commenter stated that it
is not clear how a company may provide
this information without violating
Federal laws and regulations restricting
the dissemination of such sensitive
information. Commenters proposed
suggestions to avoid such conflicts. For
instance, one suggested that the
proposed instruction should be clarified
to exclude any contracts that are
classified or otherwise subject to a
government-imposed duty of
confidentiality. Another recommended
that the Agencies consider the
appropriateness and potential
applicability of a national security
exception to certain requirements
within this proposed rule.
As an initial matter, the Commission
notes that there is nothing in the HSR
Act that overrides the protections due
classified information, and the
Commission specifically intends to not
require the submission of classified
information. To alleviate concerns about
the sensitivity of the information related
to these contracts, the Commission
revises the Instructions to expressly
state that parties should not include
classified information but that they
should note when responsive
information is withheld on that basis.
The Commission believes that this
modification addresses the concerns
raised in the comments and preserves
protections for classified information.
The Commission declines to adopt the
proposal to exclude any contracts that
are classified or otherwise subject to a
government-imposed duty of
confidentiality. The fact that the parties
have submitted a proposal in response
to a request from DoD or the IC or have
an existing contract is not classified
information. Such an exclusion is
overbroad and would not allow the
Agencies the benefit of reviewing nonclassified information related to these
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pending proposals or active contracts.
The Commission believes that the
revision stating that parties should not
include classified information in their
submissions addresses this issue. For
the same reason, the Commission
declines to adopt the proposal to create
a national security exception to the rule.
The confidentiality provisions of the
Act provide sufficient protection for any
confidential but unclassified
information about these documents. The
Commission additionally notes that
many of the products and services the
Agencies investigate have similar
national security implications even if
they involve customers other than DoD
or the IC.
As to the burden of complying with
this requirement, one commenter noted
that the requested information is often
not maintained in the ordinary course of
business, nor is it created in the course
of a deal negotiation, and that due to
confidentiality concerns, these data are
often not centrally maintained and may
not be known, even among senior
leadership. To limit the burden, one
commenter recommended that the
requested information be limited to
those DoD or IC contracts with a
primary NAICS code for which the
filing parties have identified NAICS
overlaps or that the Agencies obtain this
information from the Federal
Procurement Data System.
To reduce the cost of complying with
this request, and in light of the general
concern that classified materials are not
widely known or shared, the
Commission makes two significant
modifications to limit the scope of this
requirement. In line with the proposal
above, the Commission limits the set of
responsive contracts to those involving
a 6-digit NAICS industry code overlap
or a product or service described in the
Overlap Description or the Supply
Relationships Description. The
Agencies’ need for information about
pending or active DoD or IC contracts is
directly related to the specific antitrust
risks associated with the transaction,
and limiting this information in this
way targets the most relevant contracts,
if they exist. In addition, in response to
concerns that the $10 million de
minimis level will require reporting for
purchases by DoD or the IC of mundane
products and services, rather than
critical defense purchases, the
Commission has determined to increase
the de minimis threshold for these
contracts from $10 million to $100
million. The Commission believes that
this is the appropriate threshold for
limiting this request to products that are
uniquely sold to the DoD or the IC. The
Commission declines to make any
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modification in response to the
suggestion that the Agencies get this
information from the Federal
Procurement Data System. It is not
feasible for the Agencies to rely on
discovering critical DoD or IC proposals
or contracts from this database for the
purpose of identifying key personnel at
those agencies and obtaining
information about complex products
and services during the initial waiting
period. This information is known by
the parties and easy to verify, especially
with the limitation that the contracts be
worth more than $100 million annually.
Contracts or commitments of this size
are likely subject to close monitoring.
In addition, to further reduce the
burden of this requirement, the
Commission excuses select 801.30
transactions from reporting information
related to DoD or IC proposals or
contracts. These transactions do not
involve an agreement between the
parties.
Finally, two commenters noted a
typographical error in the proposed
Instructions: the reference to 50 U.S.C.
3033(4) should refer to 50 U.S.C.
3003(4). The Commission revises the
instructions to correct the typographical
error noted by the commenters.
In sum, the Commission has
determined that the reporting
requirements for pending proposals and
active contracts with DoD or the IC
contained in the final rule are necessary
to provide the Agencies with the ability
to identify transactions in which the
merging parties are providing critical
products or services to the government
and to quickly reach out to those
agencies for their input. The
requirement, as modified, has been
appropriately tailored to reduce the cost
of reporting as much as practicable.
3. Voluntary Waivers
The Commission proposed amending
the Instructions to allow filing persons
to waive the confidentiality provision
contained in the Act, 15 U.S.C. 18a(h),
for any non-U.S. competition authorities
or State Attorneys General they identify.
As stated in the NPRM, allowing filers
to waive the confidentiality protections
in the HSR Filing would provide an
efficient mechanism for filers to consent
to limited waivers of confidentiality at
the outset of any agency review to
facilitate early cooperation among
competition enforcers. The proposed
voluntary waivers would allow the
Agencies to disclose the existence of an
HSR Filing and the information
contained in the HSR Filing, but only
for those non-U.S. competition
authorities or State Attorneys General
identified by the filing person. The
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Commission also proposed modifying
the language that would inform filers
about potential disclosures based on the
waivers to track the language of the Act
more closely. As discussed below, the
Commission adopts this proposed
change with modifications.
The Commission received three
comments addressing this proposal. A
group of State Attorneys General, who
would be the recipients of HSR-related
information if filers granted access on a
voluntary basis, encouraged the
Commission to consider three changes.
First, they proposed requiring filing
persons to identify the relevant States
where the parties do business,
regardless of whether they opt to
provide waivers or check the box.
Second, they encouraged the Agencies
to, by default, disclose to the public the
fact of filing and the expiration date of
the waiting period. They argued that
nothing in the HSR Act requires that the
fact of filing and the waiting period be
kept confidential and that this
information should not be treated as
such. The comment urged the Agencies
to exercise their authority to disclose
this information to the public or to the
States. They recommended that to avoid
disclosure, the parties should have to
provide a basis for keeping the fact and
timing of the filing confidential. If the
Agencies adopted the second proposal,
they also encouraged the Agencies to
include a check box to allow parties to
waive confidentiality of the information
and documents filed with the
notification so that these materials
could be shared with affected States.
Third, if the Agencies chose not to
adopt the above recommendation
regarding public disclosure, the State
antitrust enforcers suggested
disaggregating the check box into two
separate boxes, one to allow disclosure
of the fact of filing and the associated
waiting period and another to allow
sharing of the information and
documents in the filing with affected
State Attorneys General. They stated
that disaggregating the check box
increases the likelihood that States at
least receive notification of the
transaction.
The Agencies have historically not
publicly disclosed or provided to the
States or international enforcers
information regarding HSR filings,
including the fact that a filing was made
and the waiting period, in the absence
of a waiver from the parties. Without
weighing on the merits of the States’
legal arguments regarding the scope of
the HSR Act’s confidentiality
protections, the Commission at this time
believes it is appropriate to maintain its
prior practice. The Commission does
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adopt the States’ suggestion to
disaggregate the waiver check boxes,
which would allow for greater flexibility
in providing the Agencies consent to
disclose and provide filers with the
option to disclose some information but
not all information contained in the
HSR Filing.393 The waiver would apply
only to those non-U.S. competition
authorities or State Attorneys General
selected by the filing person. The
Commission declines to adopt the
proposal by the State antitrust enforcers
to require parties to identify the relevant
States where they do business,
regardless of whether they waive
confidentiality. The Commission will
likely receive much of this information
through the new requirements
contained in the final rule.
The Commission received two other
comments on this proposal. One
commenter expressed concern about
confidential information becoming
publicly known once it is shared more
widely due to the increased risk of
leaks. On this point, the Commission
notes that these waivers are voluntary.
The parties can decide not to waive
confidentiality if they have concerns
about confidentiality. Further, the
Agencies take seriously the
confidentiality requirements of the Act
and require law enforcement colleagues
to abide by these protections. In the
many decades of case cooperation
pursuant to voluntary waivers, these
protections have worked to prevent
improper disclosures. The Commission
believes that concerns about an
increased risk of leaking due to the
option to waive confidentiality at the
time of filing are unfounded.
Finally, according to one commenter,
the proposed rule appears to
contemplate a single check box that
does not permit notifying parties to
communicate their willingness to waive
confidentiality as to some international
competition authorities but not as to
others. The Commission notes that this
commenter misunderstands the
requirement and clarifies that the
voluntary waiver will only apply to
those jurisdictions that the party
affirmatively indicates in the HSR
Filing. In addition, failure to check
either box or indication of only a few
jurisdictions for waivers does not
prevent the parties from providing these
waivers or adding jurisdictions later.
393 The Commission’s implementation of this
suggestion differs from the text proposed by the
States. The Commission does not adopt the States’
suggestion, with respect to the fact of filing and the
waiting period, that, in order to prevent disclosure,
the parties be required to affirmatively check a box
and provide a basis for keeping the information
confidential.
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The inclusion of these waiver options in
the Form is simply meant to serve as an
efficient mechanism for filers to provide
their clear consent at the outset even if
only on a limited basis.
The Commission did not receive any
comments regarding the proposal to
modify the language informing filers
about potential disclosures based on the
waivers to track the language of the Act
more closely. Thus, the Commission
adopts this change as proposed.
In sum, the Commission has
determined that offering the option for
parties to waive the confidentiality
provisions of the Act to allow for the
sharing of HSR materials with non-U.S.
jurisdictions or State enforcers in the
final rule will provide a benefit to the
Agencies in facilitating case cooperation
at an early stage in the Agencies’
assessment of antitrust risk. The option,
as modified, has been tailored to
provide a clear choice for filers who
wish to facilitate the sharing of
information by providing a waiver.
4. Identification of Communications and
Messaging Systems
In conjunction with the proposed
requirement that filing persons certify
they have taken steps to prevent
destruction of relevant information, as
discussed in section VI.L., the
Commission also proposed that filers
identify and list all communications
systems or messaging applications on
any device used by the filing person that
could be used to store or transmit
information or documents related to its
business operations. The Commission
does not adopt this proposal.
In the proposed rule, the Commission
reasoned that, as companies have
increasingly been relying on new forms
of communication to do business and
make key operational decisions, these
communications systems have become
an important part of the Agencies’
investigations. In the Agencies’
experience, these systems contain
highly relevant information on the
transaction itself, as well as on topics
that are critical for the Agencies’
assessment of the transaction such as
competition, competitors, markets,
customers, and industry characteristics.
Nevertheless, many parties do not
appear to fully understand or comply
with document preservation obligations
for these new modalities.
The Commission received several
comments on this proposal, mainly
regarding the burden of the request and
its utility in screening for
anticompetitive transactions during the
initial waiting period. Multiple
commenters expressed doubt about the
Commission’s assertion that this
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information is readily available to the
filing person and that identifying these
systems would impose minimal burden.
One association of antitrust
practitioners noted that because there is
no limitation on the requirement, large
or diffuse organizations may have
hundreds of communications systems
that would require identification but are
unknown or unused by the filing
person’s employees who are involved in
preparing the HSR filing. One
commenter also flagged the inevitable
complications caused by, for example,
special IT systems, legacy IT systems,
and individual employees who do not
follow corporate IT policies. According
to another, the process of gathering this
information often requires the expertise
of counsel and entails interviews of key
employees as well as a careful review of
company practices and policies. As a
result, this commenter stated that the
burdens associated with the additional
requirements would fall more harshly
on small companies that are not
equipped to navigate the regulatory
process. In addition, comments also
objected that the information requested
would not assist the Agencies in
determining whether to issue a Second
Request. They noted that the
identification of these systems is best
reserved for the transactions that are
investigated as is the Commission’s
current practice when issuing Second
Requests.
After carefully considering these
comments, and as part of its overall
effort to reduce burden on filing parties,
the Commission does not adopt this
proposal. The Commission notes,
however, that the Agencies have taken
steps to update their guidance related to
obligations to preserve ephemeral
messages and similar communications
systems, and have provided language in
the Model Second Request to reflect
document production and retention
obligations for these communication
systems.394 Based on this guidance,
companies that take steps to preserve
information related to these
communications systems may reduce
the likelihood that they will face
394 See Press Release, U.S. Dep’t of Justice,
‘‘Justice Department and FTC Update Guidance that
Reinforces Parties’ Preservation Obligations for
Collaboration Tools and Ephemeral Messaging’’
(Jan. 26, 2024), https://www.justice.gov/opa/pr/
justice-department-and-ftc-update-guidancereinforces-parties-preservation-obligations. See also
Fed. Trade Comm’n, ‘‘Slack, Google Chats, and
other Collaborative Messaging Platforms Have
Always Been and Will Continue to be Subject to
Document Requests,’’ Fed. Trade Comm’n
Competition Matters blog (Jan. 26, 2024), https://
www.ftc.gov/enforcement/competition-matters/
2024/01/slack-google-chats-other-collaborativemessaging-platforms-have-always-been-willcontinue-be-subject.
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consequences for non-compliance with
a Second Request.
L. Certification
Each HSR Filing is accompanied by a
notarized certification, signed by the
person preparing or supervising the
preparation of the filing. The person
signing the certification attests to the
veracity of the information submitted in
the filing. The Commission proposed
amending this certification to require
filers to affirm that they have taken the
steps necessary to prevent the
destruction of documents and
information relevant to the transaction.
The Commission also proposed adding
language to the Instructions to remind
filers that criminal statutes prohibit
practices that impede or frustrate
functions of government agencies, such
as submitting false information. This
proposal would require most HSR filers
to establish new document retention
policies or revise existing policies prior
to filing. As explained in the NPRM, the
deletion of information or documents
that could be called for in a Second
Request could lead to a loss of
information critical to the Agency’s
ability to conduct an in-depth
investigation.
The Commission received
approximately ten comments on this
proposal. Some commenters noted that
the proposed rule would expand
document preservation beyond current
law, which obligates parties to preserve
documents and information related to
an ongoing or anticipated government
investigation 395 or if they have a
reasonable anticipation of litigation.396
Commenters noted that very few filers
have an obligation to preserve
information about the transaction since
they are not yet under investigation and
do not have a reasonable anticipation of
litigation.
Commenters also described the
burden, particularly the cost, associated
with document preservation obligations.
Several commenters explained that
litigation holds are expensive and
difficult to design and implement,
especially concerning the breadth of
documents and information that would
395 Federal law provides serious criminal
penalties, including up to twenty years
imprisonment, for any person who knowingly
alters, destroys, mutilates, conceals, covers up,
falsifies, or makes a false entry in any record,
document, or tangible object with the intent to
impede, obstruct, or influence an ongoing or
anticipated Federal investigation. See, e.g., 18
U.S.C. 1519.
396 Zubulake v. UBS Warburg LLC, 220 FRD. 212,
218 (S.D.N.Y. 2003) (holding that once a party
reasonably anticipates litigation, it must suspend its
routine document retention/destruction policy and
put in place a litigation hold to ensure the
preservation of relevant documents).
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be subject to a hold. One commenter
noted that a document hold does not
simply encompass the suspension of
auto-delete policies, can be difficult and
expensive to implement with precision,
and typically extends to individuals,
databases, communication systems, and
materials beyond the scope of the
transaction. Another pointed out that
data is expensive to store and that filers
would be required to retain documents
that cover large components of their
day-to-day operations. According to one
commenter, at the time of filing, the
notifying party may not know enough
about what issues will be of interest to
the Agencies to identify a set of
custodians who are likely to have
information related to the proposed
transaction.
After carefully considering the
comments, the Commission has
determined not to adopt this proposal.
The Commission notes that, under
current law, when litigation is
reasonably foreseeable, parties have an
obligation to preserve documents
relating to the proposed transaction.
This obligation could arise before or
after HSR filing. In addition, it is a
Federal crime for any person to
knowingly alter, destroy, mutilate,
conceal, cover up, falsify, or make a
false entry in any record, document, or
tangible object with the intent to
impede, obstruct, or influence an
ongoing or anticipated Federal
investigation.397
The Commission also received a few
comments on the addition of language
reminding the filer of potential criminal
liability under other Federal statutes
that prohibit various deceptive practices
aimed at frustrating or impeding the
legitimate functions of government
departments or agencies. Commenters
raised general concerns about how this
language could alter how filers prepared
their notification. One commenter stated
that when read together with the
requirement to preserve documents, the
reminder of criminal penalties would
prevent filers from instituting a tailored
legal hold. Another stated that it seems
to suggest that filers should fully expect
a harsh and punitive response to filing
errors. Commenters primarily noted that
the added language merely restated
existing law. Given that the proposed
certification on criminal liability does
not increase the burden or cost of filing
and may have a benefit of putting some
unaware filers on notice of possible
criminal penalties, the Commission
adopts this proposal as a simple
restatement of existing penalties.
397 See
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M. Affidavit
As discussed in section V.D., the
Commission proposed requiring filings
for transactions without definitive
agreements to include a term sheet or
draft agreement that describes with
specificity the scope of the transaction
that would be consummated. In
conjunction with that proposal, the
Commission also proposed that parties
making such filings attest in their
affidavit that a term sheet or draft
agreement that describes with
specificity the scope of the transaction
that will be consummated has been
submitted with the executed letter of
intent or agreement in principle.
As described above, the Commission
modified the proposal and has made a
conforming change to this section of the
Instructions as part of the final rule.
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VII. Severability
In the NPRM, the Commission noted
that § 803.90 contains a separability (or
severability) provision such that, if any
provision of the Rules (including the
Form) or the application of any such
provision to any person or circumstance
is held invalid, the other provisions of
the Rules and their application to other
persons or circumstances shall be
unaffected.
The Commission did not propose any
changes to the severability provision in
§ 803.90 and does not adopt any
changes. However, as it did in the
NPRM, the Commission confirms its
intent that, if a court were to invalidate
any provision, any part of any
provision, or any application of the final
rule, the remainder of the final rule
would remain in effect to the greatest
extent possible. The Commission’s
general view is that each substantive
requirement of the final rule is severable
from each of the others. The Agencies
need the information requested by the
final rule for the reasons discussed
above. Each requirement in the final
rule serves an important, related, but
distinct purpose and provides a distinct
benefit separate from, and in addition
to, the benefit provided by other
requirements. However, if a court finds
that certain provisions are invalid, the
following analysis applies.
The Commission notes that some
reporting requirements are contingent
upon filers reporting overlapping
products or services in (1) the Overlap
Description; (2) the Supply
Relationships Description; and (3) the
same NAICS codes. The severability of
these reporting requirements are as
follows:
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Officers and Directors
If product or service overlaps are
identified in the Overlap Description or
Supply Relationships Description, the
final rule requires the acquiring person
to list officers and directors (or in the
case of unincorporated entities,
individuals exercising similar
functions), and those who have served
in the position within the past three
months for each entity within the
acquiring person responsible for the
development, marketing, or sale of
products or services that are identified
as overlaps and who have also served in
these roles with the target. The
Commission does not view this
requirement as severable from the
Overlap or Supply Relationships
Descriptions. However, the
Commission’s view is that the two other
reporting requirements regarding
Officers and Directors are severable and
would remain if the Overlap or Supply
Relationships Descriptions are held
invalid. These are the requirements to
(1) list all individuals likely to serve as,
nominate, or appoint an officer or
director of the acquiring entity (and the
accompanying requirements); and (2) for
each officer and director identified, list
all other entities operating in
commercial activities in the same
NAICS codes reported by the target for
which the individual currently serves as
an officer or director. The Agencies
need the information in the first
requirement for the reasons discussed
above in sections II.B.1. and VI.D.3.c.,
and this first requirement would not be
affected by invalidation of the Overlap
or Supply Relationships Descriptions.
With respect to the second requirement,
the Commission has long required
reporting of NAICS code information,
and the reporting of NAICS code
information stands independent of, and
can operate separately from, the Overlap
or Supply Relationships Descriptions.
The changes the Commission has
finalized here are modest and do not
significantly alter the existing
requirement to report certain NAICS
code information. Accordingly, the
Commission believes that the
requirement to report certain officer and
director information in any identified
NAICS code overlap would stand even
if either (1) the Overlap or Supply
Relationships Descriptions were held
invalid, or (2) any of the final rule’s
changes regarding NAICS code reporting
were invalidated.
Prior Acquisitions
Filers (both acquired and acquiring
persons) are required to report certain
information regarding prior acquisitions
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that (1) derived revenue in an identified
NAICS code overlap or (2) provided or
produced an overlap product or service
as described in the Overlap Description.
If the Overlap Description is
invalidated, the Commission does not
view the second part of the Prior
Acquisitions reporting requirement as
severable from that reporting
requirement. However, the first
requirement regarding derived revenue
in an identified NAICS code overlap
would remain in place, for the same
reasons discussed previously in
connection with the severability of the
Officers and Directors requirement.
