What They Mean for Pre-Merger Notifications
The Federal Trade Commission (FTC) and Department of Justice (DOJ) have finalized significant changes to the Hart-Scott-Rodino (HSR) pre-merger notification rules, marking one of the most substantial updates in decades. These new rules expand the scope and depth of information required from merging parties, introducing additional layers of complexity to the filing process. From more detailed disclosures about investment relationships to enhanced documentation of transaction rationale, businesses contemplating mergers or acquisitions now face heightened scrutiny from antitrust regulators.
This blog unpacks the key elements of the final rules, what’s changed, and how companies should adapt their pre-merger strategies to ensure compliance and avoid costly delays.
What’s New in the Final HSR Rules?
- Expanded Disclosure Requirements
Disclosure requirements have expanded significantly under the new HSR Form, mandating that parties provide detailed narratives outlining the strategic rationale for the deal, current and anticipated horizontal overlaps, and any vertical relationships, such as supply or licensing agreements. Filers must also report sales data, categorize customers, and identify top customers for overlapping products or services, including pre-revenue products that may become competitive in the future. Additionally, there is increased emphasis on disclosing minority shareholders, investment funds, and all entities involved in the transaction.
- Increased Document Production
The scope of required document production has expanded significantly under the final HSR rules, now encompassing materials prepared by the supervisory deal team leader and ordinary course business documents shared with CEOs or Boards that address market analysis or competition related to overlapping products. While some proposed requirements—such as submitting all drafts—were ultimately scaled back, the new rules still demand substantially more documentation than before.
- Greater Time and Resource Burden
Under the new HSR rules, filing parties face a substantially increased time and resource burden, with the FTC estimating an average of 68 additional hours per filing—and up to 121 hours for more complex transactions involving competitive overlaps or supply relationships. As a result, parties should plan for longer preparation timelines, increased compliance costs, and adjust their deal schedules accordingly.
- Focus on Vertical Mergers and Serial Acquisitions
With the final HSR rules, regulators have sharpened their focus on vertical mergers and serial acquisitions, now requiring parties to disclose related deals from the past five years involving overlapping products or services. This expanded reporting is designed to enable the FTC and DOJ to more effectively evaluate potential anticompetitive effects in vertical, diagonal, and roll-up strategies across markets.
How Should Companies Adapt?
- Allow More Time for Preparation
The expanded requirements will significantly increase the time and resources needed to gather documents and complete the new forms; therefore, companies should build additional lead time to avoid delays.
- Review Internal Document Management
With broader document production requirements, companies should ensure they have robust systems for identifying and collecting relevant materials, including those from supervisory deal team leads and other non-executive custodians.
- Assess Ownership and Control Structures
Particularly for private equity and investment firms, it’s critical to map out and be prepared to disclose all entities and individuals with potential post-merger influence.
- Coordinate Early with Counsel
Early engagement with antitrust counsel is essential to navigate the new requirements, identify potential pitfalls, and ensure compliance from the outset.
The Final HSR Rules represent a fundamental shift in premerger notification requirements, imposing greater burdens on filing parties but providing the FTC and DOJ with enhanced tools to scrutinize mergers more effectively. Companies involved in reportable transactions should prepare for these changes to ensure compliance and smooth regulatory review.