FTC Issues New Rules for HSR Premerger Notification Filings

On October 10, 2024, the Federal Trade Commission (FTC) voted unanimously to adopt new rules for the premerger notification form and reporting process under the Hart-Scott-Rodino (HSR) Act.  The new rules expand the scope of information that transacting parties must disclose with their premerger notification form, and will become effective 90 days after publication in the Federal Register, which likely means an effective date in mid-January 2025. The FTC also announced that it will lift its suspension on the ability of parties to request early termination of the 30 day waiting period once these new rules become effective.

The new rules overhaul the HSR reporting process and are intended to provide the FTC and U.S. Department of Justice (DOJ) more information at the start of the review process that traditionally may have come only through access letters or second requests.  The approach appears to dovetail with the 2023 Merger Guidelines, as transacting parties will be required to disclose information about vertical relationships, prior acquisitions, the competitive landscape, and certain private equity investments.  Parties also will also be required to file more deal-related and ordinary course documents than previously required. For example, the new rules require that parties identify and describe competitive overlaps, the rationale for the transaction, and certain information concerning minority stakeholders.  Parties will be required to disclose data about customers in areas of overlapping product and supply relationships, certain agreements that already exist among the parties, and detail about foreign subsidiaries.  The new rules also increase the level of disclosure about officers, directors, and board members, business plans, and prior acquisitions of both parties.

The FTC’s final rule is a pared back version of the agency’s original proposal. The FTC abandoned the requirement that parties only file after a final transaction document has been negotiated.  While parties may still file on a letter of intent, to prevent filings on hypothetical transactions, the new rules require that parties provide sufficient detail about the deal terms for the regulators to assess the transaction.  Moreover, the final rules do not require, as originally proposed, that parties provide drafts of Item 4(c) documents (those assessing the transaction in light of markets, market shares, competition, etc.), timelines of key dates for closing the deal, certain information about employees, document preservation certificates, and geolocation information.

In short, even though the FTC trimmed the original proposal’s burden, parties should expect a substantial increase in the time and preparation required for HSR filings under the new rules.