Defense or Intelligence Contracts
Filers are required to identify (1)
proposals submitted to the U.S.
Department of Defense or any member
of the U.S. intelligence community, and
(2) awarded procurement contracts with
the U.S. Department of Defense or any
member of the U.S. intelligence
community, valued at $100 million or
more, that (A) are or will be the source
of revenues in any identified NAICS
code overlap or (B) involve or will
involve an overlapping product or
service identified in the Overlap
Description or the Supply Relationships
Description. If the Overlap or Supply
Relationships Descriptions are
invalidated, the Commission does not
view the portion of the Defense or
Intelligence Contracts reporting
requirement referring to the Overlap or
the Supply Relationships Descriptions
as severable from those reporting
requirements. However, the portion
requiring the reporting of certain
information in any identified NAICS
code overlap would remain in place, for
the same reasons discussed previously
in connection with the severability of
the Officers and Directors requirement.
Annual Reports and Audit Reports for
Acquiring Entities
The final rule requires the acquiring
entities whose revenues contribute to a
NAICS code overlap or any overlap
identified in the Overlap Description to
provide the most recent annual report or
audit report and CIK number if annual
reports are filed with the SEC. If the
Overlap Description is invalidated, the
Commission does not view the portion
of the Annual Reports and Audit
Reports requirement referring to the
Overlap Description as severable from
the requirement to provide an Overlap
Description. However, the portion
requiring annual reports or audit reports
relating to NAICS code overlap would
stand, for the same reasons discussed
previously in connection with the
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severability of the Officers and Directors
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Author Information for Business
Documents
For Business Documents, if (1) a
NAICS code overlap has been identified,
(2) an overlap within the Overlap
Description has been identified, or (3) a
supply relationship within the Supply
Relationships Description has been
identified, filers must provide certain
information about the author of the
documents. If the Overlap or Supply
Relationships Descriptions are
invalidated, the Commission does not
view the portions of the Author
Information requirement referring to
those descriptions as severable from the
Overlap and Supply Relationships
Descriptions requirements. However,
the portion requiring the reporting of
author information if a NAICS ode
overlap has been identified would
stand, for the same reasons discussed
previously in connection with the
severability of the Officers and Directors
requirement.
The Commission views all remaining
provisions, parts of provisions, and
applications of the final rule not
specifically identified as non-severable
above to be severable. These reporting
requirements would have been adopted
individually regardless of whether the
other reporting requirements were
adopted and could function effectively
without the other provisions. If a
reviewing court were to stay or
invalidate any reporting requirement (or
part or application thereof) not
identified as non-severable above, the
Commission states its intent to have
adopted the remainder of the final rule.
VIII. Paperwork Reduction Act
On June 29, 2023, the Commission
published its intention to submit the
proposed rule and the associated
Supporting Statement to OMB for
review under the Paperwork Reduction
Act of 1995 (‘‘PRA’’), 44 U.S.C. 3501 et
seq.398 The Commission emphasized
that some of the proposed changes were
intended to reduce the burden of
filing 399 and that other proposed
changes offered clarifications to the
current rules and were unlikely to
change the burden on filers.400 Further,
the Commission highlighted proposed
changes that would require a filer to
collect and report information kept in
the filer’s ordinary course of business
398 88
FR 42178, 42207–08 (June 29, 2023).
at 42,207 (e.g., the proposal to report
NAICS codes in ranges rather than by specific
dollar amount).
400 Id. (e.g., the proposal to eliminate references
to paper and DVD filings).
399 Id.
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records, minimizing the burden of new
collection requirements.401 The
Commission noted that many of the
proposed changes would increase the
burden on all filers; 402 the Commission
also noted that some of the proposed
changes would significantly increase the
burden on only certain filers.403
In conducting the PRA analysis for
the proposed rule, in order to estimate
the projected change in burden due to
the proposed changes and to provide a
baseline for public comment, PNO staff
consulted current Agency staff attorneys
who had previously prepared HSR
filings for clients while in private
practice. These experienced attorneys
provided estimates of how many hours
the proposed changes would require,
depending on the complexity of the
filing at issue. To estimate an average
number of additional hours, the
Commission conservatively assumed
that 45% of HSR filings would be highly
complex and 55% would be less
complex. The Commission next
multiplied the average estimate of
additional hours per filing (107 hours)
by the 7,096 non-index HSR filings that
the Commission projected it would
receive in FY 2023.404 Finally, the
Commission multiplied the total hours
by an estimate of the hourly rate for
executive and attorney compensation
($460/hour).
The Commission received numerous
public comments referencing the
NPRM’s PRA burden analysis. One
commenter supported the analysis,
noting that the increase in the estimated
time required to prepare an HSR filing
is ‘‘inconsequential,’’ even ‘‘trivial’’
considering that these reporting
requirements only apply to transactions
valued at more than the reporting
threshold. This commenter further
asserted that it is appropriate to shift
401 Id. (e.g., the proposal to require the reporting
of minority investors in additional entities related
to the filed transaction).
402 Id. (e.g., the proposal to require narratives
regarding transaction rationale).
403 Id. (e.g., filers whose businesses have existing
horizontal, non-horizontal, or labor market overlaps
or relationships).
404 In January 2023, the Commission requested a
three-year extension of its PRA clearance for
information collection requirements related to the
existing HSR rules, which was approved by OMB
on February 23, 2023, through February 28, 2026
(OMB Control Number 3084–0005). See 88 FR 3413,
3414 (Jan. 19, 2023). At that time, FTC staff
projected an average of 7,096 non-index filings per
year for fiscal years 2023–2025. This estimate of
7,096 non-index filings was based on the fact that
the FTC received 6,518 non-index filings in fiscal
year 2022 and had experienced an average annual
increase in filings of 4.3% in the pre-COVID fiscal
years 2017–2019. Actual non-index filings in FY
2023 totaled 3,515. See Fed. Trade Comm’n & Dep’t
Just., Hart-Scott-Rodino Annual Report, Fiscal Year
2023 appendix A (FY 2023).
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costs from the Agencies to the merging
parties.
Some commenters, however,
criticized the Commission’s analysis for
significantly underestimating the extent
of the burden, and many raised
concerns about the methodology
employed by the Commission to
calculate such burden. For instance,
they raised concerns that the estimates
are not based on empirical data or
discussions with current practitioners;
and that the Commission’s methodology
is non-verifiable, and thus not subject to
empirical validation. They also argued
that Agency staff’s prior experience in
preparing HSR filings is not relevant
given the wholly different and new
information requested under the
proposed rule. One commenter called
the Commission’s approach biased and
inaccurate, stating that there is no
indication that Agency staff relied on
any data when trying to create an
estimate based on memories from past
private practice. Additionally, several
commenters also criticized the
Commission’s explanation of its PRA
analysis. With respect to the survey of
Agency staff, one commenter stated that
the Commission failed to provide basic
information, such as the number of staff
surveyed, who these staff are, their level
of experience in preparing HSR filings,
when they last prepared HSR filings,
and the results of the survey. Another
commenter stated that it had no context
for what the median might be for filings
to better understand whether the low
and high ends are outliers or the
anticipated typical experience.
The Commission carefully reviewed
the comments asserting that its analysis
underestimated the extent of the cost
and delay that would be imposed if the
Commission adopted the proposed rule.
The Commission was persuaded by
commenters who asserted that the PRA
analysis in the NPRM underestimated
the time and expense associated with
the proposed rule. To address
commenters’ concerns and recognizing
the changes from the proposal discussed
above in section II, the estimates are
revised as reflected below.
As outlined in section I and discussed
more fully in sections IV to VI above,
the Commission has not adopted certain
requirements in the proposed rule in an
effort to reduce compliance costs, and
has also modified other proposed
requirements in a manner that reduces
the burden in certain respects.
Specifically, the Commission is not
adopting proposals that would have
required a timeline of key dates for
closing the proposed transaction;
organization charts; certain information
about other interest holders; drafts of
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submitted documents; information
about employees; information about
board observers; geolocation
information; prior acquisitions
involving entities with less than $10
million in sales or revenues or
consummated more than 5 years prior to
filing; and information about steps taken
to preserve documents or use of
messaging systems. These items were
frequently cited by commenters as
unduly burdensome. While this
information is relevant to the Agencies’
premerger assessment, the Commission
has determined it can forgo requiring
this information at this time. The
Commission also has modified, in some
instances substantially, many other
proposed information requirements,
which will reduce the burden on filers
to collect and report this information.
As a result, the information
requirements contained in the final rule
are significantly less burdensome than
those reflected in the proposed rule, and
the costs imposed on filers are thus
reduced as compared to the proposed
rule.
Before finalizing the changes adopted
in the final rule, the Commission
undertook a new survey of Agency staff
that responds to comments critiquing
the estimate in the NPRM and
implemented several improvements to
its methodology, as explained below.
The Commission believes that in light of
these improvements, the estimates of
the incremental costs associated with
the final rule are reliable and consistent
with survey techniques used by others
to calculate the burden of filling out a
form.405
The new survey included 15 current
FTC and DOJ attorneys who have recent
experience preparing HSR filings in
private practice. The Commission asked
each survey participant to estimate,
based on their own experience with
preparing HSR Filings, the incremental
change in hours that would be required
to respond to each of the new and
updated items in the final rule. They
were also asked to estimate how much
time would be saved by no longer
having to provide information for
current requirements that are not
included in the final rule. The survey
participants were provided with (1) the
current HSR Form and Instructions; (2)
the HSR Form and Instructions for both
acquiring and acquired persons for the
final rule; (3) a spreadsheet listing each
of the new, updated, and eliminated
items for three categories of
405 This same survey technique, asking
experienced HSR practitioners to estimate the time
required to comply with the new information
requirements in addition to other costs, was used
in the Kothari Report, discussed below.
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transactions; and (4) instructions
regarding how to input their responses.
The survey participants provided
estimates for the amount of time
required to collect and submit
information responsive to each of the
new and updated items in the final rule,
separately for acquiring and acquired
persons, and separately for three types
of HSR-reportable transactions that
reflect varying levels of complexity and
antitrust risk: (1) the new category of
select 801.30 transactions; (2)
transactions with no reportable
competitive overlaps (e.g., where an
investment fund is buying or selling a
portfolio company with no NAICS or
competitive overlap or supply
relationship); and (3) transactions where
the parties report at least one NAICS
code overlap or have an existing overlap
or supply relationship (referred to below
as ‘‘overlap’’ filings). They were asked
to estimate the incremental change in
costs of complying with each new and
adjusted information requirement
contained in the final rule in each of the
categories and for each type of filer.
Also, for each item, the survey
participants were asked to indicate what
percentage of the additional time
required would be time spent by
company personnel as compared to a
law firm hired to prepare the HSR Filing
or any third parties that would need to
be hired to complete the HSR Form (e.g.,
data vendors).
In generating their estimates, the
survey participants were asked to
consider all time spent to complete the
HSR Form,406 including time spent
reviewing the HSR Instructions;
generating and compiling the materials
necessary for collection; acquiring,
installing, and utilizing any necessary
technology or systems; and completing
and reviewing the collected
information, among other tasks. They
were also asked to consider whether
filers would need to incur additional
costs not necessarily measured in hours,
e.g., the costs associated with new IT
investments, long-lived facilities or
equipment, related one-time
expenditures, and other non-labor
406 The Commission notes that parties to
acquisitions, whether HSR-reportable or not, may
hire antitrust counsel to assess whether the
transaction would violate any of the antitrust laws.
This is a different task from evaluating whether a
transaction requires notification pursuant to the
HSR Act, and if so, how to comply with the Form
and Instructions. The final rule does not require any
information from attorneys or any other advisors to
assess the antitrust risk of the transaction. As a
result, any cost related to the assessment of the
potential for a substantive antitrust risk, rather than
compliance with the information requirements of
the Form and Instructions, are not costs attributable
to the final rule and are not included in this PRA
analysis.
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expenditures, such as attorney training
or general HSR resources.
The Commission took several steps to
increase the reliability of its survey.
First, to reduce sampling bias as much
as possible, the Commission relied on
Agency staff who have not been
involved in this rulemaking and thus
have no more familiarity with the
changes to the HSR Form and
Instructions than an attorney in private
practice would have. As exclusion
criteria, the Commission did not survey
any staff from the FTC’s Premerger
Notification Office, nor any staff at
either Agency who were part of the core
team responsible for drafting the final
rule.
Second, the survey participants were
asked to provide details about their
experience preparing HSR filings in
private practice, both in terms of how
many years they were in private practice
and the number and types of
transactions involved. Collectively, the
survey participants had experience with
each of the three types of HSRreportable transactions described above.
Based on the information provided, the
survey participants with the most
experience tended to generate a lower
estimated number of hours than the
average.
The Commission believes that, with
these controls, the individuals who
provided estimates for the PRA burden
assessment had sufficient experience
with the current HSR reporting
requirements and enough understanding
of the HSR Rules and practice to make
their estimates of incremental costs
reliable.
Based on the survey responses, the
Commission finds that the average
number of additional hours required to
prepare an HSR filing with the changes
outlined in the final rule is 68 hours,
with an average low of 10 hours for
select 801.30 transaction filings by the
acquired person and an average high of
121 hours for filings from acquiring
person in a transaction with overlaps or
supply relationships. As noted,
however, the estimate varies
significantly based the type of filings,
with filings that are more likely to raise
antitrust risk requiring higher hours.
To calculate the average number of
additional hours, the averages of the
estimates provided by respondents were
calculated separately for each change for
both the acquiring and acquired person
within each category of transaction.
These averages were then summed by
category of transaction and then divided
by two to provide category-specific
estimated averages for an individual
filer to comply with all changes. The
overall average estimate for an
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individual filer was calculated as a
weighted average of these categoryspecific estimates for an average filer,
using as weights the Agencies’ estimate
of the fraction of filings that fall into
each of the three categories.
Specifically, the Commission estimates
that 8 percent of filings will meet the
definition of a select 801.30
transaction,407 45 percent will have a
NAICS code overlap or an overlap or
supply relationship identified in the
Competition Descriptions section, and
47 percent of filings will have no
overlaps or supply relationship.
One commenter commissioned a
report (the Kothari Report, referenced in
section III.C.2.) to estimate the
additional monetary costs of the
proposed rule and relied on a survey of
company and private counsel to
estimate the time required to comply
with the new requirements of the
proposed rule as compared to the
current rules.408 From the responses to
this survey, the Kothari Report
estimated that the proposed rule as
published in the NPRM would have
added 101.6 hours of internal personnel
time and 140.3 hours of outside counsel
time above the current requirements for
a total incremental increase of 241.9
hours. Although this estimate is
substantially higher than the estimate
based on the Commission’s new survey,
the Kothari Report estimated costs for
the proposed rule, and may have
included costs related to advocacy about
whether a transaction violates an
antitrust law, rather than only costs
related to collection and submission of
information required by the Form and
Instruction, as indicated by its inclusion
of costs of economic experts. In contrast,
the Commission has estimated the
additional time attributable to the less
burdensome requirements of the final
rule and has included in its estimates
only that time that is required to
complete an HSR Filing that is fully
compliant with the Act and the Rules.
Given the significant modifications from
the proposed rule to the final rule that
lessen the estimated burden, the
Commission finds the results of its new
survey to be generally consistent with
407 Estimated based upon a review of HSR Filings
from fiscal years 2018 through 2022.
408 Comment of U.S. Chamber of Com., Doc. No.
FTC–2023–0040–0684. The Kothari Report reflects
the results of a survey of antitrust practitioners
conducted by the Chamber of Commerce seeking
input on the proposed rule as well as the Agencies’
draft merger guidelines. See U.S. Chamber of Com.,
‘‘U.S. Chamber HSR/Merger Guides Practitioner
Survey’’ (Sept. 19, 2023), https://
www.uschamber.com/finance/antitrust/antitrustexperts-reject-ftc-doj-changes-to-merger-process.
The Kothari Report was prepared by Professor S.J.
Kothari and is appended to its comment at 54–85.
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the survey relied on in the Kothari
Report.
Several commenters also questioned
the hourly rate that the Commission
relied on to calculate the estimated cost
of compliance. One commenter stated
that the Commission’s estimate of $460
per hour may underestimate the
blended hourly rate applicable to most
HSR filings, particularly given attorney
billing rates and that such filings often
require senior executive participation.
Another noted that the rate is below the
nationwide average hourly rate for M&A
attorneys. Others objected to the lack of
support for the previously assumed
hourly wage and description of how the
Commission calculated the assumed
hourly wage. One commenter suggested
that a more realistic average rate for
outside counsel is $936 per hour;
however, no law firm that submitted
comments specified a different hourly
rate that should be applied.
The Commission has carefully
reviewed and considered the comments
submitted regarding the hourly rate and
has determined to apply a blended
hourly rate of $583. To reach this
number, the Commission consulted
additional resources regarding the rates
for outside counsel and in-house
personnel. In an effort to make as few
assumptions as possible, the
Commission used current data from
reliable, publicly available sources.
Although the actual rates charged by
HSR practitioners (and attorneys
generally) are not typically publicly
available (and no commenter provided
actual rates), the Commission reviewed
public media and industry reports to
determine a range of approximate values
that would realistically reflect the costs
to prepare an HSR filing.
The ELM Solutions 2023 Real Rate
Report published by Wolters Kluwer
reports data regarding the 2023 hourly
rates charged by corporate M&A
attorneys.409 According to the report, at
firms with more than 1,000 lawyers, the
nationwide mean rate charged by
partners in 2023 was $1,254 per hour
and the nationwide mean rate charged
by associates in 2023 was $781 per
hour. At firms with 501 to 1,000
lawyers, the nationwide mean rate
charged by partners was $1,213 per hour
and for associates it was $801 per hour.
409 Wolters Kluwer’s ELM Solutions, 2023 Real
Rate Report (2023). See also Ctr. Ethics & L. Prof.
at Geo. L. & Thomson Reuters Inst. 2024 Report on
the State of the US Legal Market 11–12 (Jan. 8,
2024) (discussing rise in law firm worked rates over
the past five years as well as the counterinfluence
of billing realization practices); Andrew Maloney,
‘‘Where Are Partner Billing Rates Surging the Most
in Big Law?,’’ Am. L. (May 24, 2023) (noting a 2023
median hourly rate for M&A partners of $955 per
hour).
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89333
At firms with 201 to 500 lawyers, the
nationwide mean rates were $786 per
hour for partners and $519 per hour for
associates.
The Commission notes that HSR
filings are not typically prepared
exclusively by M&A law firm partners
or exclusively by M&A associate
attorneys. As a result, relying on one
mean rate or the other would be
inappropriate. The WK 2023 Real Rate
Report indicates that with regard to
corporate M&A matters from 2020–2023
that resulted in 40–100 total billed
hours, approximately 45% of the hours
billed were at the partner hourly rate,
and approximately 49% of the hours
billed were at the associate hourly
rate.410 The report further notes that
approximately 7% of the hours billed
were at a lower paralegal hourly rate.411
The Commission further notes that
HSR filings are not prepared exclusively
by the largest law firms, nor is it
necessary for filers to engage such
counsel. To account for filings prepared
by small to mid-sized firms, the
Commission calculated blended rates
for both partners and associates by
weighting the nationwide mean rates for
firms with more than 1,000 lawyers
(67%) and firms with 201 to 500
lawyers (33%). Applying the billing
percentages in the WK 2023 Real Rate
Report to those blended rates, the
Commission calculated a blended rate
for outside counsel of approximately
$878 per hour.
To generate an overall blended rate,
the Commission also accounted for the
cost of client time spent preparing the
filing, which could include a range of
employees depending on the type of
business and may include in-house
counsel. The Commission has factored
in an hourly rate for in-house personnel
of approximately $140 per hour, which
reflects current wage data reported by
the Bureau of Labor Statistics.412
Additionally, the Commission believes
that 60% of the time required to prepare
410 Wolters Kluwer’s ELM Solutions, supra note
410, at 214.
411 Instead of separately estimating a paralegal
hourly rate, the Commission conservatively
estimated that the remaining 7% assigned to
paralegals in the WK 2023 Real Rate Report would
be work performed at the associate’s hourly rate.
412 This assumed hourly rate is based on the
median wage for lawyers, which according to the
Bureau of Labor Statistics was $70.08 in 2023. See
https://www.bls.gov/ooh/legal/lawyers.htm. The
Commission doubles this number to reflect the lost
productivity of the worker. The Commission notes
that a company’s top executives may also
participate in preparing or reviewing the filing;
however, since the median wage for top executives
was $49.92 in 2023, to be conservative the
Commission values top executive time at the same
rate as lawyer time. See https://www.bls.gov/ooh/
management/top-executives.htm.
