Earlier this week, the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice (the “Antitrust Agencies”) announced proposed changes to the premerger notification process that mark the most significant changes to the Hart-Scott-Rodino (“HSR”) Form since it was created 45 years ago. Assuming that the proposed changes go into effect, all filers (without any exception, all buyers and sellers subject to the HSR Act) should expect a seismic change in the amount and type of upfront information required for the HSR Form, significant additional time to prepare the HSR Form and expansion of the potential areas of inquiry that the reviewing Antitrust Agency will be armed to examine.
These changes are purportedly designed to enable the Antitrust Agencies to more effectively and efficiently discharge their duties under the U.S. antitrust laws, and to implement certain mandates from the Merger Filing Fee Modernization Act of 2022, such as a requirement to disclose foreign subsidies. While there are certain proposed changes that would bring the HSR Form in line with many ex-U.S. merger control filings, there are also many changes that would go much further in enabling the Antitrust Agencies to examine at an early stage a wide range of substantive antitrust issues, such as interlocking directorates under Section 8 of the Clayton Act, potential effects of transactions on labor markets, private equity firm structures and relationships, and defense industry relationships. Moreover, the increase in narrative, data and documentary requirements under the proposed changes will make HSR submissions significantly longer and more burdensome to assemble. In short, the proposed changes will fundamentally change the breadth and depth of information available to the Antitrust Agencies about all reportable transactions at the outset of the HSR review period, requiring greater resources and time for the HSR Form preparation and potentially impacting how parties approach any reportable transaction, regardless of whether such a transaction is likely to attract antitrust scrutiny.
While the proposed changes may well be amended before going into effect, rulemaking proposed this week calls for numerous fundamental changes to the HSR Form.
A high-level overview of the key proposed changes is summarized below:
These proposed changes will substantially increase the amount of time needed to plan for and prepare an HSR Form for every type of filer. The FTC Premerger Notification Office estimates that the new requirements will add on average 107 additional hours to the time firms already spend preparing the HSR Form, although that number is likely a significant underestimate. That said, there will also be a disparate impact on clients in certain industries, such as private equity funds and firms serving the defense industry, where the Antitrust Agencies have clearly stated the existing HSR Form is insufficient for them to analyze proposed transactions.
While the actual increased timing burden is yet to be seen, parties can expect that a standard 10-business-day filing deadline in a transaction agreement will likely not provide sufficient time to complete the forms unless parties start preparation significantly ahead of signing. Moreover, only time will tell whether pre-filing consultations with the Antitrust Agencies become a de facto necessity in order for parties to avoid the risk of having their HSR Form bounced for alleged gaps in the information and/or data provided in the HSR Form.
When the rules and related form changes are implemented, clients may want to consider engaging with antitrust counsel earlier in their negotiations and transaction planning to ensure that they are aware of the new document creation and document collection requirements. It will also be important to identify the “supervisory deal team leads” who will be handling the day-to-day transaction process early on.
After they are officially published later this week, the proposed rules and related changes to the HSR Form will be open for public comment for 60 days. This comment period could result in the Antitrust Agencies making material changes. Given the scope of the changes, the comment period may be extended further. Then, the Antitrust Agencies will publish a final version that incorporates and/or responds to the public’s feedback, a process that typically takes several months to complete. Additionally, a 30-day notice is required before any final rules become effective. Therefore, it is unlikely that a final rule revising the HSR Form goes into effect prior to late 2023 at the earliest.
 As an example, the Antitrust Agencies seek to require the submission of semi-annual and quarterly plans and reports that discuss these ordinary course business assessments if they were shared with an entity’s chief executive or their direct reports within one year of the HSR filing.
 This includes documents prepared by or for an officer or director that evaluate the HSR-reportable transaction in terms of market shares, competition, competitors, markets, potential for sales growth or expansion into product or geographic markets, and/or synergies and efficiencies.
 The Antitrust Agencies are seeking comments on a potential alternate approach where the parties collect the relevant draft versions but only submit them if the agency staff reviewing the HSR filing asks that they be submitted. The filing party would then have 48 hours to submit the requested drafts without interruption of the waiting period.
 Filing parties will now need to disclose information about foreign subsidies for the two years prior to filing from countries or entities that have been deemed to threaten U.S. strategic or economic interests. They will also be required to identify (i) any of their products that are produced in a country that is a covered nation under 42 U.S.C. 18741(a)(5)(C) that are subject to countervailing duties, what those duties are and the jurisdiction that imposed the duties and (ii) any products partially or wholly produced in a covered nation under 42 U.S.C. 18741(a)(5)(C) that are the subject of an investigation by any jurisdiction for potential countervailing duties and which jurisdiction.