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FTC Releases New HSR Rules: Implications for Antitrust Deal Teams, Planning for HSR filings, eDiscovery, and Beyond 

By Tom Leuba, Vice President, Antitrust and Investigations

More than 15 months after announcing proposed rule changes, the Federal Trade Commission (FTC) has finalized rules that usher a sweeping overhaul of the Hart-Scott-Rodino (HSR) premerger notification program. The new rules–although less drastic than what was first proposed–will require filing parties to provide substantially more documents and information with their HSR filings. Unless challenged in federal court and enjoined, the rules will become effective in mid-January 2025 (90 days after the official publication in the Federal Register). 

These changes will increase the costs, burden, and time required to prepare HSR filings for transactions that must be notified to the government, even for those that pose no competitive concerns. Because many of the new requirements apply to HSR filers regardless of whether the FTC or DOJ ultimately issue a second request for additional information (Second Request), they will affect thousands of filers each year. To put this in perspective, in 2022, there were 3,152 HSR filings, but only 47 Second Requests were issued, according to the FTC’s annual report.  

Expanded Document Production Requirements 

The new rules significantly expand the universe of documents that must be collected, reviewed, and produced with the HSR form. Indeed, the agencies are effectively requiring transacting parties to file some documents with the HSR form that today are only required if they issue a voluntary access letter during the initial 30-day waiting period, or a Second Request at the end of it. Thus, the new document requirements would require, at the pre-HSR filing stage, review of electronically stored information and may require use of eDiscovery tools akin to those typically used to respond to Second Requests or discovery demands in civil litigation. The document requirements are summarized below. 

  • Transaction agreements and prior agreements: Filing parties must, for the first time, produce all agreements relating to the transaction, including schedules and exhibits that will be in effect on and after the closing. The acquiring filer must also identify certain agreements between the acquiring person and the target in effect within a year of the date of filing. For example, this new requirement applies to supply agreements, leases, licensing agreements, master service agreements and non-competition or non-solicitation agreements. 
  • Evaluations or analyses: The HSR Form has always required submission of documents prepared “by or for officers or directors” that discuss the acquisition with respect to “market shares, competition, competitors, markets, potential for sales growth or expansion into product or geographic markets.” The new rules expand this requirement, now calling for documents that are also prepared by or for the “supervisory deal team lead” of each merging party. The supervisory deal team lead is defined as “the individual who has primary responsibility for supervising the strategic assessment of the deal, and who would not otherwise qualify as a director or officer.” (If the only individuals supervising the strategic assessment of the deal are also either an officer or director, the new rules permit filers to identify an officer or director as the supervisory deal team lead.) 
  • Ordinary course plans and reports: For the first time, many filers must now produce with their HSR filings certain business plans and reports relating to competition that are prepared in the ordinary course of business. The new requirement applies to filers involved in transactions in which both parties provide the same types of products or services. For such transactions, the filers must produce certain plans and reports created within one year of the HSR filing and shared with CEOs and Boards of Directors of the entities involved in the transaction (or of any entity they control or are controlled by) that discuss market shares, competition, competitors, or markets for the overlapping lines of business. Such ordinary course business documents, going back one year, will be much more difficult to identify, particularly for large corporations.  
  • Translations: Parties are now required to submit verbatim English language translations for foreign-language documents produced with their HSR filing.  
  • Drafts not required: The final rules do not include the FTC’s original proposal that drafts of final documents be included with the HSR filing. 

Expanded Information Requirements 

The new HSR rules also require that, for most filers, significantly more information be submitted with the HSR form, including, for example: 

  • Descriptions of the strategic rationales for the transaction and identification of the documents submitted with the HSR filing that support the rationales described. 
  • Descriptions of the horizontal overlaps and supply relationships between the filing persons, and new disclosure obligations relating to products or services that are in development. 
  • A more extensive disclosure of minority holdings, including limited partners with board/management rights in partnerships and minority holders of any entities within the control chain of the acquiring entity. 
  • Details regarding certain prior acquisitions. 
  • Identification of certain officers and directors of the acquiring person and acquired entity for transactions where there are overlapping products or services. 

Key Takeaways for HSR Filing Preparation   

One thing is certain: the new HSR filing rules will significantly increase the breadth of information and the time required to prepare an HSR filing. Deal teams must take the new rules and time frames into account and begin preparing HSR filings, including collection of documents, earlier in the deal negotiation process to avoid delays.  And for those deals that may raise antitrust concerns, it will be more important than ever for antitrust counsel to be brought into the loop early in the deal negotiation process to assess antitrust risk and prepare for questions that documents produced with the HSR filing may raise with the FTC and DOJ. 

More formalized eDiscovery approach 

All of these factors suggest that, for some transactions, HSR filing preparation may require a formalized eDiscovery approach that, until now, was reserved for Second Requests.  

In the past, most filing parties have relied on targeted self-collections to identify responsive documents from a relatively small number of custodians, who work with outside counsel to identify relevant documents from their files. But with significantly more documents–including ordinary of course business documents–that must be collected, reviewed, and produced from a broader universe of custodians, the old approach is unlikely to suffice in all cases under the new rules.  

Thus, companies, in coordination with outside counsel and eDiscovery support teams, should proactively take the following steps to prevent delay in completing transactions: 

  • Devise plans and best practices for data mapping to identify where the relevant documents and related information reside within the organization. 
  • Manage the process of collecting information from in-scope employees, leveraging both self-collection for employees that can identify a portion of the required documents within their own files as a starting point, and other collection tools to effectively identify similar documents.    
  • Use eDiscovery tools and review methods to gain early insight into what documents are in the companies’ files so that counsel can gauge antitrust risk and be prepared for the questions the documents may raise with the agencies. Afterall, many of those documents will now be in the agencies’ hands as soon as the HSR form is filed. 

The new HSR rules significantly increase the volume and types of documents that parties are required to submit as part of HSR filings. To meet this challenge, filing parties would be wise to adopt new HSR preparation strategies, including with respect to the use of eDiscovery tools.  

Especially for more complex transactions with large deal teams, and for deals that may raise antitrust concerns, filing companies should work closely with antitrust counsel and their third-party eDiscovery vendor early in the HSR planning process.  

UnitedLex can help with your HSR pre-filing, filing, and Second Request efforts. Let’s talk.

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