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the HSR filing is time spent by outside
counsel and 40% is time spent by the
client. These percentages are supported
by survey results from Agency staff and
are also consistent with the survey
results in the Kothari Report. By
weighting the hourly rates for outside
counsel and in-house personnel
accordingly, the Commission calculates
an overall blended rate of $583 per
hour. This adjusted hourly rate
generally reflects publicly available
information; however, it does not reflect
real-world factors that would likely
drive down the overall cost of preparing
an HSR filing under the final rule (e.g.,
client-negotiated rates, discounts, writeoffs, alternative fee agreements, and
work shifted to paralegals and other
support staff at substantially lower
rates).
Multiple commenters cited to the
Kothari Report as providing a better
estimate of the additional costs of the
proposed changes and concluding that
the true cost of the proposed rule may
be many times greater than the NPRM
suggested. But the Commission has
accounted for many of the same costs in
its own estimates, such as the time
required from outside counsel, in-house
counsel, and business personnel. Much
of the difference in estimates is
attributable to the higher hourly rate
applied to the required hours, which the
Kothari Report suggests is more likely
$936 per hour, and a category of ‘‘other’’
costs that is nearly one-third of the total
projected costs.413 These additional
costs are attributable to ‘‘other external
costs’’ that include economic
consultants, investment bankers, and
data vendors.
The Commission does not believe that
there will be this level of additional
costs outside of internal personnel and
outside counsel. In particular,
completing the new requirements
contained in the final rule should not
require the services of economic
consultants or investment bankers. As
described above, the Form and
Instructions require information from
the parties’ own records. The
Commission specifically is not seeking
an analysis or post-hoc rationales
developed by external parties. As for
data vendors and similar services for the
collection and production of the
required information, in its new survey
of Agency staff, the Commission asked
the survey participants to indicate for
413 Comment
of U.S. Chamber of Com., Doc. No.
FTC–2023–0040–0684 at 74–75 (other costs
estimated at $102,917, added to external costs of
$234,259 for a total of $313,828, with other costs
33% of total).
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each item the percentage of time that
should be allocated to third parties that
they did not otherwise attribute to time
spent by outside counsel. Only a few of
the survey participants indicated any
need for third-party involvement—and
even for those few, they estimated only
a small percentage of time for a limited
set of items (e.g., for translations). As a
result, there is no basis to further adjust
the Commission’s estimates to account
for ‘‘other’’ external costs.
Commenters also objected that the
Commission failed to consider the
indirect costs to the economy that
would result when parties are
discouraged from pursuing clearly
nonproblematic deals. The PRA does
not require the Commission to consider
potential indirect costs to the economy
presented by the changes described in
the proposed rule. Under the PRA, the
term ‘‘burden’’ means time, effort, or
financial resources expended by persons
to generate, maintain, or provide
information to or for a Federal agency,
including the resources expended for
(A) reviewing instructions; (B)
acquiring, installing, and utilizing
technology and systems; (C) adjusting
the existing ways to comply with any
previously applicable instructions and
requirements; (D) searching data
sources; (E) completing and reviewing
the collection of information; and (F)
transmitting, or otherwise disclosing the
information.414 Comments related to
indirect costs attributable to the final
rule are discussed in section III.C.
Despite these points of disagreement,
the Commission notes that its estimate
for the increase in the average number
of hours required to prepare an HSR
filing is generally consistent with the
estimates put forth by commenters,
including in the Kothari Report, which
were based on the proposed rule but not
the final rule. The Commission believes
that the differences in projected total
costs are mainly attributable to (1) the
significant modifications that were
made to the final rule as compared to
the proposed rule; (2) the difference in
the hourly rates ($583 versus $936); (3)
a category of ‘‘other’’ costs that unduly
increased total costs by one-third; and
(4) use of projected filings for FY 2023
(7,096), which the Commission now
replaces in its calculation with the
actual number of filings for FY 2023
(3,515). The Commission’s PRA
414 44 U.S.C. 3502(2); see also 5 CFR 1320.3(b)
(defining burden); U.S. General Services
Administration & Office of Management and
Budget, ‘‘A Guide to the Paperwork Reduction Act:
Estimating Burden,’’ https://pra.digital.gov/burden/
.
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assessment for the final rule addresses
concerns raised by the commenters
related to the methodology used in the
NPRM.
Net Effect
The changes outlined in the final rule
only affect non-index filings which, for
FY 2023, totaled 3,515. As described
above, the Commission estimates that
the amendments to the HSR Rules and
Notification and Report Form contained
in the final rule could increase the time
required to prepare responses for nonindex filings, with an estimated average
increase of 68 hours per filing. Thus, the
annual estimated additional hours
burden is 239,020 (3,515 non-index
filings multiplied by 68 additional
hours per filing). Applying the revised
estimated hours, 239,020, to the
updated hourly rate of $583 for
executive and attorney compensation
yields approximately $139.3 million in
total additional annual costs for a year
with that number of filings. The
additional per filing cost is estimated at
$39,644 (68 hours multiplied by $583
per hour). However, the Commission
believes that this PRA cost estimate may
overestimate the actual PRA burden. For
a variety of reasons, costs for any
particular transaction are likely to be
different from these estimates. The final
rule will result in higher costs for those
transactions that present the most
antitrust risk, and the PRA estimates do
not take account of the substantial
benefits to the Agencies, the parties, and
third parties generated from a more
efficient premerger review process that
shifts some of the burden of information
collection and reporting away from
third parties to the merging parties and
allows the Agencies to obtain critical
business facts earlier in the initial
waiting period, which in turn helps
mitigate avoidable costs associated with
Second Requests that might have been
avoided or that were not tailored to
areas of competitive concern due to
insufficient information in the HSR
Filing. In addition, the annual costs
associated with the final rule will be
directly related to the number of
reportable transactions. See section
III.C. Finally, any estimated additional
hours burden is expected to decline
over time as filers become more familiar
with the HSR Form and Instructions.
The amendments are expected to
impose either minimal or no additional
capital or other non-labor costs, as
businesses subject to the HSR Rules
generally have or obtain necessary
equipment for other business purposes.
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The Commission believes that the above
requirements necessitate ongoing,
regular training so that covered entities
stay current and have a clear
understanding of Federal mandates, but
that this would be a small portion of
and subsumed within the ordinary
training that employees receive apart
from that associated with the
information collected under the HSR
Rules and the corresponding
Instructions.
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Basis for OMB Assessment
Finally, one commenter stated that
the proposed rule provides an
insufficient basis for the Office of
Management and Budget (OMB) to
conduct the informed and accurate
assessment required by the PRA. The
OMB typically defers its substantive
review until the final rule stage and did
not provide substantive feedback on the
NPRM. However, the Commission
disagrees with the commenter and
believes that it has provided a sufficient
basis for OMB to conduct an informed
and accurate PRA assessment. Based on
comments it received, the Commission
narrowed the information requirements
in the final rule, conducted a new
survey to estimate costs, and revised its
PRA analysis accordingly. The
Commission believes that its revised
assessment provides a sufficient basis
for OMB review under the PRA.
IX. Regulatory Flexibility Act
Certification
The Regulatory Flexibility Act (RFA),
5 U.S.C. 601 through 612, requires that
an agency conduct an initial and final
regulatory analysis of the anticipated
economic impact of the proposed
amendments on ‘‘small entities,’’ unless
the agency certifies that the regulatory
action will not have a significant
economic impact on a substantial
number of small entities.415 Pursuant to
section 605(b) of the Regulatory
Flexibility Act, 5 U.S.C. 605(b), the
Commission certifies that the final rule
will not have a significant economic
impact on a substantial number of small
entities.
The Commission finds that the final
rule will not affect a substantial number
of small entities, because small entities
will be affected only when they are
party to a transaction that exceeds the
HSR Act thresholds, and less than
0.02% of the nation’s small entities file
premerger notifications in any given
year. Furthermore, the economic impact
on the very few small entities that are
required to file is not significant,
because smaller businesses generally
415 5
U.S.C. 605(b).
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have fewer employees, generate fewer
documents related to a transaction, and
are involved in less complex
transactions, all of which will minimize
their costs of complying with the final
rule. Further, these costs will generally
account for a small fraction (less than
0.5%) of the value of the transaction.
This document serves as the required
notice of this certification to the SBA’s
Chief Counsel for Advocacy.416
The Commission also certified in the
NPRM that the changes in the proposed
rule would not, if adopted, have a
significant economic impact on a
substantial number of small entities.
Commenters objected to the
Commission’s reliance on this
certification and stated that the
Commission failed to use the proper
definition of small business or to
discuss the proposed rule’s impact on
them.417 The Commission responds by
providing an assessment of how many
small businesses are subject to the
reporting requirements of the HSR Act
and therefore would be impacted by the
final rule. The Commission also notes
that the final rule does not change
which entities (including which small
entities) are required to submit HSR
Filings.
Under the RFA, ‘‘small entities’’ are
defined as small businesses, not-forprofit organizations that are
independently owned and operated and
not dominant in their fields, and
governmental jurisdictions with
populations of less than 50,000.418 The
term ‘‘small business’’ has the same
meaning as the term ‘‘small business
concern’’ under section 3 of the Small
Business Act, meaning that it must be
independently owned and operated and
not dominant in its field of operation.419
The Small Business Act permits the
Small Business Administration (SBA) to
specify size standards by which a
business may be determined to be a
‘‘small business concern.’’ 420 The SBA
416 Id.
417 One commentor suggested that the increased
information requirements will, on the margin, lead
to less investment by private equity in small
businesses. Such indirect effects are not the proper
subject of RFA analyses. See, e.g., Cement Kiln
Recycling Coalition v. EPA, 255 F.3d 855, 868 (D.C.
Cir. 2001) (rejecting the contention that the RFA
applies to small businesses indirectly affected by
the regulation of other entities).
418 5 U.S.C. 601.
419 See id. at 601(3) (cross-referencing 15 U.S.C.
632).
420 15 U.S.C. 632(a)(2)(A). The Commission does
not expect that the final rule will impact other types
of ‘‘small entities’’ (not-for-profit organizations that
are independently owned and operated and not
dominant in their fields and governmental
jurisdictions with populations of less than 50,000).
In the Agencies’ experience, governmental
jurisdictions are typically not parties to transactions
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89335
publishes these standards at 13 CFR
121.201.
To determine whether a regulatory
action will impact a ‘‘substantial
number’’ of small entities, SBA
Guidance encourages agencies to
examine the number of small businesses
affected by a given rule relative to the
total number of small businesses in the
regulated industry. The regulated
industry may include the ‘‘entire
universe of small businesses’’ where a
rule’s reach is economy wide.421 That is
the case here, as the HSR Rules apply
broadly to the entire economy, and all
persons involved in reportable
transactions are required to file an HSR
Form, irrespective of industry.
The SBA estimates that, as of March
2023, there were approximately 33.2
million small businesses in the United
States.422 As explained below, due to
the filing thresholds Congress
established in the HSR Act, the small
businesses that would have to report a
transaction under the HSR Act represent
a tiny fraction of this number. Even
under the counterfactual and extreme
assumption that all of 6,288 HSR filings
received in FY2022 were made by small
businesses,423 less than 0.02% (6,288
divided by 33.2 million) of all small
businesses would need to file an HSR
Form. Such a de minimis number of
small businesses does not qualify as a
‘‘substantial number’’ of small entities
under the SBA’s Guidance.424 In an
abundance of caution, however, as
detailed below, the Commission
analyzed a randomized sample of the
filings received in FY2022 and further
estimates that the final rule will apply
to less than 0.0007% of small
businesses. Therefore, the final rule will
that would be subject to the HSR Act. As a result,
the Commission has focused its analysis on small
businesses as defined by the SBA.
421 U.S. Small Bus. Admin., Office of Advocacy,
‘‘How to Comply with the Regulatory Flexibility
Act’’ 21 (Aug. 31, 2017), https://advocacy.sba.gov/
2017/08/31/a-guide-for-government-agencies-howto-comply-with-the-regulatory-flexibility-act/
(‘‘Depending on the rule, the substantiality of the
number of small businesses affected should be
determined on an industry-specific basis and/or on
the number of small businesses overall. For
example, the Internal Revenue Service, when
changing the tax deposit rules, would examine the
entire universe of small businesses to see how many
would be affected.’’).
422 U.S. Small Bus. Admin., Office of Advocacy,
‘‘Frequently Asked Questions’’ (Mar. 2023), https://
advocacy.sba.gov/wp-content/uploads/2023/03/
Frequently-Asked-Questions-About-Small-BusinessMarch-2023-508c.pdf.
423 Federal Trade Commission, Hart-Scott-Rodino
Annual Report Fiscal Year 2022, appendix A.
424 U.S. Small Bus. Admin., Office of Advocacy,
supra note 424, at 21 (‘‘The interpretation of the
term ‘substantial number’ is not likely to be five
small firms in an industry with more than 1,000
small firms.’’).
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Federal Register / Vol. 89, No. 218 / Tuesday, November 12, 2024 / Rules and Regulations
not apply to a substantial number of
small businesses.
The SBA regulations define ‘‘small
business’’ primarily based on firm
revenue or total number of employees,
depending on the industry.425 For
industries where the SBA uses revenue
to define ‘‘small business,’’ the revenue
thresholds vary from $2.25 million to
$47 million. In other industries, the
SBA definition of small is based upon
the number of employees. These
thresholds range from 100 to 1,500
employees. Finally, certain financerelated industries are defined as small if
they have less than $850 million in
assets. Each NAICS code has a
corresponding SBA threshold to
determine whether a business
generating revenue in that code is
‘‘small.’’ 426 In addition to these
thresholds, businesses must also be
independently owned and operated and
not dominant in their fields on a
national basis and satisfy additional
criteria to be considered ‘‘small.’’ 427
The calculation of the size of a business
must also give present effect to
agreements to mergers and acquisitions,
including agreements in principle.428
To estimate how many small entities
so defined might be required to make an
HSR filing, the Commission analyzed a
randomly selected, statistically
significant 10% sample of the filings
submitted in FY 2022. Of that sample,
the Commission first eliminated filings
made by individuals in their individual
capacity, and not as the ultimate parent
entity of a business, such as for filings
resulting from executive compensation.
Second, the Commission used NAICS
code information and financials
reported by the acquiring or acquired
person to determine if they qualified as
a small business by revenue or assets, as
applicable. For NAICS codes with
thresholds based upon the number of
employees, the Commission used public
information or documents submitted by
the filing parties to determine if they
qualified as a small business based on
the number of employees. For
transactions in which the acquiring
person filed for control of the acquired
entities, the Commission analyzed the
acquiring person and acquired entities
after giving effect to the change of
control.429 Additionally, because a
small business must be independently
owned and operated, all filings where
an investment group was the ultimate
parent entity of the acquiring or
acquired person were coded as not
small businesses. The Commission does
not have information sufficient to
determine whether other filers are
independently owned and operated, but
where the Commission lacked sufficient
information to exclude a business on
this basis, they were counted as a small
business even if they may not truly
qualify as one. As a result, the estimates
below are likely over-inclusive; that is,
it is likely that fewer filers were small
than were coded as small in the sample.
Table 6: Estimated Number of Small Business HSR Filers in Fiscal Year 2022
FY 2022
(Sample x 10)
Estimated# of
As %of Small
Businesses*
As %ofM&A
Parties**
-~ ~ - - ~ - - • • • - - • - - " • • ~ - - _ . - - • - - - • • • ~ - - - - • - - - - : • • ~ - - ~ - • • s s • - • • - • • •
As% of# ofHSR
Filings***
-----···- ---~---"'-----·-·
Small ]3uyers that May Remain SmaHAfter
Consummation of the Transaction
40
0.00012%
0.13%
0.64%
Small Targets that May Remain Small After
Consummation of the Transaction
180
0.00054%
0.57%
2.86%
Total# ofFilers That May Remain Small
After Consummation of the Transaction
220
0.00066%
0.70%
3.50%
As shown above in Table 6,430 the
Commission estimates that in FY 2022,
it received up to 220 filings from
businesses that meet the definition of
small (22 found in the 10% sample). Of
these, approximately 180 (18 found in
the 10% sample) were the targets of the
425 13
CFR 121.201.
426 Id.
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427 15
U.S.C. 632.
CFR 121.103(d)(1).
429 The Commission notes that filers must attest
(1) to their good faith intent to consummate a
transaction, and (2) in all transactions to which 16
CFR 801.30 does not apply, that a contract,
agreement in principle or letter of intent to merge
or acquire has been executed. See 16 CFR 803.5.
430 See Table 1 (showing 15,734 acquisitions in
2022).
428 13
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transaction, and 40 (4 found in the 10%
sample) were the buyers. As a result, the
Commission estimates than less than
0.0007% of small businesses will be
affected by the final rule.431
This is consistent with the structure
of the HSR Act, which focuses on larger
mergers, as defined by dollar value.432
The framework of the Act established
three tests that together serve to limit
the applicability of the Act for small
businesses: (1) the Commerce Test; (2)
the Size of the Transaction Test; and (3)
the Size of the Person Test.433
431 Though the SBA regulations give effect to
agreements, including agreements in principle,
when determining size, the Commission also
analyzed whether the sample of filers might meet
the thresholds if agreements resulting in a change
of control were not considered. Here too, the
Commission finds that the final rule does not affect
a substantial number of small entities. It estimates
that in FY2022 approximately 850 filers may have
met the definition of small if the effect of
agreements is not considered, representing less than
0.003% of small businesses in the United States,
approximately 2.70% of the estimated number of
M&A parties, and 13.52% of FY 2022 HSR filers.
432 The Commission now provides this
information to give context about the reach of the
Act and does not rely upon any of the HSR
reporting thresholds in this certification, since it
has conducted an analysis of the filing parties using
the SBA’s definitions of small, as described above.
Therefore, the Commission does not address
comments related to the RFA analysis provided in
the NPRM that drew different conclusions from the
statutory thresholds.
433 15 U.S.C. 18a(a).
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* Small Businesses in 2022 = 33,200,000
** M&A Parties in2022 = 31,468 (15,734 x2)
*** Number of Filings FY2022 = 6,288
Federal Register / Vol. 89, No. 218 / Tuesday, November 12, 2024 / Rules and Regulations
89337
Table 7: Current HSR Form Filing Thresholds
Size of Transaction (SOT) (as adjusted, as of March 6, 2024)
SOT :'S $119.5 M
$119.5 M > SOT :'S $478 M
SOT> $478 M
No
No, unless the Size of Person Test is met.
Yes
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The Commerce Test is met if either
party is engaged in commerce or any
activity affecting commerce.
Under the Size of the Transaction
Test, no filing is required if the
transaction is valued at $119.5
million 434 or less. Transactions valued
between $119.5 million and $478
million only must be reported if the
acquiring and acquired person also meet
the Size of the Person Test. Transactions
valued at more than $478 million are
reportable regardless of the Size of the
Person Test.
Where the Size of the Person Test
applies, premerger notification is
required only if (1) the acquiring person
has total assets or annual net sales of
$23.9 million (2024 adjusted value) and
the acquired person has total assets or
annual net sales of $239 million (2024
adjusted value); or (2) the acquiring
person has total assets or annual net
sales of $239 million (2024 adjusted
value) and the acquired person has total
assets (or, if it is ‘‘engaged in
manufacturing,’’ annual net sales) of
$23.9 million (2024 adjusted value). If
these size thresholds are not met, no
filing is required. For example, in 2024,
if the size of a transaction were $475
million and the acquiring person had $1
billion in assets and revenue, but the
acquired person was not engaged in
manufacturing and had $220 million in
revenue but only $20 million in assets,
no filing would be required.
The final rule also will not have a
significant economic impact on small
entities that are required to file. An HSR
filing is not an ongoing cost for small
businesses. Instead, the costs are
incurred only when a small business is
a party to a reportable transaction.
Therefore, the Commission does not
expect that the costs of complying with
434 When Congress passed the HSR Act, it created
minimum dollar thresholds for mandatory
premerger reporting. In 2000, Congress amended
the HSR Act to require an annual adjustment of
these thresholds based on the change in gross
national product. As a result, reportability under
the Act changes from year to year as the statutory
thresholds adjust. The most recent adjustment
became effective March 6, 2024.
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the final rule will cause a significant
impact on affected small businesses.
