FTC Issues Guidance on Antitrust Merger Review

As mentioned in a prior post, if the transaction value for an M&A deal equals or exceeds $92 million (as of the date of this post; the threshold is adjusted annually), an HSR filing may be required with the Premerger Notification Office of the Federal Trade Commission, and the parties must wait 30 days to consummate the deal. During this waiting period, the FTC or the Antitrust Division of the U.S. Department of Justice will review the proposed transaction to determine whether it may raise any competition concerns.  If so, the FTC or DOJ will issue a “Second Request,” a request for additional information and materials, which will extend the waiting period significantly.

The FTC has briefly summarized this merger review process here.

Last week, the FTC issued updated best practices guidance for antitrust merger review intended to help parties reduce the time and burden of compliance. The document is only four pages long so, if you’re interested in this topic, reading it in its entirety is probably a good idea. However, if you’re pressed for time, here are the highlights:

Submit Additional Information Voluntarily

The Commission recommends providing information to staff early. Parties can produce information in addition to the HSR filing during the initial waiting period or even before the filing is made. This information may resolve the staff’s questions about the transaction during the investigation’s preliminary phase, which may obviate the need for a Second Request, or the early submission of key information may allow staff to tailor the Second Request and thus reduce the burden of production.

Withdraw and Refile

At times, near the end of an initial review period, open issues may remain that could be resolved with relative ease with additional information or a bit more time. In certain cases, merging parties should consider giving staff more time by withdrawing their HSR filing and refiling. This procedure resets the HSR timing provisions (i.e., it gives the authorities another 30-day waiting period) without the need to pay another filing fee. Additional time during the initial HSR waiting period reduces the likelihood that a Second Request will issue and increases the likelihood that any Second Request that is issued will be narrower in scope. Of course, a withdraw and refile will not be effective in avoiding a Second Request in an investigation that requires substantial review.

For more information on the withdraw and refile process, read the FTC’s blog post, Running Time, and a tip sheet put together by the Premerger Notification Office.

Negotiate Down the Scope of the Second Request

In my experience, the FTC and DOJ take the shotgun approach to most Second Requests: demand as much information from as many people about as many topics as possible. From the transacting parties’ perspective, full compliance is often excessively costly and time consuming and highly undesirable. Thankfully, sfaff will negotiate a Second Request in good faith through meaningful discussions “to prevent confusion or misunderstandings regarding the nature and scope of the information and material being sought.” In fact, under the FTC Rules of Practice §2.20, after a Second Request is issued, staff are encouraged to initiate a discussion addressing the competitive issues raised by the transaction and the most effective way to obtain information and documents relating to the competitive issues raised.

During these discussions, parties to the proposed M&A transaction should seek appropriate limitations to the document custodians (i.e., people whose files need to be searched) as well as the terms for which searching is required. Moreover, parties may discuss producing a limited set of core documents and information identified by staff. Under the right circumstances, this may address the staff’s concerns and result in termination of the review.

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