DOJ, FTC Propose Updated Merger Review Requirements

The changes could impact M&A transactions in healthcare and would require more information regarding proposed transactions.

The Federal Trade Commission (FTC) with the Assistant Attorney General of the Antitrust Division of the US Department of Justice (DOJ) issued a proposal this week that would make changes to the premerger notification form and instructions and premerger notification rules implementing the Hart-Scott-Rodino (HSR) Act. Currently, the HSR Act requires premerger notification for transactions valued at $111.4 million.

The proposed changes include mandates as required by the Merger Filing Fee Modernization Act of 2022, which would "require filers to provide information on subsidies received from certain foreign government or entities that are strategic or economic threats to the United States," according to an FAQ page about the proposed premerger notification, reporting, and waiting period requirements.

These proposed changes would "enable the Agencies to more effectively and efficiently screen transactions for potential competition issues within the initial waiting period, which is typically 30 days," a "critical" part in the review process of merger and acquisition transactions where the agencies identify which transactions require an in-depth investigation on the proposed transactions potential violation of antitrust laws.

The changes proposed include provisions regarding transaction rationale details as well as details on investment and corporate relationships within the deals, information related to products or services in both horizontal and non-horizontal business relationships, projected revenue streams, and details about previous acquisitions.

Additionally proposed is the "disclosure of information that screens for labor market issues by classifying employees based on current Standard Occupational Classification system categories," according to the FTC.

Chairperson of the FTC Lina Khan, joined by Commissioner Rebecca Kelly Slaughter and Commissioner Alvaro M. Bedoya, released a statement in defense of the proposal to update the HSR Act for the first time since its creation 45 years ago in 1978, which they argue is in need of an update due to the size and volume of M&A activity that currently takes place. The HSR Act

"Much has changed in the 45 years since the HSR Act was passed. Deal volume, for example, has soared. The House Report for the HSR Act estimated that the statute would "requir[e] advance notice" for approximately "the largest 150 mergers annually." Today, the agencies often receive more than 150 filings each month. Transactions are increasingly complex, in both deal structure and potential competitive impact. Investment vehicles have also changed, alongside major transformations in how firms do business. The HSR form, meanwhile, has largely stayed the same.

"This proposal is designed to ensure that we can efficiently and effectively discharge our statutory obligations and faithfully execute on the mandate that Congress has given us," the statement concludes. "We look forward to the public comments."

Public comment regarding the proposed changes are due on or before August 28, 2023.