For the less than 0.0007% of
American businesses that will remain
small after engaging in an HSR
reportable transaction, the impact will
be minimal. Even in a case of a complex
transaction between two small
businesses where the size of the
transaction was at the threshold
(currently $119.5 million), the
Commission estimates that the
additional cost imposed by the final rule
would be approximately 0.12% of the
value of the transaction.435 For the
majority of transactions involving small
businesses, actual costs are likely much
lower and would represent an even
smaller percentage of the proceeds from
the transaction. For example, based
upon the Commission’s review of the
sample of FY 2022 transactions, in some
transactions involving a presumptively
small business, the size of transaction
value exceeded $1 billion, resulting in
the additional cost of the final rule
representing less than 0.015% of the
transaction value for even a complex
transaction.436
Finally, the Commission has no
reason to believe that the final rule will
have a significant economic impact on
any entity, let alone entities that have
assets or revenues substantial enough to
meet the HSR Act’s reporting thresholds
but that nevertheless qualify as small
businesses. As detailed in the final rule,
the Commission estimates that the
changes would result in approximately
10 to 121 additional hours per filing,
depending on the complexity of the
filing at issue. In the Commission’s
experience, smaller businesses have
fewer lines of business and fewer
employees, generate fewer documents
related to a transaction and maintain
fewer ordinary course documents, and
435 Estimated cost for acquiring and acquired
persons combined in transactions with overlaps
using highest average cost (242 hours × $583)
divided by the $119,500,000 threshold.
436 Estimated cost for acquiring and acquired
persons combined in transactions with overlaps
using highest average cost (242 hours × $583)
divided by $1,000,000,000.
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are involved in less complex
transactions, all of which will minimize
their costs of responding to the
document requests contained within the
final rule, to the extent their compliance
is even triggered under the HSR Act’s
thresholds.
Accordingly, the Commission hereby
certifies that the final rule will not have
a significant impact on a substantial
number of small entities.
X. Congressional Review Act
Pursuant to the Congressional Review
Act (5 U.S.C. 801 et seq.), the Office of
Information and Regulatory Affairs has
designated this rule as a ‘‘major rule,’’
as defined by 5 U.S.C. 804(2).
List of Subjects
16 CFR Parts 801
Antitrust.
16 CFR Part 803
Antitrust, Fees, Reporting and
recordkeeping requirements.
For the reasons stated in the
preamble, the Federal Trade
Commission amends 16 CFR parts 801
and 803 as set forth below:
PART 801—COVERAGE RULES
1. The authority citation for part 801
is revised as follows:
■
Authority: 15 U.S.C. 18a(d); 15 U.S.C. 18b.
2. Amend § 801.1 by revising
examples 1, 4, 5, and 6 in paragraph
(d)(2) and by adding paragraph (r) to
read as follows:
■
§ 801.1
Definitions
*
*
*
*
*
(d) * * *
(2) * * *
Examples: 1. ABC Investment Group
has organized a number of investment
partnerships. Each of the partnerships is
its own ultimate parent, but ABC makes
the investment decisions for all of the
partnerships. One of the partnerships
intends to make a reportable
acquisition. For purposes of the
Notification and Report Form, each of
the other investment partnerships, and
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HSRFiling
required?
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ABC Investment Group itself, are
associates of the partnership that is the
acquiring person. In the Minority-Held
Entity Overlaps section of the
Notification and Report Form, the
acquiring person will disclose any of its
5 percent or greater minority holdings
that generate revenues in any of the
same NAICS codes as the acquired
entity(s) in the reportable transaction. In
this same section, the acquiring person
would also report any 5 percent or
greater minority holdings of its
associates in the acquired entity(s) and
in any entities that generate revenues in
any of the same NAICS codes as the
acquired entity(s). In the Controlled
Entity Geographic Overlaps section of
the Notification and Report Form, the
acquiring person will indicate whether
there are any NAICS code overlaps
between the acquired entity(s) in the
reportable transaction, on the one hand,
and the acquiring person and all of its
associates, on the other.
*
*
*
*
*
4. CORP1 controls GP1 and GP2, the
sole general partners of private equity
funds LP1 and LP2 respectively. LP1
controls GP3, the sole general partner of
MLP1, a newly formed master limited
partnership which is its own ultimate
parent entity. LP2 controls GP4, the sole
general partner of MLP2, another master
limited partnership that is its own
ultimate parent entity and which owns
and operates a natural gas pipeline. In
addition, GP4 holds 25 percent of the
voting securities of CORP2, which also
owns and operates a natural gas
pipeline.
MLP1 is acquiring 100 percent of the
membership interests of LLC1, also the
owner and operator of a natural gas
pipeline. MLP2, CORP2 and LLC1 all
derive revenues in the same NAICS
code (Pipeline Transportation of Natural
Gas). All of the entities under common
investment management of CORP1,
including GP4 and MLP2, are associates
of MLP1, the acquiring person.
In the Controlled Entity Geographic
Overlaps section of the Notification and
Report Form, MLP1 would identify
MLP2 as an associate that has an
overlap in pipeline transportation of
natural gas with LLC1, the acquired
person. Because GP4 does not control
CORP2 it would not be listed in this
section, however, GP4 would be listed
in the Minority-Held Entity Overlaps
section of the Notification and Report
Form as an associate that holds 25
percent of the voting securities of
CORP2. In this example, even though
there is no direct overlap between the
acquiring person (MLP1) and the
acquired person (LLC1), there is an
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overlap reported for an associate (MLP2)
of the acquiring person in the
Controlled Entity Geographic Overlaps
section of the Notification and Report
Form.
5. LLC is the investment manager for
and ultimate parent entity of general
partnerships GP1 and GP2. GP1 is the
general partner of LP1, a limited
partnership that holds 30 percent of the
voting securities of CORP1. GP2 is the
general partner of LP2, which holds 55
percent of the voting securities of
CORP1. GP2 also directly holds 2
percent of the voting securities of
CORP1. LP1 is acquiring 100 percent of
the voting securities of CORP2. CORP1
and CORP2 both derive revenues in the
same NAICS code (Industrial Gas
Manufacturing).
All the entities under common
investment management of the
managing entity LLC, including GP1,
GP2, LP2 and CORP1 are associates of
LP1. In Minority-Held Entity Overlaps
section of the Notification and Report
Form, LP1 would report its own holding
of 30 percent of the voting securities of
CORP1. It would not report the 55
percent holding of LP2 in Minority-Held
Entity Overlaps section of the
Notification and Report Form because it
is greater than 50 percent. It also would
not report GP2’s 2 percent holding
because it is less than 5 percent. In the
Controlled Entity Geographic Overlaps
section, LP1 would identify both LP2
and CORP1 as associates that derive
revenues in the same NAICS code as
CORP2.
6. LLC is the investment manager for
GP1 and GP2 which are the general
partners of limited partnerships LP1 and
LP2, respectively. LLC holds no equity
interests in either general partnership
but manages their investments and the
investments of the limited partnerships
by contract. LP1 is newly formed and its
own ultimate parent entity. It plans to
acquire 100 percent of the voting
securities of CORP1, which derives
revenues in the NAICS code for
Consumer Lending. LP2 controls
CORP2, which derives revenues in the
same NAICS code. All of the entities
under the common management of LLC,
including LP2 and CORP2, are
associates of LP1. For purposes of the
Controlled Entity Geographic Overlaps
section of the Notification and Report
Form, LP1 would report LP2 and CORP2
as associates that derive revenues in the
NAICS code that overlaps with CORP1.
Even though the investment manager
(LLC) holds no equity interest in GP1 or
GP2, the contractual arrangement with
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them makes them associates of LP1
through common management.
*
*
*
*
*
(r)(1) Foreign entity or government of
concern. The term foreign entity or
government of concern means:
(i) An entity that is a foreign entity of
concern as that term is defined in
section 40207 of the Infrastructure
Investment and Jobs Act (42 U.S.C.
18741(a)(5)); or
(ii) A government, or an agency
thereof, of a foreign country that is a
covered nation as that term is defined in
section 40207 of the Infrastructure
Investment and Jobs Act (42 U.S.C.
18741(a)(5)(C)).
(2) Subsidy. The term subsidy has the
meaning given to the term in part IV of
title VII of the Tariff Act of 1930 (19
U.S.C. 1677(5)(B)).
PART 803—TRANSMITTAL RULES
3. The authority citation for part 803
is revised to read as follows:
■
Authority: 15 U.S.C. 18a(d); 15 U.S.C. 18b.
4. Amend § 803.2 by:
a. Revising paragraph (a);
b. Removing paragraph (b) and the
undesignated example following
paragraph (b);
■ c. Redesignating paragraphs (c), (d),
(e), and (f) as paragraphs (b), (c), (d), and
(e), respectively; and
■ d. Revising newly redesignated
paragraphs (b), (d), and (e). The
revisions read as follows:
■
■
■
§ 803.2 Instructions applicable to
Notification and Report Form.
(a)(1) The notification required by the
act shall be filed by the preacquisition
ultimate parent entity, or by any entity
included within the person authorized
by such preacquisition ultimate parent
entity to file notification on its behalf.
In the case of a natural person required
by the act to file notification, such
notification may be filed by his or her
legal representative: Provided however,
That notwithstanding §§ 801.1(c)(2) and
801.2 of this chapter, only one
notification shall be filed by or on
behalf of a natural person, spouse and
minor children with respect to an
acquisition as a result of which more
than one such natural person will hold
voting securities of the same issuer.
Example 1 to paragraph (a)(1). Jane
Doe, her husband, and minor child
collectively hold more than 50 percent
of the shares of family corporation F.
Therefore, Jane Doe (or her husband or
minor child) is the ‘‘ultimate parent
entity’’ of a ‘‘person’’ composed to
herself (or her husband or minor child)
and F; see § 801.1(a)(3), (b), and (c)(2) of
of this chapter. If corporation F is to
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acquire corporation X, under this
paragraph only one notification is to be
filed by Jane Doe, her husband, and
minor child collectively.
(2) Persons that are both acquiring
and acquired persons shall submit
separate forms, one as the acquiring
person and one as the acquired person,
following the appropriate instructions
for each.
(b) In response to the Revenue and
Overlaps section of the Notification and
Report Form, information need not be
supplied with respect to assets or voting
securities to be acquired, the acquisition
of which is exempt from the
requirements of the act.
*
*
*
*
*
(d) For annual reports and audit
reports required by the Notification and
Report Form, a person filing the
notification may, instead of submitting
a document, provide a cite to an
operative internet address directly
linking to the document, if the linked
document is complete and payment is
not required to access the document. If
an internet address becomes inoperative
during the waiting period, or the
document is otherwise rendered
inaccessible or incomplete, upon
notification by the Commission or
Assistant Attorney General, the parties
must make the document available to
the agencies by either referencing an
operative internet address where the
complete document may be accessed or
by providing electronic copies to the
agencies as provided in § 803.10(c)(1) by
5 p.m. Eastern Time on the next regular
business day. Failure to make the
document available, by the internet or
by providing electronic copies, by 5
p.m. Eastern Time on the next regular
business day, will result in notice of a
deficient filing pursuant to
§ 803.10(c)(2).
(e) Filings must comply with all
format requirements set forth at the
Premerger Notification Office pages at
https://www.ftc.gov. The use of any
format not specified as acceptable, or
any other failure to comply with the
applicable format requirements, shall
render the entire filing deficient within
the meaning of § 803.10(c)(2).
5. Amend § 803.5 by redesignating the
paragraph (a)(1) heading as the
paragraph (a) heading and republishing
it and revising paragraphs (a)(1)
introductory text, (a)(3), and (b) to read
as follows:
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§ 803.5
Affidavits required.
(a) Section 801.30 acquisitions. (1) For
acquisitions to which § 801.30 of this
chapter applies, the notification
required by the act from each acquiring
person shall contain an affidavit
attesting that the issuer or
unincorporated entity whose voting
securities or non-corporate interests are
to be acquired has received written
notice delivered to an officer (or a
person exercising similar functions in
the case of an entity without officers) by
email, certified or registered mail, wire,
or hand delivery, at its principal
executive offices, of:
*
*
*
*
*
(3) The affidavit required by this
paragraph must have attached to it a
copy of the written notice received by
the acquired person pursuant to
paragraph (a)(1) of this section.
(b) Non-section 801.30 acquisitions.
For acquisitions to which § 801.30 of
this chapter does not apply, the
notification required by the act shall
contain an affidavit attesting that a
contract, agreement in principle, or
letter of intent to merge or acquire has
been executed, and further attesting to
the good faith intention of the person
filing notification to complete the
transaction. If the executed agreement is
not the definitive agreement, the
affidavit must attest that a dated
document that provides sufficient detail
about the scope of the entire transaction
that the parties intend to consummate
has also been submitted.
■ 6. Revise § 803.8 to read as follows:
§ 803.8
Foreign language documents.
Documentary materials or information
in a foreign language required to be
submitted at the time of filing a
Notification and Report Form and in
response to a request for additional
information or documentary material
must be submitted with verbatim
English language translations. All
verbatim translations must be accurate
and complete.
■ 7. Amend § 803.9 by revising
paragraph (c) to read as follows:
§ 803.9
Filing fee.
*
*
*
*
*
(c) For a reportable transaction in
which the acquiring entity has two
ultimate parent entities, both ultimate
parent entities are acquiring persons;
however, if the responses for both
ultimate parent entities would be the
same for the NAICS Codes section of the
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89339
Notification and Report Form, only one
filing fee is required in connection with
the transaction.
*
*
*
*
*
■ 8. Amend § 803.10 by revising
paragraphs (c)(1)(i) and (ii) and
redesignating the example following
paragraph (c)(1)(ii) as Example 1 to
paragraph (c)(1).
The revisions read as follows:
§ 803.10
Running of time.
*
*
*
*
*
(c) * * *
(1) * * *
(i) The date of receipt shall be the date
of electronic submission if such date is
not a Saturday, Sunday, a legal public
holiday (as defined in 5 U.S.C. 6103(a)),
or a legal public holiday’s observed
date, and the submission is completed
by 5 p.m. Eastern Time. In the event
electronic submission is unavailable,
the FTC and DOJ may designate
procedures for the submission of the
filing. Notification of the alternate
delivery procedures will normally be
made through a press release and, if
possible, on the https://www.ftc.gov
website.
(ii) Delivery effected after 5 p.m.
Eastern Time on a business day, or at
any time on any day other than a
business day, shall be deemed effected
on the next following business day. If
submission of all required filings is not
effected on the same date, the date of
receipt shall be the latest of the dates on
which submission is effected.
*
*
*
*
*
■ 9. Amend § 803.12 by revising
paragraph (c)(1)(iii) to read as follows:
§ 803.12
Withdraw and refile notification.
*
*
*
*
*
(c) * * *
(1) * * *
(iii) The resubmitted notification is
recertified, and the submission, as it
relates to Transaction-Specific
Agreements, Transaction-Related
Documents, and Subsidies from Foreign
Entities of Concern sections of the
Notification and Report Form, is
updated to the date of the resubmission;
*
*
*
*
*
■ 10. Revise appendices A and B to part
803 to read as follows:
Appendix A to Part 803—Notification
and Report Form for Certain Mergers
and Acquisitions
BILLING CODE 6750–01–P
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16 C.F.R. Part803-Appendix
Notification and Report Form for Certain Mergers and Acquisitions
Total FIiing Fee: Select Filing Fee.
Post-Cons_ummatian filing?Cash Tender Offer?
Bankruptcy?
Paid By:
□ Yes
□ No
□ Yes
□ No
□ Yes
□ No
D Acquiring Person
D Acquired Person
Acqwring Person
D Both
Do you request early tormlnallon oflhe waiting period? . D Yes D Nd
(Grants ofearly termination are published in the Federal Register aml on the.FTC website.)
►
OPE Details
Name: - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Address Line 2: _ _ _ _ _ _ _ _ _ _ _ _ __
Headquarters Address:
City: _ _ _ _ _ _ _ _ _ __
State: _ _ _
Zip Code: _ _ _ _ _ Cauntrv: _ _ _ _ _ _ _ _ _ _ _ _ __
Website:
Entity "fypa: The UPE Of the acquiring person is a(n)?
D Corporation
D Unincorporated Entity
□
Natural Person
D Not Applicable.
□
This report is being filed an behalf of th0c ultimate parent entity by another
entityw~hin the same person authorized by i to fife pursuant to§ 803.2(a).
□
This report is being filed on behalf Of a foreign person pursuant to§ 803A.
Nam&:
Firm/Campany:
Address:
City, Stats, Zip Cade:
country:
Telephone Number:
E•Mall Addfess:
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89341
central Index Key(CIK) Num~er
Annual/Audit Report Document# or Link
Date of Annual/Audit Report
Does the person fllfng notification Stipulate that the acquiring person meets the size of person test? See 15 U$;C. § 18a(a).
□ Yes, the tower size of person test
□ Yes, the highersize of person test
□ NIA
□
MINORITY SHAREHOLDERS OR INTEREST HOLDERS
►
None.
Acquiring Person Structure
ENTmES WITHIN THE ACQUIRING PERSON
Entity Name
City
State
Zip Code
Country
Entity Name
City
State
Zip Code
country
Entity Name
City
Slate
Zip Code
Country
ANNUAL REPORTS AND AUDIT REPORTS
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1$ C.FR Pert 80-3- Appendix A~ Acqulnng_ Pe~on
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►
Additional Acquiring Person Information
OWNERSHIP STRUCTURE
Description oflhe ownership
stnictura of the acquiring entity
Document # of organlzatlonal
chart for fund or MLP (or N/A)
0Fl'ICERS AND DIRl!CTORS
Parties
►
Name:
Name:
Address:
Address:
Address Line 2:
Address Line 2:
City, State, Zlp Code:
City, Stale, Zip Code:
Country:
Country:
Website:
Website:
Name:
Name:
Address:
Address:
Address Line 2:
Address Line 2:
City, State, Zip Code:
Clly, State, Zip Coda:
Country:
country:
Website:
Website:
►
Transaction Detail sis this transaction subject to§ 801.301 D Yes, Specify Type(s)
□ No
TAANSACTION TYPE
Check all that apply:
□
Acquisition of voting securities
Fonnalion of a joint venture, other corporation, or unincorporateti entity
(see §§801.40 and 801.50)
□ Acquisition subject lo§ 801.31
□
Acquisition of assets
Merger (see§ 801.2)
D Consolidation (see§ 801.2)
D secondary acquisition subject to§ 801 A
D Acquisition subject to§ 801.2(e)
Other, specify _ _ _ _ _ _ _ _ _ _ __
□
□
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□
D Acquisition ofn:on-cotpora.te interests
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89343
ACQUISrTION DETAILS
Percentage of voling securities already
held
%
Percentage of non-cOfPorale
interests already held
Value of voling securities already held
($MM)
$
Value of non-corporate interests
Total percentage Of voting securities to
be held as a result of the acquismon
%
Total percentage of non-cOfPorate to
be held as a result of the acquisition
%
%
already held ($MM)
$
NOTIFICATION THR&sMOLO
□ $50 million (as adjusted)
►
□
$100 mmlon (as adjusted)
□ $500 million (as adjusted)
025%
0.50%
D NIA
Transaction Description
BUSINESs·oF THE ACQUIRING PERSON
BUSINESS OF THE TARGET
NoN-REPORTAELE UPE(s)
'TRANSACTION DESCRIPTION
RELATED TRAi,!SACTIONS
Does tho transaction that Is the subject of this filing have related filings?
□
Yes
D No
□
Uhknown
If the transaction has related filings; Indicate ¥.hether the related flllng(sj (choose all that apply):
□
□ Isa
IS a principal transaction that triggers one or more shareholder
jolnlveritute
backside transactions
□
□
ls a shareholder backside transaction
□
lsan exchange of assets
□
Has more than one acquiring UPE
□
Has one or more filings in the allernatl\le
□
Has mote than one acquired UPE
□
Other, explain: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
□
Has more than one reportable step
Is a consolidation
Party Names or Transaction Numbers for Related Transactions:
Transactions Subject to lnferni,tional Antitrust Notification
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□ No
□
Yes (pt()Vfde details below)
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►
Has (or Will) a non-U.S. antitnust or compelllion authority bean (or be) notified of the transaction?
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►
Additional Transaction Information
TRANSACTION RATIONALE
D Not applicable, select 801.30tra:nsaction
DOCUMENT NUMBERS RELATED TO
TRANSACTION RATIONALE.
DOCUMENT# FOR 'TRANSACTION DIAGRAM
D Not appllcable,.select 801.30 transaction
►
Joint Ventures
Complete only If acquisition is the fo/rnaUon QI a joint venture corporation or unincorporated entity
D Not Applicable
CONTIUBl/ffONS TO BE MADE
DESCRIPTION OF CONSIDERATION
DESCRIPTION OF THE BUSINESS OF THI!
