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FTC, DOJ propose changes to merger reviews

The Federal Trade Commission has proposed changes to the premerger notification form in addition to premerger notification rules implementing the Hart-Scott-Rodino Act, which requires organizations to report large transactions to the FTC and Justice Department for antitrust review.

The HSR Act and its implementing rules related to mergers and acquisitions involve completing HSR Forms and waiting a specified period of time before completing the transaction.

The proposed HSR changes would help the agencies to more effectively screen transactions for potential competition issues within the waiting period, which is generally 30 days. The FTC said that this competition review is important to identify deals that require in-depth investigations to determine whether they would violate antitrust laws and, if so, to seek to block the proposed transaction.

"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 'require advance notice' for approximately 'the largest 150 mergers annually,'" FTC Chair Lina Khan said in a June 27 statement on the proposed changes. "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."

Key changes in the proposal include:

- Providing details about transaction rationale and surrounding investment vehicles or corporate relationships.

- Provision of information related to products or services in horizontal products and services and non-horizontal business relationships, such as supply agreements.

- Providing projected revenue streams, transactional analyses and internal documents describing market conditions, and structure of entities involved such as private equity investments.

- Provision of details regarding previous acquisitions.

- Disclosure of information that screens for labor market issues by classifying employees based on the Bureau of Labor Statistics' Standard Occupational Classification System categories.

The notice will be published in the Federal Register this week, with comments due 60 days after publication.

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