Overview of the Hart-Scott-Rodino Antitrust Improvements Act

Signed into law on September 30, 1976, the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act) is a set of amendments to U.S. antitrust laws, which established a premerger notification program to provide information about a merger or acquisition to the Federal Trade Commission (FTC) and the Department of Justice (DOJ).

This pre-merger notification includes submitting an HSR Report Form (HRS Form) with pertinent business information about each company. The companies cannot complete their transaction until a waiting period – typically 30 days – has passed or the government has terminated the waiting period. This allows regulatory agencies time to review the proposed merger or acquisition and contact all involved parties regarding any anticompetitive issues.

In the summer of 2010, the FTC and DOJ announced the most sweeping proposed changes to the HSR Form since its inception and, in some cases, increased the amount of information that must be submitted to the FTC and DOJ, placing a heavier burden on the filing parties.

In October 2010 , the PEGCC filed a comment letter in response to the proposed changes to the Hart-Scott-Rodino reporting rules. In it, the PEGCC addressed the fact that many of the proposed amendments to the Hart-Scott-Rodino Form would substantially increase the burden on reporting persons and agency staff without significantly improving the effectiveness of antitrust review.

When the FTC and DOJ announced final changes to the HSR Form in July 2011, the agencies did revise some of the requirements in response to concerns raised by the PEGCC and other interested parties.  These revisions include:

• A pared-back requirement for production of offering memoranda and outside consultant/advisor materials
• A requirement to produce synergy/efficiency studies prepared for officers/directors of the ultimate parent entities of the parties or any of their controlled entities in connection with the transaction subject to HSR reporting;
• Pared-back reporting requirements for products manufactured outside of the U.S. and imported into the U.S.; and
• A revised definition of “Associate,” intended to include entities that are under common investment or operational management with the filing person Entities that merely provide non-binding advice on investment decisions and/or provide non-managerial assistance will not be considered “Associates” in the final rule.

Nevertheless, as highlighted in the PEGCC comment letter, the final rules will impose additional burdens on private equity and other investment funds.  All Hart-Scott-Rodino filings made on or after August 18, 2011, will have to use the new HSR Form.

[1] See Graham http://faculty.fuqua.duke.edu/~jgraham/website/JACFHowBig.PDF