JOINTVEN'IORE
JOINT VENTURE NAICS CODES
►
Business Documents
TRANSACTION RELATED DOCUMENTS
D Nol Applicable, Select 801.30 Transaction
Pi.ANS AND REPORTS
Prlvtlege Log Documeht # - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
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►
89345
Agreements
□
TRANSACTION-SPECIFIC AGREEMENTS
Not Applicable, 801.30 or Bankruptcy
OTHER AGREEMENTS BE1WEEN'ritE ACQUIRING PERSON AND TAl<QET
Does the acquiring person have(onNlihln one year of filing, had) any agreements with !he target?
o No
□
Yes (provide details below)
□
Yes
O Yes
□ No
□
No
Agreement with non-compete or non-solicitation terms betW11en the acquiring parson
and target
Other
□ Not Appffcable, Select 801.30 Transaction
►
overlap DescriptiQn
Briefly des_i:riba the acquiring perSon's princil)al categories of prod\Jcts or services.
List and briefly describe current and known planned products or services that compete (or could compete) with the target, (See lnstructlons)
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□ None
Competing Product or service Details
►
Supply Relationships Description
RELATED SALES
List and briefly describe the acquiring person's products, services, or assets that are supplied to the target or a business that competes with the
target. (See Instructions)
□ None
Product,servtee, or Asset Details
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RELATED PURCHASES
List and briefly describe the products, services, or assets that are purchased by the acquiring person from the target or a.business that competes
'With the target. (See lnstrutttons)
Product, Service, or Asset Details
D None
Doesthe acqulrln)J person have US revenue?
□ Yes
►
NAICS Codes
►
Controlled Entity Geographic dverlaps
D No, explain:
dNone
STATE LEVEL REPOltnNG
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□.None
STREET LEVEL REPORTINCl
►
□
►
Minority-Held Entity Overlaps
None
Prior Acquisitions
□ None
Subsidies from Foreign Entities or Governments of Concern
0 Norie O Yes (l)rovide details beloYI)
SUIISIDll!s
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►
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COUNT'ERVAILlNG DUTIES IMPOSED
□
None □ Yes (providedetailsbelow)
COUNTERVAILING DUTY INIIESTICJATI!>NS
□
None
□
89349
Yes (provide details below)
I
►
Defense or Intelligence Contracts
□
►
None
□
Not Applicable, Select 801.30 Transaction
Voluntary Waivers
INTERNATIONAL COMPETITION AUTHORfflES (VOWNTARY)
The acquiring person agrees to waive the disclosure exemption in the HSR Act for the following competition authorities:
1.
4.
2.
5.
3.
6.
□
None
STATE :ATTORNEYS GENERAL (VOLUNTARY)
The acquiring: person agrees to waive the disclosure exemption in the HSR Act for the following states:
□
End Notes
None
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►
□ None
89350
Federal Register / Vol. 89, No. 218 / Tuesday, November 12, 2024 / Rules and Regulations
PENlll.nes l'OR FALSE STATeMENTS
Federal law provides criminal penalties, including up lolweiity years imprisonment, for any person who knowingly alters. destrays, mutilates, conceals,
CQ\lers .up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence an ,ongoing or
anticipated federal investigation (see·, e.g., Section 1519 of Title 18, United states Code.). It is also a criminal offense to knowingly make a false statement in
a federal investigation, obstruct a federal investigation, or conspire to obstruct Justice or obstruct or impede the lawful functioning of !he government (see,
e.g., Sections 371, 1001, and 1505 of Tille 111, United states Code).
CERTIFICATION.
This NOTIFICA:rION AND. REPORT FORM, together with any and an appendices and attachments thereto, was prepared and assembled under my
supervision in' accordance with insttucttons issued by the Commission. Subject to the recognition: that"where so Indicated, reasonable estimates have been
made because books and records do not provide the required data, the Information is, to the best of my knowledge, true, correct, and con,ptete in accordance
with the statute and rUles.
I ackhowledgethatthe Commission or the Assistan! Attorney General ofthe·Antilrust Division Of the Department of Justice may, prior !Qthe expiration oflhe
Initial waiting period pursuant to 15 u.s.c. § 18a, require the submission of additional information or documentary material relevant to the proposed
transaction.
Name (Please Print or Type)
Title
Signature
Data
D SWorri under penalty. of perjury
Pursuant to 28 U.S.C. § 1746, I declare under p,malty Of perjury uncterthe laws of the United states of America !hat the foregoing is true and correct.
Signature
Executed Date
D Notarized
Subscnbed and sworn to before me at the:
seal:
City of: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
State of:
This
day o f - - - - - - -
the year _ _ _ _ __
Signature: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
My commission expires: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
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Page 11 Of12
Pre F◊RM Cif. (rnv_ Ocl:obw2b2.4)0MBsoM--0005
Federal Register / Vol. 89, No. 218 / Tuesday, November 12, 2024 / Rules and Regulations
16 C.F.R. Part 803 -Appendix
NOTIFICATION ANO REPORT FORM FOR CERTAIN.MERGERS ANO ACQUISITIONS
89351
Approved by 0MB 3084-0005
THEIN FORMATION REQUIRED TO BE SUPPLIEO ON THESE ANSWER SHEETS IS SPECIFIED IN THE INSTRUCTIONS
THIS FORM IS REQUIRED BY LAW and must be flied separalely by each person that, by reason of amerger, consolidation, or acquisition, is subject to§ 7A
of the Clayton Act, 15 U.S.C. § 18a, and rules promulgated thereunder (hereinafter referreq to as "the rules' or by section number). The rules may be found
at 16 CFR Parts 801-0:tFailure to file this Notmcallon and Report Form, and lo observe the required waiting period before consummating the acquisitlon in
accordance with the applicable provisions of 15 U,S.C. § 18a and the rules, subjects any 'person," as defined In the rules, or anylndlviduals responsible fat
noncompliance, to liability for a penalty for each day during. which such person is in violation of 15 U.S.C. § 18a. The maximum daily cMI penalty amount is
listed in 16C.F.R. § 1.98(8).
Pursuant to the Hart-Scott0 Rodlno Act, information and documentary material filed in or with this Form is confidential. It is exempt from disclosure under the
Freedom of Information Act and may be made public only in an admihislratfve at judicial proceeding, or disclosed to Congress at to a. duly authorized
committee or subcommittee of Congress,
DISCLOSURE NOTICE' Public reporting bUrden for this report ls estimated at 105 hours per response, Including time fat reviewing instructions, searching.
existing data sources, gathering; and maintaining the data needed, and completing and reviewing the collecllon of Information. Send comments regarding the
burden estimate or any other aspect ofthis report, including suggestions for reducing this burden to:
Premerger Notification Office
Federal Trade commission
4007th St. SW
Washington, DC 20024
and
Office of Information and Regulatory Affairs
Office of Management and Budget
Wasliington, DC 20503
Under the Paperwork Reductlon Act, as amended, arr:agency may not con duct or Sponsor, an-d a- person IS not required to respond-to, a coUection of
information unless tt displays a currently valid 0MB control number. Thal number is 3084-0005, which also appears above.
Privacy Act Slatament--Secllon 18a(a) of Title 15 of the U.S. Code authorizes the collection of this information. The primary use of information submitted on
!his Form Is to determine whether the reported merger or acquisition may violate the antitrusflaws. Taxpayer information Is collected, used, and may be
shared with otheragencies and contrac!ors for payment processing, debt collection and reporting purposes. FumiShlng the information on the Form is
voluntary. Consummation of an acquisition required to be reported by the statute cited above without having provided this ihfatmalion may, however, render a
person liable to civil penalties up lo the amount listed in 16 C.F.R. § 1.98(a) per day. We also may be unable lo processlhe Form unless you provide all of
the requested information.
This page may be .omitted wllen submitting the Form.
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89352
Federal Register / Vol. 89, No. 218 / Tuesday, November 12, 2024 / Rules and Regulations
16.C.F.R. Part 803-Appendix
Notification and Report Form for Certain Mergers and Acquisitions
Paid By:
Total Flllng Fee: Seloet FIiing "Fee.
Post-Consummation Filing?
Cash Tender Offet?
Bankruptcy?
□ Ye1,
□ No
□ Yes
□ No
□ Yes
□ No
tJ Acquiring Person
D Acquired Person
Acquired Person
□
Both
Do you raquallt early tilrmlnatian oflha Waiting perli11J? □ Yes □ No
(Grants .of early termination are published in the Federal Register and. on the FTC website)
►
UPEDetails
Name:
Headquarters Address:
City: _ _ _ _ _ _ _ _ _ _ __
stale: _ _ _ _
Address Line 2: - - - - ~ - - - - - - - - - Zip Code: _____ country:
Website:
Entity type: The UPE ofihe acqu fred person. is a(n)?
D Natural Person
D Not Applli:able.
0 This report.is being fifed Clli behalf of the ultimate parent entity by another
entity wlhin the same persO<] authorized by it to file.pursuant fo §. 803.2(a).
D This report i~ being filed Clli behalf ofa foreign person pursuanl to§ 803.4.
Name:
Firm/Company:
Address:
City, Stale, Zlli Code:
Country:
"Telephone Number:
E-Mail Address:
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Page I of t1
Federal Register / Vol. 89, No. 218 / Tuesday, November 12, 2024 / Rules and Regulations
89353
Central Index Key (CJK) Number
AnnuaVAud~ Report Document# a Link
Date of Annual/Audit Report
Does the person filing notification stipulate that the acquired person meets the size of person test? See 15 U.S.C. § 1Ba(a).
D Yes, the lower size ofperson test
D Yes, the higher size of person lest
D NIA
D None
MINORITY SHAREHOLDERS OR INTEREST HOLDERS
►
Acquired EntityStructure
ENTITIES Wm!IN THE ACQUIRED ENTITV(IES)
Entity Name
Ctly
Slate
Zip Code
Country
ANNUAL REPORTS AND AUDIT REPORTS
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89354
Federal Register / Vol. 89, No. 218 / Tuesday, November 12, 2024 / Rules and Regulations
►
Parties
Name:
Name:
Address:
Address:
Address Lina 2:
Address Line 2:
City, State, Zip Code:
City, State, Zip t'ode:
Country:
Country:
Website:
Website:
Name:
Name:
Address:
Address:
Address Line 2:
Address Line 2:
City, state, Zip Code:
City, State, Zip Code:
Country:
Country:
Website:
Website:
►
Transaction Details
Is this transaction subject to§ 1101.307
Yes, Specify Type(s) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
□
□ No
l'RANsACTION TYPE
Check all that appll(:
□
Acquisition of vcting securities
D Acquisition subject to§ 801.31
□ Secondary acquisition subject to i 801.4
D Acquisition subject to§ 801.2(e)
□
Acquisition of non-corporate interests
D Acquisition of assets
□ Merger (see § 801.2)
0 Other, specify _ _ _ _ _ _ _ _~ - - -
D Consotidalion (see§ 801.2)
Ai:QU1SmoN DETAILS
Percentage of voting securities already
held
%
Percentage of non-corporate
interest'S already held
Value of voling securities already held
Value of non-corporate interests
($MM)
$
already held ($MM)
Total percentage of voting securities to
be held as a result of the acquisition
%
Total percentage of non-eorporete to
be held as a resullof the acquisilion
%
%
$
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f'TC FORM C4 (rev, 0'ci:Dber'2024}0MS 30$4-0005
Federal Register / Vol. 89, No. 218 / Tuesday, November 12, 2024 / Rules and Regulations
►
89355
Transaction Description
BUSINESS OF THE TARGET
NON-REPORTABLE UPE(s)
TRANSACTION DESCRIPTION
RELATED TRANSACTIONS
Does the transaction that is the subject of this filing have related lifings?
O Yes
0 No
□
Unknown
If the transaction has related flllngs, Indicate YAlether the related nnng(s) {choose all that apply}:
□ Isa principal transaction lhat triggers. one or more shareholder
□
□
Is a joint venture
consolidation
□ Isa
backside transactions
□ Is an exchange of assets
Is a shareholder backside transaction
O Has more than one acquiring UPE
□ Has one or more filings in tlie alternative
□ Has more
0 Other, explain: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
□
than one. acquired UPE
Has more than one reportable step
Party Names or Transaction Numllers for Related Transactions:
►
Additional Transaction Information
TRANSACTION RA'l)ONALE
D Not applicable, select 801.30 transaction
DoCUMENT NUMBERS RELATED TO
TRANSACTION RATIONALE
►
Business Documents
TRANSACTION RELATED DOCUMENTS
□
□
D NotAppliceble, Select 801.30 Transaction
PLAN$ AND REPORTS
D
□
Privilege log D o c u m e n t # - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
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89356
Federal Register / Vol. 89, No. 218 / Tuesday, November 12, 2024 / Rules and Regulations
►
Agreements
□
TRANSACTION-5PECIFIC AGREEMEkl'S
Not Applfcable, 801.30 or Bankruptcy
l
□
►
Nol Applicable, Select 801.30 Transaction
Overlap Description
Briefly describe the target"s principal categories of products or services.
List and bri&lly describe current and known planned products or servic_osthat compete· (or could comj,ota) with Iha acquiring parson. (Sae
Instructions)
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Competing Product or Service
►
89357
D None
Supply Relationships Description
RELATED SALES
List and briefly describe the target's product)', servlci!s, or assets that are supplied lo the acquiring person or a business that competes with
acquiring person. (See Instructions)
Product, Setvtce; or Asset Details
D None
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89358
Federal Register / Vol. 89, No. 218 / Tuesday, November 12, 2024 / Rules and Regulations
RELATED PURCHASES
List and briefly describe the products, services, or assets that are purchased by the target from the acquiring person or a business that competes
"'1th the acquiring person. (Se& Instructions)
□ None
Product, Service, or Asset Details
rchases from Acqu
I> 10 Supplrers:
□ Yes
Doesthil target have US revenue?
►
D No, explain: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
NAICS Codes
D
Controlled Entity Geographic Overlaps
□
STATE, LE\lliiL REPORTING
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►
Federal Register / Vol. 89, No. 218 / Tuesday, November 12, 2024 / Rules and Regulations
□.None
STREET LEVEL REPORTING
►
89359
Minority-Held Entity Overlaps
0. None
►
Prior Acquisitions
None
S11bsidies from Foreign Entities or Governments of Concern
□
SUBSIDIES
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□
Yes (provide details,below)
46 C,.F.R. Pei:t803-Append1x:A-AcqulredPerso11
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►
□
89360
Federal Register / Vol. 89, No. 218 / Tuesday, November 12, 2024 / Rules and Regulations
CoUl'ITERVAILING DIJTIES IMPOSED
tJ None
□
Yes.(provide details.below)
COUl'ITERVAi(INII DUTY INVE$TIGA110NS
D "Jone
□
Yes (provide details below)
0
►
Defense or Intelligence Contracts
D None D Not Applicable, Select 801.30 Transaction
►
Voluntary Waivers
ll'ITERNA110NAl COMPE11110NAUTHORl11i!S (VOLUNTARY)
□
The acquired person agrees to waive the disclosure exemption in the HSR Acffor the following compe!ftion authO!ities:
1.
4.
2.
5,
3,
6.
None
STATE ATTORNEYS GENERAL (VOLUNTARY)
The acquired person agrees to waive the disclosure exemption in the HSR Actforthe following states:
►
□
D None
End Notes
Nohe
~~~~~~.,,!
,, +0••·~.
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FTC, FORM C4 (rev-, October 2024} 0MB. 3084-0005
Federal Register / Vol. 89, No. 218 / Tuesday, November 12, 2024 / Rules and Regulations
89361
PENALTIES FOR FAl.SE STATEMENTS
Federal law provides criminal penalties; including_up to twenty years imprisonm_ent; for any person who knowingly alters, destroys, mutilate_s, conceals,
covers up; falsifies; or makes a false entry in any record, document, or tangible object with the intent to Impede, obstruct, or influence an ongoing or
anticipated federal investigation (see, e.g., Section 1519 of Title 18, United States Code.), It is also a criminal offense to knowingly make a false statemen!in
a federal investigation, obstruct a federal investigation, or conspire to obstruct justice or obstruct or impede the lawful functiooing of the government (see,
e.g., Sections 371, 1001, and 1505 of Title 18, United States Cocte).
CERTIFICATION
This NOTIFICATION AND REPORT FORM, togetfterwtth any and all appendices.and attachments thereto, was prepared and assembled under my
supervision in accordance with Instructions issued by the Commission. Subject to the recognition that, where so Indicated, reasonabl_e estimates have been
made because books and records do not provide the required data, the informatioo is, to the best of my knowledge, true, correct, and complete.in accadance
with the statute and rules.
I acknowledge that the Commission or the Assistant Attorney General of the Antitrust Division of the Department of JuStice may, priOfto the expiration oflhe
initial waiting periOd pursuant to 15 U.S.C. § 1Ba, require the submission of addltional information or documentary material relevant to the proposed
transaction.
Name (Please Prinfor Type)
Title
Signature
Date
□
Sworn under penally of perjury
Pursuahtto 2l! U.S.C. § 1746, l declare under penalty of perjury under the laws of !he United States of America that the foregoing is true and correct.
Signature
Executed Date
D Notarized
Subscribed and sworn lo before me at the:
Seal:
City of: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
Staie of:
day of _ _ _ _ _ __
This
the year _ _ _ _ __
Signature:-~-~--------------~---My commission-expires:-----------------~
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FTC FORM
89362
Federal Register / Vol. 89, No. 218 / Tuesday, November 12, 2024 / Rules and Regulations
16 C.F.R. Part 803 -Appendix
NOTIFICATION AND REPORT FORM FOR CERTAIN MERGERS AND ACQUISITIONS
Approved by 0MB 3084-0005
THE INFORMATION REQUIRED TO BE SUPPLIED ON THESE ANSWER SHEETS IS SPECIFIED IN THE INSTRUCTIONS
TH.IS FORM IS REQUIRED BY LAW and must be filed separalely by each person that, by reason of a merger, consciHdalion, or acqµisition, is$Ubiect to§ 7A
of the Clayton Act, 1.5 U.S.C. § 18a, and rules promulgated thereunder (hereinafter referred toas "the rules' or by section number). The rulas may be found
at 16 CFR Parts 801-03. FaUure to file this Notification and Report Form, and to observe the reqµired waiting period before consummating the acquisition in
accordance. with the applicable provisions of 15 U.S.C. § 18a and the rules, .subjects any "person; as defined in the rules, or any individuals responsible for
noncompliance, to liability for a penalty for each day during which such persoo is in violation of 15 U.S.C. § 18a. The maximum dailycMI penalty amount is
listed in 16C.F.R. § 1.98(a).
Pursuant to the Hart-Scott-Rodino Act, information and documentary material filed in or with !his Fonn is confidential. lt is exempt from disclosure under the
Freedom of Information Act and lnay be made public only in an administrative or judicial proceeding, or d'rsclosed to Con grass or to a duly author12ed
committee or subcommittee of Congress.
DISCLOSURE.NOTICE - Public reporting burden for !his report is estimated at 105 hours per response, including lime for reviewing instructions, searching
existing data sources, gathering, and maintaining the data needed, and completing and reviewing the collection of Information. Send comments regarding the
burden estimate or.any other aspect of this report, including suggeslioos for reducing this burden to:
Premerger Notification Office
Federal Trade commission
400 7th st. SW
Washington, DC 200:24
and
Office of Information and Regulatory Affairs
Office of Management and Budget
Washington, DC 20503
un·der the Paperwork RedlJction Act" as amended,-an ·agency may not conduct or .sponsor, and 8' person is not required to respond to1 a coffection of
information unless it displays a cunen!ly valid 0MB control number. That number is 3084-Q005, which also appears above.
Privacy Act statement-..Se'C!ion 18a(a) ol1ille 15 of the U.S. Code authorizes the collection of!his information. The primary use.of information submitted on
this Fonn is to determine whether the reported merger or acquisitton may Violate the antitrust laws. Taxpayer information is collected, used, and may be
shared with otheragencies and contractors for payment processing, debt collection and reporting purposes. Furnishing the information on the Form is
voluntary. consummation of an acqµisition required to be reported by the statute cited above without having provided this information may, however, tender a
person liable to civil penalties up.to the amount listed in 16C.F.R. § 1.98(a} per day. We also.may be unable to process the Form unless you provide all of
the reqµested information.
This page may be omitted when submitting the Form.
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Page 110111
FTC FORM C4 (Ml\ Qctober20.24)OM63084--0005
Federal Register / Vol. 89, No. 218 / Tuesday, November 12, 2024 / Rules and Regulations
89363
Appendix B to Part 803—Instructions to
the Notification and Report Form for
Certain Mergers and Acquisitions
Antitrust Improvements Act
Notification for Certain Mergers and Acquisitions
AcquInng Person Instructions
These instructions specify the information that must b.e submitted pursuant to § 803.1 (a) of the prernerger notification rules, 16 CFR Parts
801-803 ('the Rules"). Submitted materials must be. provided to the Federal Trade CommiSsion ("FTC") and to the Antitrust Division of the
Department of Justice ('DOJ'1 (together, "the Agencies').
►
Information
The central office for information and assistance concernin'g the Rules is:
Premerger Notification Office
Federal Trade Commission
400 7th Street, S.W.
Washington, D.C. 20024
Phone: {202) 326'3100
E-mail: HSRhelp@ltc.qoy for Rules questions
Premerger@flc.gov for filing information
Qopies Of these Instructions, the Hart-Scott-Rodino AntitrustJmprovemehts Act of 1976 ('1he Act'1, the. Rules, FTC final rules (including their
Statements of Basis and Purpose) published in the Federal Register, as well as information to assist in submitting the required i.nformation
are available at the FTC's Premerger Notification Office ("PNO") webslte.
►
Definitions and Explanation of Terms
Unless otherwise indieated, the definitions provided in the Rules apply to these Instructions.
Dollar Values
All financial information should be expressed in millions of dollars rounded to the nearest hundred thousand.
Fee Information
The filing fee is based on the aggregate.total value of assets, voting securities, and controlling non-corporate interests to be held as a. result
of the acquisition. Filing fee tiers are adiusled annually pursuant to 15 U.S.C. § 18a. note, based on the change in gross national product, in
accordance With 15 U..S.C. § 19(a)(5). Filing fees increase annually by the percentage increase, if any, in the consumer price index ('CPI")
over the CPI for the fiscal year ending September 30, 2022, pursuant to15 U.S.C. § 1.8a note. For current fee information, see the PNO
website.
North.Alhetican Industry Classification Sy!>tertt (NAICSJ Data.
When reporting infor.mation by 6-digit NAICScode; refer to the North American Industry ClassfflcatiOn System- United States, 2022,
published by the Executive Office of the President, Office of Management and Budget, available at https:Jfwww.census.qoy/naics/. This
website also provides guidance in choosing the proper code(s).
Notification Thresholds
Notffication thresholds are adjusted annually based on the change in gross national product, in accordance with 15 U.S.C. § 19{a)(5J. $ee
§ 801.1 (h). The current threshold values can be found at Current Thresholds.
Person Fifing and Fifing Person
The terms "person filing" or "filing person" mean the ultimate parent entity ("UPE'). See§ 801.1 (a)(3). The terms are used herein
interchangeably.
Sele.ct 801.30 Transaction
A transaction to which§ 801.30 applies and where (1) the acquisition \Wuld notconfet control, (2) there is no agreement (or contemplated
agreement) between any entity within the acquiring perSon and any entity wittiin the acquired person governing any aspect of the
transaction, ana (3) the.acquiring person does not have, and Will not obtain, the right to serve as, appoint, veto, or approve board members,
or members of any similar body, of any entity Within the acquired person or the general partner or management company of any entity Within
the acquired person. Executive compensation transactions also qualify as select 801.30 transactions.
Supervisory Deal Team Lead
The individual who has primary responsibility for supervising the strategic assessment of the deal, and who 'M'Uld not otherwise qualify as a
director or officer.
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Target
The target includes all entities and assets to be acquired by the_ acquiring person from the acquired person in the reported transaction.
Year
All references to "year" refer to calendar year. If data are not available on a .calendar year basis, supply the requested data for tt,e fiscal
year reporting period that most nearly corresponds to the calendar year specified. References to "most recent year" mean the most recently
completed calendar or fiscal year for which. the requested.information is available.
►
Filing
If the UPE is both an acquiring and acquired person, separate filings must be submitted, one as the acqoirlng person and one as the
acquired person, folloWing the appropriate instructions for each. See § 803,2(a)(2).
Filings should be submitted electronically consistent With the instructions on the PNO webstte. If the electronic submission platform is
unavailable, the Agencies may announce sites for deliveryfhrough the media and, if possible, at the PNO website.
►
Responses
Documents, including the Form, should be l)rocluced as (1) a searchable PDF from which. text can be copied or (2) an Excel file.
For Business Documents (see below}, check fhe box to indicate whether any part.of the document is privileged and then provide the
document number, titre, and estimated date. If the acquiring person has identified (1) a NAICS overlap; (2) an overlap within the Overlap
Description, or (3) a supply relationship within the Supply Relationships Description, also provlde the following:
1. Author(s) (and job tttle(s)) for documents created by the acquiring person; or
2. Recipient(s) or supervisor(s} (and job title(s)) of documents created by third parties as part of an engagement with the acquiring
person.
If a group of people prepared the document, list all the authors and their titles, identifying the l)rincipal authors. Alternatively, it isaccel)table
to indicate that the document was prepared under the supervislon of the lead author and to provide the name and title of that author.
Similarly; if the acquiring person engaged a third party to prepare a document, provide the name of the third party, and the name, title, and
company name for the individual within the acquiring person who supervised the creation of the document, or for whom the document was
prepared. For materials received from a third party that was not engaged by the acquiring person, only the name of the third party is
required.
If the acquiring person submtts documents in addition to what is required, such documents should be.identified as "Voluntary". See
§ 803.1(b).
Submit oniy one copy of identical responsive documents.
►
Privilege
See§ 803.3(d). For privileged documents, the filing person must also provide the following in a log;
1. The privilege type (redacted or withheld);
2. The privilege claim;
3. Addressee(s) and all recipients, with company name and We, of the original and any copies;
4. Subject matter;
5. Document's present location; :;ind
6. Who has control over ft.
If a privileged document was circulated to a group, such as the board or an lnvestmentcommittee, tlie name of tne group is sufficient, but
the filing person should be prepared to disclose the names and titles/positions of the indlviduar group members; if requested.
If the claim of l)rivilege is based on advice from inside and/or putside counsel, the name of the inside and/or outside counsel providing the
advice (and the law firm, if applicable) must be provided. If several lawyers participated in providing advice, identifyillg lead counsel is
sufficient. In identifying who controls a document, the name of the law firm is sufficient.
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►
89365
Translations
Materials or information in a language other than English must be translated into English, With the English translation attached to the original
version. See§ 803.8.
►
Non-Compliance
If unable to answer any-item fully, provide such information as is available and a statement of reasons for non-compliance as required by
§ 803.3. If exact answers to any ftem cannot be given, enter best estimates and indicate the source or basis of such estimates. Add an
endnote with the notation "est." to any item where data are estimated.
►
Limited Response
Information need not be supplied regarding assets, voting securities, or non-corporate interests currently being adquired when their
acquisition isexempt under the Act or Rules. See§ 803.2(c).
Total Expected Filing Fee
Indicate the value of the total requited fee for the transaction.
Patties Paying the Fee
Indicate whic.h filing persoh{s} is paying the filing fee and, ~ appllcable, whether the fee is being paid by multiple entities. For each entity
Within the acq·uiring person paying a portion of the fee, provide the name of the payer, the amount paid, the payment method, and the
Electronic Wire Transfer {EWT) confirmation number or check number.
Note on Paying by EWT
In order for the FTC to track payment, the payer must ptovide information required by the Fedwire Instructions to the financial institution
initiating the EWT. A template of the Fedwire Instructions is available at the PNO website on the Filing Feelnformation page.
Note on Paying by Check
The FTC strongly discourages check payments because handling a physical check will create a delay in processing the Form. However, if
an EWT cannot be arranged, the FTC will accept a check, sent to Financial Operations. Cashiers' or certlfied dhecl<s are preferred. Make
the chedk payable to the Federal Trade Commission and deliver to:
Federal Trade Commission
Financial Operations Division
600 Pennsylvania Ave; Drop H-790
Washington; DC 20580
Please note that the waiting period may be delayed until tlie fee has been confirmed.
Special Filing Types
Indicate whether the filing is a post-consummation filing, or whether the transaction is a cash tender offer or bankruptcy that is subject to
Section 363(b) of the Bankruptcy Code (11 U.S.C. § 363).
Early Termination
Indicate whether the acquiring person requests early termination of the waiting period. Notifidation of .each grant of early termination will be
published in the Federal Register, as required by 15U.S.C. § 18a(b)(2), and onthe PNO website. Note that if either person in any
transaction requests early termination, it may be granted and publiShed.
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►
UPE Details
Name
Provide the name, headquarters address, and website (if one exists) of the person filing notification. The rtame of the person filing is the
name of the UPEof the acquiring person. See §801.1(aJ(3).
Entity Type
Specify whether the UPE is a corporation, unincorporated entity, natural person, or other entity type (specify). See§ 801.1.
Filing Madeon Behalfof.the UPE
If the filing_is being made on behalf of the UPE by another entity within the acquiring person authorized by the UPE to_ Ii le the notification on
its behalf pursuant to§ 803.2(a) or filed pursuant to§ 803.4 on behalf of a foreign person, provide the name and mailing address of the
entity filing the notification on behaW ofme UPE.
•
Contact Jnfqrmatlon
Provide the name, firmlcompany name, address, telephone number, arid e-mail address of two individuals (primarv and secondary) to
contact regarding the filing. See§ 803.20(b)(2)(ii).
Additionally, provide the name, firmlcompany name, address; telephOne number, and e-mail address of an individual located in the United
States designated for the limited purpose of receiving notice of the issuance of a request ror additional information or documentarv materiaL
See§ 803.20(b)(2).
UPEAnnual Reports and Financial Information
• Central Index Key
If the UPE of the acqulring person files annual reports (Form 10-K or Form 20-FJ with the United States Securities and Exchange
Commission (SEC), provide the Central Index Key (CIK) number.
•
Annual Reports and Audit Reports
Provide the most recent annual reports .and/or annual audit-reports (or, if audited is unavailable, unaudited) of the UPE of the
acquiring person.
Natural person UPEs should not provide personal balance sheets or tax returns. Natural person UPEsshould leave this section.blank
and instead provide the most recent reports for the highest-level entlty(ies) that controls the acquiring entity under "UPE Struoi:are."
i"he person filing notification may incorporate a document responsive to this item by reference to an internet address directly linking
tothedocument. See§8032(e}.
•
Date of Report(s)
Provide the date of the most recent annual report(s) and/or audit reports (or, if audited is unavailable, unaudltedy ofthe.UPE of the
acq Wring person.
•
Size of Person
If applicable, indicate whether the person filing notification stipulates that the acquiring person meets either the higher or lower size of
person test. See 15 U.S.C. § 18a(a), § 801.11.
Minority Shareholders or Interest Holders
This section requires the acquiring person to report the name, headquarters mailing address, and approximate percentage held by certairr
minority holders of (1} the acquiring entity, (2) any entity directly or indirectly controlled by the acquiring entity, (3) any entity that directly or
indirectly .controls the acquiring entity, and (4) any entity within the acquiring person thafhas been or will be created in contemplation of, or
for the purp0ses bf, effectuating the transaction (each a "covered entity'').
If a covered entity is not a limited partnership, provide the requirecl inrormation for each individual or entity that currently holds, or will hold
as a result of the transaction, 5%- or more but less than 50% of the voting securities or non-corporate interests of any covered entity, starting
with the OPE.
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If a covered entity is a limited partnership; provide the required information for Its (a) general partner, regardless of the percentage it holds,
and (b) limited partners that (ij currently hold, or will hold as a result of the transaction, 5% or more but less than 50% of the non-corporate
illlerests of the covered entity, and (iQ have or will have the right to serve as, nominate, appoint, veto, or.approve board members, or
individuals with similar responsibilities, of any covered entity, or of the general partner or management company of a covered entity.
If a minority holder is related to a master limited p:artnership, fund, investment group, or similar entity that does business under a common
name, the dlb/a or "street name" of such group should also be listed, if known to the acquiring person.
If the identity of minority investors or percentages to be held of a covered entity is notflnalized at the time of filing, provide good faith
estimates and explain in an endnote.
► Acquiring Person Structure
Entities Within the Acquiring Person
List the name, city,.state, zip code, and country of an U.S. entities, and all foreign ellllties that have sales in or into the United States, that
are included within the acquiring person. Entities with total assets of less than $10 million may be omitted. Alternatively, the acquiring
person may report all entities within tt. The acquiring person must also list all names under which the entities do business (e.g., dlbfa
names).
The list of entities should be organized by operating company or operating business C'top-level entity'), if applicable. Filings for select
801.30 transactions need not include dlbla na111es and the list of entities can be organized.as kept in the ordinary course of busi11ess.
Annual Reports and Audit Reports
For the acquiring entity{ies) artd ahy entity controlled by the acquiring person whose revenues contribute to a NAICS overlap or any overlap
identified in the Overlap Descript1on, provide the CIK number(s) it annual reports (Form 10-K or Form 20-F) are filed with the SEC, and the
most recent annual or audit report(s).
Natural person UPEs must also provide the most recent annual report or audit report and CIK number for the highest-level entity that
.controls the acquiring entity.
►
Additional Acquiring Person Information
Ownership·structure
Describe the ownership structure of the acquiring entity.
For transactions where a fund or master limited partnership is the UPE, provide any existing organizational chart that shows the relationship
of any entities that are affiliates or associates. lf such an organizational chart does not exist, there is no requirement to create one,
Officers and Directors
For all entities within the acquiring person responsible for the development, marketing, or sale of products or services that are identified as
overlaps within the Overlap Description or as supply relationships within the Supply Relationships Description:
• List an currelll officers and directors {or in the case of unincorporated entities, individuals exercising similar functions) and those who
have served in one ofthese positions within the _three months bE!fore filing that also serve as an officer or director of another entity
that derives revenue in the same NAICS codes reported by the target. For each, provide the name Of all such entities. If NAICS
codes are unavailable, list all such entities that have operations in the same industry, based on the knowledge or beli.ef of the
acquiring person or the identified individual.
For the acquiring entity, entities the acquiring entity directly or indirectly controls, entities that directly or indirectly control the acquiring entity,
and entities within the acquiring person that have been or will be created as a result of or as contemplated by the transaction:
• List all current officers and directors (or in the case of unincorporated entities, individuals exercising similar functions) as well as
those who are likely to serve in one of these. positions that also serve as an officer or director of another entity that derives revenue in
the sanie NAICS codes reported by the target For each, provide the name of all such entities. If NAtCS codes are unavailable, list all
such entities that have operations in the same industry, based on the knowledge or belief of the. acquiring person or the identified
individual. II the id.entitles of the prospective officers or directors are unknown, briefly describe in an endnote who will have the
authority to select them.
No filer is required to disclose any individual's role as an officer, d1rector, or member of any non-profit entity organized for a religious or
political purpose, even ~ that entity carries on substantial commerce. Organize the response by entity and include entities that are not yet
created but are expected to be created as a result of or as contemplated by the transaction.
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►
Parties
List the name a!'lc! mailing address of each acquiring and acquired persc,n and each acquiring and acquired entity~ Do not list entities
controlled by an acquire<:! entity.
Acquiring UPE
ProVic!e the name, headquarters address, and website of the acquiring person.
Acquiring Entity(ies)
ff an entity other than the acquiring UPE is making the acquisition, provide the name, mailing address, artd website of that entity.
Acquired UPE
Provide the name, headquarters address, and website of the acquired person.
Target(s)
If the assets, voting securities, or non-corporate interests of an entity other than the acquired UPE are being acquired, provide the name,
mailing address, and website of that.entity.
►
Transaction Details
801.30 Transaction
Indicate whether the transaction fs subject to § 801.30 a.lid if so, what type(s), including Select 801.30.
Transaction Type
Indicate whether the transaction is any of the following (select all that apply):
• AcquisitiQn ofvotingsecurities;
• Acquisition of non-corporate interests;
• Acquisition Of assets;
• Merger(see§801.2);
• Consolidation (see § 801.2);
• Formation of a joint venture, other corporation, or unincorporated entity (see§§ 801.40 and 801.$0);
• Acquisitionsubjectto§801.3.1;
• Secondary acquisition subject to§ 801.4;
• Acquisition subject to§ 801.2(e); or
• Other (spec~y)
Acquisition Details
Provide the requested information for the value and percentage of assets; voting securities, and non-corporate. interests to be acquired. If a
combination of assets, voting securities, and/or non-corporate interests is being acquired and allocation is not possible, note such
information in an endnote.
For determining the percentage of voting securities, evaluate total voting power per § 801.12. For determining the percentage of noncorporate interests, evaluate the economic interests per§ B01, 1(b)(1)(iQ.
To complete this item:
• State the percentage of voting securities ,ilready held by the acquiring person. See § 801. 12,
• State the value of voting securities already held by the acquiring person. see§ 801,10.
• State the total percentage of voting securities to be held by theacquirtng person asa result of the acquisition. See§ 801.12.
• State the total value of voting securities to be held by the acquiring person as a result of the acquis'rtion. See§ B01.10.
• State the percentage of non-corporate interests already held by the acquiring person. See§ 801.1 (bJ(1)(iQ.
• State the value of non-corporate interests already held by the acquiring person. See§ 801. 10.
• State the total percentaQe:of non-corporate interests to be held by the acquiring person as a result of the acquisition. See§§ 801.10
and 801.1 (b)(1 )(iQ.
• State the total value of non-corporate interests to be he1d by the acquiring person as a result of the acquisition. See§ 801. 10.
• State the total value of assets to be held by the.acquiring person as a result ofthe acquisition, See§ 801. 10,
• State the aggregate total value of assets, voting securities, and non-corporate interests of the acquired person to be held by the
acquiring person as a result of the acquisition. See §§ 801. 10, 801 .12, 1301.13 and 801.14.
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Notification Threshold
This item should only be completed when voting securities are being acquired. If more than voting securities are being acquired, respond to
this ~em only regarding voting securities. Indicate the highest applicable threshold for which notification is being filed. See §. 801.1 (h).
• $50 million (as adjusted};
• $100 million (as adjusted);
• $500 million (as adjusted};
• 25% (if the value of votingsecurities tobe held is greater than $1 billion; as adjusted);
• 50%; or
• NIA.
Note that the 50% notffication threshold is the highest threshold and should be used for any acquisition of 50% or more of the voting
sec;ur~ies of an issuer, regardless of the value of !he voting securities. For instance, an acquis~ion of 100% of the voting securities of an
issuer valued in excess of $500 million (as adjustedJwould cross the 50% notification threshold, not the $500 million (as adjusted)
threshold.
►
Transaction.Description
Business of the Acquiring Person
Describe the business operation(s) of the acquiring person.
Business of the Target
Describe the business operation(s) being acquired. If assets, describe the assets and whether they comprise an operating business.
Non-Reportable UPE(s)
Provide the names of any UPE that does n.ot have a reporting obligation.
Transaction Description
Briefly describe the transaction, indicating whether assets, vdtlng securities, or non-corporate interests (or some combination) are being
acquired. l ndicate what consideration will be received by each person and !he scheduled consummation date of the t~nsaction. Also
identify any special circumstances that ap-ply to the filing, such as whether part al the ·transaction. is exempt under one of the exemptions
found in Fla.rt 802.
If any attached transaction documents use code names to refer to the· parties, provide an index identifying the code names.
Related Transactions
If the transaction that is the subject of this filing has related filings, indicate whether the related filing(s) (choose all that applyl:
• Is a principal transaction that triggers one or more shareholder backside transactions;
• Is a shareholder backside transaction;
• Has more than one acquiring LIPE;
• Has more than one acquired. LIPE;
• HasmQre·than onereportablestep;
• Is a joint venture;
• Is a consolidation;
• Is an exchange of assets;
• Has one or more filings in the alternative; or
• Has other circumstances that require more than one filing and if so, explain.
Provide all additional details regarding the related filings(s), including party names and transaction numbers, necessary to identify and
connect all related filings.
►
Transactions Subject to International Antitrust Notification
Indicate whether, to the knowledge or belief of the filing person at the time of filing, a non-U.$. antitrust or competition authority has been or
will be notified of the transaction.
If yes, list the name of each such authority. Identify, to the knowledge or belief of the filing person al the time of filing, any jurisdiction where
(1) a merger notification has. been filed, (2) a merger notification is being prepared for filing, or (3) the parties have a good fa~ belief that a
merger nolffication will be made, a{ong with the dates al the fning or planned fillng.
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►
Additional Transaction Information
Transaction Rationllle
Except for select 801.30 transactions, identify and explain each strategic rationale for the transaction discussed or comeh\plated by tl,:e
filing per$0n or any of its officers, directors, or employees. If the rationale Of acquiring entity is:differentfrom the UPE, submit an explanation
for each. Identify each document produced in the filing that confirms or discusses the stated rationale(s). lfdocurnents produced in the ffling
are referenced, identify the specific page(s) that discusses the stated rationale(s).
Transaction Diagram
Except for select 801.30 transactions, subm~ a diagram of the transaction, ii one exists. If such a diagram does not exis~ there is no
requirement to create one.
►
Joint Ventures
Complete only if the acquisition is the formation of a joint venture corporation or unincorporated entity. See §§ 801 AO and 801.50.
Contributions
List the contributions that each person forming the joint venture corporation or unincorporated entity has agreed to make, specifying When
each contribution is to be made and the value of the contribution as agreed by the contributors.
Consideration
Describe fully the consideration that each person forming the joint venture corporation or unincorporated entity will receiv_e in exchange for
its contribution(s).
Business Description
Describe generally the business in which the joint venture corporation or unincorporated entity will engage, including its principal types of
products or activ~ies, and the geographic areas in which it will do.business.
NAICSCodes
Identify each 6-digit NA1CS industry code in which the joint venture corporation or unincorporated entity will derive dollar revenues.
►
B.usiness Documents
Transaction-Related Documents
•
Competition Documents
Provide all studies, surveys, analyses, and reports prepared by or for any officer(s], director(s), or supervisory deal team lead for the
purpose of evaluating or analyzing the acquisition with respect fo market Shares, competition, competitors, markets, potential for
sales growth, or expansion into product or lJeographic markets. For unincorporated entities, provide such documents prepared lly or
for individuals exercising similar functions as officers and directors, as ~II as the supervisory deal team lead.
•
Confidential Information Memoranda
Provide an confidential infOrmation memoranda prepared by or for any officer(s} or director(s) (or, in the case of unincorporated
entities, individuals exercising similar functions) of the LIPE of the acquiring Or of the acquiring entity(s) that spec~ically relate to the
sale of the target. If no such confidential information memorandum exists, submit any document(s} given to a(ly Offioer(s) or
director(s) of the acquiring person meant to serve the funclion of a confidential information memorandum. This does not include
ordinary course documents and/or financial data shared in the course of due diligence, except to the extent that such materials
served the purpose of a confidential information memorandum when no such confidential information memorandum exists.
Documents responsive to this item are limited 1o.those produced within one _year before the date offiling.
•
Thim-Party Studies, surveys, Analyses, and Reports
Provide all studies, surveys, analyses and reports prepared by investment bankers, consultants, or other third-party advisors C'lhird0
party advisors") for any officer(s) or director(s) (or, in the case of unincorporated entities, individuals. exercising similar functions} of
the. UPE of the acquiring person or of the acquirlng entity(s) for the purpose of evaluating or analyzing market shares, competition,
competitors, markets, potential for sales growth or expansion into product or gepgraphic matl<ets that specifically relate to the sale of
the target. This item requires only materials developed by.third party advisors during an engagement or for the purpose Of seeking arr
engagement. Documents responsive to this item are lim~ to those produced within one year before the date of fifing.
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•
89371
Synerglesand Efficiencies
Provide all studies, surveys, analyses, and reports evaluating or analyzing synergies, andfor efficiencies prepared by odor any
officer(s) or director(s) (or, in the case ol' unincorporated entities, individuals exercising similar functions) for the purpose of
evaluating or analyzing the acquisitron. Financial models without stated assumptions heed not be provided.
PlansanCI Reports
Except for select 801.30 transactrons, provide all regularly prepared plans and reports thahvere provided to the Chief Executive Offiber
(CE:O) of the acquiring entity or any entity that .it controls or is controlled by that analyze market shares, competition, competitors, or marketS
pertaining to any product or service of the acquiring person also produced, sold, or known to be under development bythetarget, as
identified in the Overlap Description. Documen1S responsive to this item are limited to those prepared or modified within one year of the date
of fning.
Except for select 801.30 transactions, provide all plans and reports that were provided to the Board of Direclors of the acquiring entity or any
entity that it controls or is ccntrolled by that analyze market shares, competition, ccmpetitors, pr markets pertaining to any product or service
ofthe acquiring person also produced, sold, or known to be underdevelopment b.ythe target, as identified in the Overlap De!lerlption.
Documents responsive to this item are limited to those prepared or modified within one year of the date of filing.
► Agreements
Transactlon-SpeciflC Agreements
Furnish copies of all documents that constitute the agreement(s) related to the transaction, including, but not limited to, exhibits, schedules,
side letters, agreements not to compete or solicit, and other agreements negotiated in conjuhction with the transaction that the parties
intend to consummate, and excluding clean team agreements.
Documents that constitute the agreement(s) (e.g., Agreement and Plan of Merger, Letter of Inter\!, Purchase and Sale Agreement, Asset
Purchase Agreement, Stack/Securities Purqhase Agreement) must be executed, while supporting agreements; such.as employment
agreements and agreements not to compete may be provided in draft form. ~ that is the most recent version.
If the executed agreement is not the definitive agreement, submit a dated document that provides sufficient detail about the scope of !he
entire transaction that the parties intend to consummate, such as an agreement in principle, or term sheet, or the most recent draft
agreement. See§. 803,5. Such document should include information regarding some combination of the following terms: the Identity of.the
parties; the structure of the transaction; the scope of what is being acquired; calculation of the purchase price; an estimated closing timeline;
employee retention policies, including with respect to key personnel; post-closing governance; ·and transaction expenses dr other material
terms.
Note that transactions subject to§ 801.30 and bankruptcies under 11 U.S.C. § 363(b) do not require an executed agreement. For
bankruptcies, provide the order from the bankruptcy court.
Other Agreements Between the Acquiring Person and Target
Indicate whether the acquiring person has, or had within one year of filing, any contractual agreement(s) with the target. Jf so, indicate which
type(s). If an agreement has terms that apply l!l more than one category, indicate each category that applies.
This section is not applicable to select 801.30 transactions.
►
Overlap Description
Briefly describe each of the principal catel)ories of products and services (as refected in documents created in the ordinary course of
business) of the acquiring person:
In additi!ln, list and briefly describe each of the current or known planned products or services ofthe acquiring person that competes with
(or could compete With) a current or kno11.m planned product or service of the target, based on documents created in the ordinary course of
business. Current or known planned products or services include those that the acquiring person or target researches, develops,
manufactures, produces, sells, offers, provides, supplies, or distributes. Kno.sm planned products or services may be limited 1o those
referenced in any.submitted Business Document and should reflect the acquiring person's existing knowledge·ofthe.targets business. The
acquiling and acquired person should not exchange information for the purpose of answering this item:
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89372
Federal Register / Vol. 89, No. 218 / Tuesday, November 12, 2024 / Rules and Regulations
For each such product or service listed, provide:
1. The sales (in dollars} for the most recent year. For those products or services not generating revenue or whose performance is not
measured by revenue ln the ordinary course of business, provide projected revenue, estimates of the volume.of products to be sold,
time spent using the service, or any other metric by which the acquiring person measures performance (e.g.,. daily users, new
sjgntipi;).
2. A description of all categories of customers ot the acquiring person that purchase or use the product or service (e.g., retailer,
distributor, broker, government, military, educational, national account, local account, commercial, residential, or institutional}. If no
customers have yet used the product or service, provide the date that development of the product or service began; a. description of
the current stage in development, including any testing and regulatory approvals and any planned improvements or modffications;
the dats that development (including testing and regulatory approvals) was or will be completed; and the date that the product or
~rvice is expected to be sold or otherwise commercially launched.
3. The top 10 customers in the most recent year (as measured in dollars), and the top 10 customers for each customer category
identified;
►
Supply Relationships Description
Related Sales
List and briefly describe each j:>roduct, service, cir asset (including data) that the acquiring perscin has Scild, licensed, or otherwise supplied,
and which represented at least $10 million ih revenue (including internaltransfers) in the most recent year (1) to the target, or (2) to any
other business that, to the acquiring person's knOWledge or belief, uses the acquiring person's product, service, or asset to compete with
the target's products or services, or as an input for a product or service that competes or is intended lo compete with the target's products or
services. Responses to this item should reflect the acquiring person's existing knowledge of the target's business; the acquiring and
acquired person should not exchange information for the purpose of answering this item.
For eac11 product, service, or asset listed, for the most recentyear; provide:
1. The sales (ih doltarS) to (1) the target and (2) any otMr business that, to the acquiring person's knOWledge or belief, uses the
acquiring person's product, service, or asset to compete with the target's products or services, or as an input for a product or service
that competes or is intended to compete with the target's products or services.
2. The top 10customers {as measured in dollars).of the acquiring person that use the acquiring person's product, service, or asset to
compete with the target's products or services, or as an input for a product or service that competes or is intended to compete with
the target's products or services. For each such customer, describe the acquiring person's supply or licensing agreement (or other
comparable terms of supply).
Related Purchases
List ahd briefly describe each product, service, or asset (lhcluaing data) that the acquiring person incorporates as an input into any j:>roduct
or service and that the acquiring person has purchased, licensed, or otherwise obtained, and which represented at least $10 million in
revenue (incl\Jding internal transfers), in the most recent year (1) from the target or (2) from any other business that, to the acquiring
person's knowledge or belief, competes with the target to provide a substantially similar product, service, or asset. Responses to this item
should reflect the acquired person's existing knowledge of the acquiring person's business; the acquiring and acquired person should not
exchange information for the purpose of answering this item.
For each product, service, or asset listed, for the most recent year, provide:
1, The purchased amount {in dollars) for (1) the target and (2) any other business that, to the acquiring perscin's knowledge or belief,
ccimpetes with the target to provide a substantially similar product, service, or asset.
2. The top 10 suppliers (as measured in dollars) fo_r the associated input product, ser\/ice, or asset, and a description cif the acquiring
person's purchase or licensing agreement (or other comparable terms of purc11ass).
►
NAICS Codes
This item requests information regarding the industry categories for the acquiring person's products and services that derived revenue in the
most recent year.
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89373
No.Revenue
If there is no revenue to.report, explain why.
NAICS Codes Oeseribilig U.S. Operations with Estimates.of Revenue
Identify all 6-diglt NAICS industry codes that describe the U.S: operations of the acquiring person, inclusive of all entities included within the
acquiring person at the time the filing is made.
Responses must be organized by NAICS code in ascending order. For each code, provide the name of the operating business(es) that
derive(s) revenue in that code and the estimated revenue range: less than $10 milHan; $10 million or mare but less than $100 million; $100
million or mare but less than $1 billion; or $1 billion or more.
Identify each 6-digit NAICS industry code in which both the acquiring person and target derive revenue by checking the overlap box.
For products and services that derived revenue iri the most recent year in a non-manufacturing NAICS code, ifltie revenue is estimated at
less than one million dollars, that code may be omitted so long as the code does not overlap with a -co.de in which the target derived revenue
from U.S. operations.
►
Controlled Entity Geographic overlaps
lf, to the knowledge or belief of the person filing notification, the acquiring person, or any associate ofthe acquiring person (see
§ 801.1 (d)(2}), derived any amount of dollar revenues in the most recent year from operations:
1. In industries within any 6-digit NAICS'industry code in which the target also derived any amount of dollar revenues in the most recent
year;-or
2. In which a joint venture·tOrporation or unincorporated entity Wilt derive dollar revenues;
then for each such 6-diglt NAICS industry code follow the instructions below tor this section,
Note that if the target is a joint venture, the only overlaps that should be reported are those bet'Neen the assets to be held by the joint
venture and any assets of the acquiring person or its associates not contributed tothe joint venture.
NAICS Overlaps of Controlled Entities
List each overlapping NAICS code and description. For each, list the name of each operating business within the acquiring person or
associateof theacquiring person that has U.S. operations in the same NAICSco.de as the target and the name(s) under which the
operating business does business, whether the listed entity is controlled by the acquiring person or an associate of the acquiring person,
and provide the appropriate Geographic Market Information, based upon the NAICS code. Organize responses by N'AICS code in
ascending order.
Geographic Market lnformatiQ'rl
For each identified overlapping NAIGS code, provide 'geographic information, as described below.
and terrfories.and provide the total number of states and territories at the end of the response.
Use the 2-digit postal codes for states
Except in the case of those NAICS industries in the sectors, subsectors, and codes that require street-address level reporting, the personfiling notification may respond with the. word "national'' if business is conducted in all 50 states.
•
State-Level Reporting
o Manufacturing Industries
For each 6-digtt NAICS code within the Industry sector, subsector, or code ttsted below, listthe states in which, to the knowledge
or belief of the person filing the notification, the products in that 6-digit NAICS industry code produced by the acquiting person or
associate of the acquiring person are sold withOut a significant'Change in their form (whether they are sold by the acquiring
person or associate of the acquiring person or by others to whom such products have been sold or resold).
31 ..**through 33**** Manufacturing, except:
Dairy Product Manufacturing
Animal (except Poultry) Slaughtering
Rendering and Meat Byproduct Processing
Poultry Processing
Bread and Bakery Product Manufacturing
Wood Product Manufacturing
Paperboard Container Manufacturing
Petroleum and Coal Products Manufacturing
Basic Chemical Manufacturing
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321...
32221*
324...
3251..
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325521
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3272..
3273..
o
Vllholesale Trade
For each 6cdigit NAICS codewithin the industry sector, subsector, or code listed below, list the states or, if desired, portions
thereof in which the customers of the acquiring person or associate of the acquiring person are located.
42*...
Wholesale Trade, except:
42331*
42333*
42344*
42345*
42346•
42349*
423Q..
4241 **
4242..
42441*
42442*
42451*
42452"
4247..
4248**
42491*
42495*
o
Lumber, Plyvvood, Millwork, and Wood Panel Merchant Vllholesaler!I
Roofing, Siding, and Insulation Material Merchant Wholesalers
Other Commercial Equipment Merchant Wholesalers
Medical, Dental, ahd Hospital Equipment and Supplies Merchant Wholesalers
Ophthalmic Goods Merchant Wholesalers
0:ther Professional Equipment and Supplies Merchant Wholesalers
Miscellaneous Durable Goods Merchant Wholesalers
Paper and Paper Product Merchant Wholesalers
Drug ano Qruggists' Sundries Merchant Wholesalers
General Line Grocery Merchant Wholesalers
Packllged Frozen Food Merchant Wholesalers
Grain and Field Bean Merchant Wholesalers
Livestock Merchant Wholesalers
Petroleum and Petroleum Products Merchant Wholesalers
Beer, Wine, and Distilled Alcoholic Beverage Merchant Vllholesalers
Farm Supplies Merchant Wholesalers
Paint; Varnish; and Supplies Merchant WhOlesalers
Insurance C..rners
For the 6-digit NAICS code within the industry subsectorlisted below, list the state(s) in which the acquiring person or associate of
the acquiring person is licensed to write insurance.
5241 ..
o
Plastics Materials and Resin Manufacturing
Clay Product.and Refractory Manufacturing
Glass and Glass Product Manufacturing
Cement and Concrete Product Manufacturing
Insurance Carriers
OtherNAICS Sectors
For each 6-digit NAICS code within the ihdustry sector, subsector, or code listed below, list the states or, if desired, portions
thereof in which the acquJting person or associate of the acquir[ng petson conducts such operations.
Agriculture, Forestry, Fishing, and Huntlng, except:
113***
Forestry and Logging
Mining, Quarrying, and Oil and Gas Extraction, except:
2123**
NonmetallicMineral Mining and Quarrying
22f3**
Water, Sewage, and Other Systemi;
23****
construction
44912*
Home Furnishing Retailers
Electronics and Appliance Retailers
4492*"
48* ... and 49••.. Transportation and Warehousing, except
493...
Warehousing and Storage
Information, except
512*..
Nondepository Credit Intermediation
Securities, Commodity Contracts, and Other Financial fnvestmentsand Related ActiVities
Agencies, Brokerages, and other Insurance Related Activities
Funds, Trusts, and Other Financial Vehicles
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523•..
5242**
525***
Motion Picture and Sound Recording Industries
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89375
Real Estate
Lessors of Nonfinani:ial Intangible Assets (Except Copyrighted Works}
Professional, Sclentific alli:I Technical Services, except
54138* Testing Labor,1torie$.and.Serviees
54194* Veterinary Services
Management of Companies and Enterprises
561 ...
Administrathle and SUpport services
61****
Educational SefVices
71****
Arts, Entertainment, alld Recreation, except:
7132" Gambling Industries
71394* Fitness and Recreational Sports Centers
1212••
7213**
8114••
813***
814**'
•
RV(Recreational Vehicle} Paiks and Recreatkinal Camps
Rooming and Boarding House$, Dormitories, and Workers' Camps
Personal and Household GOOds Repair and Maintenance
Religious, Grantmaking, Civic, Professional, and Similar Organizations
Private Households
street-Level Reporting
For each 6-digit NAICS code within !he industry sector, subsector, or code listed below, pro"ide the street address, arranged by
state, zip code, county and city or town of each establishment from which dollar revenues were derived (either directly by the
acquiring person or associate of the acquiring person or by a franchisee) in the most recent year,
113tt•
2123**
Forestry and Lo!lg ing
Nonmetallic Mineral Mining and Quarrying
Utilities, except
2213- Water, Sewage and Other Systems
Dairy Product Manlitacturing
Animal (e:ieeept Poultry)Slaughtering
Rendering and Meat Byproduct Processing
Poultry Processing
Bread and Bakery Product Manufacturing
Wood Product Manufacturing
Paperboard Container Manufacturing
Petroleum and Coal Products Manufacturing
Basie Chemical. Manufacturing
Plastics Materials and Resin Manufacturing
Clall Product and Refractory Manufacturing
Glass and Glass Product Manufacturing
Cement and Concrete Product Manufactl/rtng
Lumber, Plywood, Millwork, and Wood Panel Merchant Wholesalers
Roofing, Siding, and Insulation Material Merchant Wholesalers
Other C.ommerclal Equipment MerchantWholesalers
Medical, Dental, and Hospital Equipment and supplies MerchantWhotesaters
Ophthalmic Goods MerchantWholesalers
Other Professional Equipment and Supplies Merchant Wholesalers
Miscellaneous Durable Goods Marchant Wholesalers
Paper and Paper Product Merchant Wholesalers
Drug and Druggists' sundries Merchant Wholesalers
General Line Grocery Merchant Wholesalers
Packaged Frozen Food Merchant Wholesalers
Grain and Field Bean Merchant Wholesalers
Livestock Merchant Wholesaler.=;
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321***
32221*
324***
3251**
325521
3271**
3272**
3273**
42331*
42333*
42344*
42345~
42346*
42349*
4239**
4241**
4242··
42441*
42442*
42451*
42452*
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4247**
4248**
42491*
42495*
Petroleum and Petr:oleum Pr:oducts Merchant Wholesalers
Beer, Willi!. and Distilled Alcohollc Beverage Mercbant Wholesalers
Farm Supplies Merchant Wholesalers
Paint, varnish, and Supplies Merchant Wholesalers
44**** and 45*..* Retail Trade, except
44912' Home Furnishings Retailers
4492** Electronics and Appliance Retailers
493'**
512***
521***
5221**
5223**
532***
54f38*
54194*
562***
62*..,,.*
7132**
713.94*
Warehousing and Storage
Motion PiQture and Sound Recording lndustriii1;
Monetary Authorities-Central Bank
Depository Credit Intermediation
Activities Related to Credit lntermed iation
Rental and Leasing services
Testing Laboratories and Services
Veterinary Services
Waste Management and Remediation Services
Health care and social ASsistance
Gambling Industries
Fitness and Recreational Sports Centers
Accommodation and Food Services, except:
721.;2.. RV (Recreationa!Vehicle) Parks and Recreational Camps
7213** Rooming and Boarding Houses; Dormitories, and Workers' Camps
Repair and Maintenance, except
Personal and Household Goods Repair and Maintenance
812***
►
Personal and Laundry Services
Minority-Held Entity overlaps
This section requires the disclosure of holdings of the acquiring person and its associates (see§ 801.1 (d)(2)) of 5% or more but less than
50% of certain entities that derive dollar revenues in any 6-digit NAICS code reported by the target. If NAICS oodes are unavailable,
holdings in entities that have operationsin the same industry as.the target, based.on the knowledge or belief of the filing person, should be
listed. Holdings in those entities that have total assets of less than $10 milliqn may be omitted.
Minority Holdings of Acquiring Person and Its Associates
If the acquiring person holds 5% or more but less than 50% of the voting securities of any issuer or non-corporate interests of any
unincorporated entity that derived dollar revenues in the most recent year from operations in industries within any 6-digit NAICS code(s)
reported by the target, list thel name of such entity and dlb/a names (ff known),the percentage held, the entity within the acquiring person
that holds the minority interests, and the overlapping 6-diglt NAICS code(s) or industry(ies}.
Additionally, based on the knowledge or belief of the acquiring person, for each associate o/ the acquiring person holding:
1. 5% or more but less than 50% of the voting securities or non-corporate interests of an acquired entity; and/or
2. 5% or more but less than 50% of the voting securities of any issuer or non-corporate interests of any unincorporated entity that
derived dollar revenues in the mot! recent year from operations in industries within any 6-digit NAICS industry oode in which tt\e
target also derived dollar revenues in the most recent year,
list the name of such entity and d/b/a names {ff knowhJ, percentage held, the associate of the acquiring person that holds the minority
interests; and the overlapping 6-digit NAICS code(s) or industry(ies).
Responses should be organizetl alphabetieally by the name of the.entity in which minority interests are held.
The acquiring person may rely on its regularly prepared financials that list its investments, and those of its associates that list their
investments, provided the financials are no more.than three months old.
► Prior Acquisitions
This item pertains only to prior acquisitions of U.S. entities or assets a.nd foreign entities or assets with sales in or into the U.S. by the
acquiring person that in the most recent year (1) derived revenue in an identified 6-diglt NAICS industry code overlap, or (2) provided or
produced a competitive overlap product or service as described in the overlap Description.
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89377
For each such overlap, list all acquisitions of enttties or assets deriving dollar revenues in an overlapping 6-dig~ NA(Cs· industrycocle or
overlapping product or service made by lhe acquiring person in lhe five years prior to the date of the instant filing, .even if the transaction
was non-reportab(e. List only acquisttlons of 50% or more of the voting securities of an issuer, 50% or more of non-corporate interests of an
unincorporated entity, or all or substantially all the assets of an operating business if the entity or business had annual net sales or total
assets greater than $10 million in the year prior to the acquisttion and any acquisitions otassets that did not con_stitute all or substantially all
of an operating business valued at or above the statutory size-of-transaction test al the t]me of their acquisttion.
For each such acquisftion, supply:
1. the overlapping 6-digit NAICS code(s) (by number and description) identified above in which the acquired enttty or assets derived
dollar revenues, or the ccimpetftive overlap product(s}or service(s). in the Overlap Description;
2. the name of the entity from which the assets, voting securtties, or non-corporate interests were acq1,1ired;
3. the headquarters address Of that entity prior to the acquisition;
4. whether assets, voting SE?curlties, or non-corporate interests were acquired; and
5. the consummation date of the acquisttion.
► Subsidies from Foreign Entities or Governments of Concern
Indicate whether, to the knowledge or belief of the filing person, within the two years prior to filing, the acquiring person has received any
subsidy (or a.commitment to providea subsidy in the future) from any foreign entity orgovemment of concern (see§ 801.1(t)). If yes, list
each entity or government from which such subsidy was received (or which has tnadE! the commftment} and provide a brief description of
the subsidy.
lridicate wttether, for products the acquiring person produced in whole or in part in a country that is a covered nation under 42 u.s.c.
§ 18741 (a)(5)(C), !ilny product is subject to countervailing duties imposed by any jurisdiction. If yes, list each product, the co1,1ntervailfnl;} duty
imposed, and the jurisdiction that imposed the duty.
Indicate whether, to the knowledge or belief of the filing person, for products the acquiring person produced in whole or in part in a country
that is a covered nation under 42 U.S.C. § 18741(a)(5)(¢), any product is the subject of a current investigation for countervailing duties in
any jurisdiGllon. If yes, list each product and the jurisdi<;tlon conducting the investigation.
► Defense or Intelligence Contracts
Except for select 801.30 transactions, identify (1) pending requests for proposals from the U.S. Department of Defense or any member of
the U.S. intelligence community, as defineq by 10 U.S:C. § 101(a)(6) or 50 U.S:C. § 3003(4) for which the acquiring person has submitted. a
proposal and (2) awarded procurement contracts with the U.S. Department of Defense or any member of the U.S. intelligence community,
as.defined by 10 U.S.C. § 101(a)(6) or 50 U,S.C. § 3003(4) valued at$100 million or more Wsuch pending requests fur proposals or such
awarded procurement contracts (a) are or will be the source of revenues in any identified 6-digit NAICS industry cocle overlap; or (b} involve
or will involve an overlap product or service as described in the Overlap Description or the Supply Relationships Description. Limit the
response to the acquiring entity and any entity Within the acquiring person that direGlly or indirectly controls the acquiring entity. Include (1)
the name of the entity within the filing person (2) the contracting office, as c!efined by 48 C.F:R §.2.101(b); (3) the Contracting Office tD; (4)
the Award ID; and (5) the NAICS code(s), if 'any, listed in the System for Award Management database. Do not include classified information
but note that responsive information was withheld on that basis.
Voluntary Waivers
•
HSR Confidentiality Waiver for International Com petition Authorities (VOLUNTARY)
Indicate whether the acquiring person agrees to waive the disclosure exemption contained in the Act, 15U.S:C. § 18a(h}, to permit
the OOJ and FTC to disclose to non-U.S. competition authoritylauthorities listed by the filing person (1) the fact that a notification was
filed,. (2) the wafting period associated with the notification, and (3) information and documents filed with the notification. This. waiver
will not cover materials provided in response toa request for additional information issued pursuant to15 U.S.C. § 18a(e) and does
not preclude the acquiring person from prol/iding a full waiver as provided for under FTC and DO.J practice as reflected in the Model
Waiver. The acquiring pers<ln should list the jurisdictions to which the waiver applies. This ttem isvoluntary.
•
HSR ConfidentialityWaiver tor state Attorneys General {VOLUNTARY)
Indicate whether the acquiring person agrees to. waive any part of the disclosure exemption contained in the Act, 15 U.S.C. § 18a(h).
If yes, list the applicable State Attorneys General and whether the acquiring person permits the OOJ and FTC to drsclose (1) the fact
that a notification was filed and the wafting period associated with the notification, (2) information and documents filed with the
notification, or (3) both (1) and (2). This waiver will not cover materials provided in response to a request for additional information
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issued pursuant to 15 U.S.C. § 18a(e) and does not preclude the acquiring perscn from providing a lull waiver as provided for under
FTC and DOJ practice as reflected in the Model Waiver. The acquiring perscn shouldJist the jurisdictions to which the waiver applies.
This item is voluntary.
See § 803.6 lor requirements.
The certification must be notarized or use the language found iri 28 U.S.C. § 1746 relating to unsworn declarations Linder penalty of perjury.
The Form includes the following language:
Penalties for Farse statements
Federal law provides criminal penalties, including ut> to twenty years imprisonment, for"any person who knowingly alters; destroys,
mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede,
obstruct, or influence an ongoing or anticipated federal investigation (see, e.g., Section 1519 of Hie 18, United States Code.), It is alsc a
criminal offense to knowingly make a false statement in a federal investigation, obstruct a federal investigation, or conspire to obstruct
justice or obstruct or impede the lawful functioning of the government (see, e.g.,. Sections 371, 1001, and 1505 of Title 18, United States
Code).
CERTIFICATION
This NOTIFICATION AND REPORT FORM, together with any and all appendices and attachments thereto, was prepared and assembled
under my supervision in accordance with instructions issued by the Commissioh. Subject to the recognition that, where so indicated,
reasonable estimates have been made because bool<sand records do not provide the required data, the information is, to the best of my
knowledge; tJ:ue, correct, and complete in accordance with the statute and rules.
I acknowledge that the- Commisslon or the Assistant Attorney General of the Antitrust Division of the Department of Justice may, prior to the
expiration of the initial waiting period pursuant to 15 U.S,C. § 18a, require the submission·of additional information. or documentary material
relevant to the proposed transaction.
Affidavit(s) required by §803,5 must be notarized or use the language found in 28 U.S.C. § 1746 relating to unsworn declarations under
penalty of perjury. If an entity is filing on behalf of the .acquiring person, the affidavit must .still attest to the good faith intent of the UPE.
In non-§ 801.30 transactions, the affidavit(s) {submitted by both persons filing) must attest that an ai;treemerit to merge or acquire has been
executed, and ii the executed agreement is not the definitive agreement, that a dated document that provides sufficient detail about the
.scope of the entiretransaction that.the parties intend to CQrtsummate has been submitted. The affidavit(s) mustfurther attest.to the good
faith intention of the person filing notification to complete the transactlon. See§ 803.5(b).
In § 801.30 transactions, the affidavit (submitted only by the acquiring person) must attest
1. That the issuer whose voting securities or the unincorporated entity whose non•corporate interests are to be acquired has received
notice, as described below, from the acquiring person;
2. In .the case of a tender offer, thatthe intention to make me tender offer has been publiely anhouncecl; and
3. The good laitti intention of the person filing nOtificati_on to complete the transaction.
Acquiring persons in§ 801.30 transactions are also required to submit a copy of the notice received by the acquired person pursuant to§
803.5(a)(3) along with the filing. This notice mus! include:
1. The identity of the acquiring person and the fact that the acquiring person intends to acquire voting securities of the issuer or noncorporate interests of the unincorporated entity;
2. The specific notification threshold that the acquiring perscn intends to meefor e~ceed in an acquisition of 1/otingsecurities;
3. The fact that the acquisiticin may be subject to the Act, and that.the. acquiring person will file notification under _the Act;
4. The anticipated date of receipt of such notification by the. Agencies; and
5. The fact that the person withih which the issuer or unincorporated entity is included may be required to file notification un_der the Act.
See §803.5(a).
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89379
Section 18a(a) of Title 15 of the U.S. Code authorizes the colleGl:ion of this information. The primary use of lnformation submitted on this
Form is to determine whether the reported merger or·acquisitlon may violate.the antitrust laws. Taxpayer information is collected, used, and
may be shared with other agencies and contraGtdrs for payment processing, debt collection and reporting purposes. Furnishing the
information on the Form is voluntary, Consummation of :an acquisition required.to be reported by the statute cited :above without having
ptovided this information may, however, render a person liable to clvii penalties up to the amount listed in 16 C.FR §1.98(a) per day.
We also may be unable to process the Form unless you provide all of the requested information,
Public reporting burden for this report is estimated.to average105 hours per response, including time for reviewing instructions, searching
existing data sources, gathering, and maintaining the data needed, and completing and reviewing the collectlon of information. Send
comments regarding the burden estimate or any other aspect of this report, including suggestions for reducing this burden to:
Premerger Notification Office
Federal Trade commission
400 7th Street, S.W.
Washington, DJ,::. 20024
and
Offlce of Information ani:I Regulatory Affairs
Office of Management and Budget
Washington, D,C. 20503
Under the Paperwork Redaction A,Gt, as amended, an agency rnay not conduct or sponsor, and a person is not required to respond to; a
collection of information unless it displays a currently valid 0MB control number. The operative OMS control number, 3084-0005, appears
within the Notification and Report Parm and these Tnstruc;tions.
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Antitrust Improvements Act
Notification for Certain Mergers and Acquisitions
Acquired Person Instructions
These instructions speclfythe.information that must be submitted pursuantto § 803.1 (a) ol the premerger notffication rules, 16 CFR Parts
801-803 ("the Rules"). Submitted materials must b_e provided to the Federal Trade Commission ("FTC") and to the Antitrust Division of the
Department of Justice C'DOJ') (together, "the Agencies').
►
Information
The central office for information and assistance concerning the Rules is:
Premerger Notifrcation Office
Federal Trade Commission
400 7th Street, S. W.
Washington, D.C. 20024
Phone: {202J 326-3100
E-mail: HSRhelp@ftc.gov for Rules questions
Premerger@ftc.gov for filing information
.Copies of these Instructions, the Hart-Scott-Rodin.o Antitrust Improvements Act of 1976.("the Act'), the Rules; FTC final rules (incl tiding their
Statements of Basis and Purpose) published in the Federal Register, as well as information to assist in submitting the required information
are available at the FTC's Premerger Notification Office ("PNO") website.
►
Definitions and Explanation of Terms
Unless otherwise indicated, the definitions provided in the Rules apply to these Instructions.
Dollar Values
All financial information should be expressed in millions of dollars rounded to the.nearest hundred thousand.
Fee Information
The filing fee is based on the aggregate total value of assets, voting securities, and controlling non-corporate inter.ests to be held as a result
.of the acquisttion. Filing fee tiers are adjusted annually pursuant to 15 U.S,C. § 18a note, based on the change in gross national product, in
accordance With 15 u.s:c. § 19(a)(5}. Filing fees increase.annually by the percentage increase, if any, in the.consumer price index C'CPl'j
over.the CPI for the fiscal year ending Septembe(30, 2022, pursuant to 15 U.S.C. § 18a note. For current fee lrilormatiort, see the PNO
website.
North American lndµstry Classification System (NAICS) Data
When reporting information by 6.diglt NAICScode, refer to the North American Industry Classification System - United states, 2022,
pubfished by the Executive Office of thePresi<lent, Office of Management and Budget, available at https:l/www,census.gov/naics.l. This
website also provides guidance in choosing the proper cbde(s).
Notification Thresholds
Notffication thresholds are adjusted annually based on the change in gross national product, in accordance with 15 U.S.C, § 19(a)(5). See
§ 801.1 (h). The current threshold values can be found at Current Thresholds.
Person Filing and Filing Person
The terms "person filing" or "filing person" mean the ultimate parent entity ("UPE"). See §801.1 (a)(3}. The terms are used herein
interchangeably.
Select 801.30 Transaction
A transaction to which § 801.30 applies and where (1) the acquisrtion would not confer control, (2) there is no agreement (or contemplated
agreement) bel\,veen any entity within the ac;quiring person and any entity within the acquired person governing any aspe()t of the
transactiOn, and (3) the acquiting person does not have, and Will not obtain, the rigt,! to serve as, appoin~ veto, or approve beard members,
or members of any similar body, of any entity within the acquired person orthe general partner or management company of any e:ntlty within
the acquired person. Executive compensation transactions also qual~y as select 801.30 transactions.
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Supervisory Deal Team Lead
The individual who has primary responsibility for supervising the strategic assessment oflhe deal, and who would not othelWise qualify as.a
director or officer.
Target
The target includes all entities and assets to be.acquired.by the acttuiring person from the acquired person in the reported transactiott
Year
All references to "year refer to calendar year. If data are not available on a calendar year basis, supply the requested data for the fiscal
yesr reporting period that most nearly corresponds to the calendar year specified. References to "most recent year" mean the most recently
completed calendar or fiscal year for which the requested information is available.
► Filing
If the U PE is both an acquiring and acquired person, separate filings must be submitted, one as the acquiring person and one as the
acquired person, folfowing the appropriate instructions for each. See§ 803.2(a)(2).
Filings should be submitted electronically consistent with the instructions.on the PNOwebsite. If the electronic submission platform is
unavailable, the Agencies may announce sites for delivery through the media and, ~ possible, at the PNO website.
►
Responses
Documents, ineluding the Form, should be produced as (1) a searchable PDF format from which text can be copied or (2) an Excel file.
For Business Documents {see below), check the box to indicate whether any part of the document is privileged and th.en provide the
document number, title, and estimated date. If !he acquired person has Identified (1} a NAICS overlap, (2) an ove~ap within the Overlap
Description, or (3) a supply relationship within the Supply Relationships Description, also provide the following:
1. Author(s) (and job title(s)) for documents created by the .acquired person; or
2. Recipient(s) dr supervisor(s) (and job title(s)) of documents created by third parties as part of an engagementwith the acquired
person.
If a group of people prepared the document, list all the authors and their titles, identifying the principal authors. Alternatively, it is acceptable
to indicate that the document was prepared under the supervision of the lead author and to provide the name and title of that author.
Similarly, if the acquired person engaged a third party to prepare a document, provide the name of the third party, and the name, title, and
company name for the individual within the acquired person who supervised the creation of the document, or for whom the document was
prepared. For materials received from a third party that was not engaged bythe acquired person, only the name of the third party is
required.
If the acquired person submits documents in addition to what is required, such documents should be identified as "Voluntary". See
§803.1(b).
Submit only one copy of identical responsive documents.
►
Privilege
See § 803.3(d). For privileged documents, the fifing Jierson must also provide the following ln a log'
1. The privilege type (redacted or Withheld);
2. The privilege claim;
3. Addressee(s).and all recipients; with company name an.d title, of the original and any copies;
4. Subject matter;
5, Document's present location; and
6. Who has control over it.
ff a privileged document was circulated to a group, such as the board-or an investmentcommiltee, the name of the group is sufficient, but
the filing person should be prepared.to disclose the names and titles/positions of the individual group members, if requested.
If the claim of privilege is based on advice from inside and/or outside counsel, the name of the inside and/or outside counsel providing the
advice (and the law firm, if applicable) must be provided. If several lawyers participated in providing advice; identifying lesd counsel Is
sufficient. In identifying who controls a document, the name of the law firm is sufficient
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►
Translations
Materials or information in. a language other than English mµst be translated into English, with .the English translation attached to the original
version. see§ 803.8.
►
Non-Compliance
If unable to anS'l\ler any item fully, provide such information as is available and a statement o! reasons for non-compliance as required by
§ 803.3. If exact·anS'l\lers to any ~em cannot be given, enter best estimates and indicate the source or basis of such estimates. Add an
endnote with the notation "est.'' toany ·item where data are estimated.
►
Limited Response
Information need not be sup\'.)lied regarding assets, voting securities, or non-corporate interests currently being acquired Wheii their
acquisition is exempt under the Act or Rules. See§ 803.2(c).
Total Expected Filing Fee
Indicate the value of the total required fee for the transaction.
Parties Paying the Fee
fndieate which filing person{s) is paying the filing fee ahd, if applicable, whether the fee is oeingpaid by multiple entities. For eacli entity
within the acquired person paying a portion ofthe fee, provide the name of the payer, the amount paid, the payment method, and thei
Electronic Vvlte Tra~fer (EWTl confirmation number or check number.
Note on Paying bS, EWT
In order for the FTC to track payment, the payer must provide information required by the Fedwire lnstrucllons to the financial institution
initiating the EWT. A template of the Fedwire Instructions is available at the PNO website on the Filing Fee Information page.
Note on Paying by Ch-eek
The FTC strongly discourages check payments because handling a physical check will create a delay in processing the Form. However, if
an EVVT cannot be arranged, the FTC will accept a check, sent to Financial Operations. Cashiers' or certified checks are preferred. Make
the check payable to the Federal Trade Commission and deliver to:
Federal Trade Commission
Financial Operatidns Division
600 Pennsylvania Ave, Drop H-790
Washington, DC 20580
Please note that the waiting period may be delayed until !tie fee has been confirmed.
Special Filing Types
Indicate whether the filing is a post-consummationfiling, or whether the transaction is a cash tender offer or bankruptcy that is subject to
Section 363(bJ of the Bankruptcy Code (11 U.s:c. § 363).
Eai1y Termination
Indicate whether the acquired person requests early termination of the waiting period. Notification of each grant of early termination will be
published in the Federal Register, as required by 15 U.S.C. § 18a(b)(2), and on the PNO website. Note that if either oerson in any
transaction requests early termination, it may be granted and published.
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►
89383
UPEDetails
Name
Provide the name, headquarters address, and website (if one exists) of the perso11 fifing notification. The name of the person filing is the
nameorthe UPEofthe acquired person. See§ 801.1(a)(3).
EntltyType
Specify whether the UPE is a corporation, uninoorporated entity, natural person, or other entitytype (specify). See§ 801.1.
Filing Madeon Behalfofthe UPE
If the filing is being made on behalf Of the UPEby another entity within the acquired person authorized by the UPE to file the notification on
its behalf pursuant to§ 803.2(a) or filed pursuant to§ 803.4 on behalf of a foreign person, provide the name and mailing add re$$ of the
entity filing the notification on behaW of the.UPE.
Contact Information
Provide the name, firm/company name, address, telephone number, and e-rilaTI address of two ihdividuals (primary and secondary) to
contact regarding the fiting. See§ 803.20(b)(2J (ii).
Add~ionally, provide the name, firm/company name, address; telephone number, and e-mail address of an individual located in the United
·States designated for the limited purpose of receiving notice of the issuance of a request for additional information or documentary material.
See§ 803.20(b)(2).
UPEAnnual Reports and Financial Information
•
Central Index Key
If the UPE of the acquired person files-annual reports (Form 10-K or Form 20-F) with the United states Securities and Exchange
Commission (SEC), provide the ~ntral Index Key{CIKJ number.
•
Annual Reports and AuaitReports
PrQvide the most recent annual reports anc!lor annual auditreports (or, if audited is unavailable, unaudited) of the UPE of the
acquired person.
Natural person UPEs should notprovide personal balance sheets or tax returns. Natural person UPEs should leave this section blank
and instead provide the most re
