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DOJ and FTC propose changes to merger control regime that will increase information requirements on deal-makers

Financial sponsors will be challenged by a new U.S. filing form which will require details on deal rationale, overlaps in parties’ activities, granular financial data and structure of entities involved in a transaction.

In the biggest shake up of the U.S. merger review process in decades, the Federal Trade Commission (FTC) and Department of Justice (DOJ) have announced proposed changes to the merger control notification form as well as the pre-merger notification rules which implement the Hart-Scott-Rodino (HSR) Act.

According to the agencies, the revisions will enable transactions to be screened for potential antitrust issues “more effectively and efficiently” within the initial 30-day waiting period. To facilitate this they plan to dramatically expand the scope of information that merging parties will need to submit up front.

New U.S. merger filing form requires much more granular information from parties

As an example, the new form will require details on the rationale for the transaction, investment vehicles/corporate relationships and previous acquisitions. Merging parties will need to submit information on horizontal overlaps and non-horizontal relationships, as well as more detailed financial data, new categories of internal documents and, importantly, the “structure of entities involved, such as private equity investments”.

In line with the current focus of the FTC and DOJ on the impact of M&A on competition for workers, the revised form will require information that will enable the agencies to screen for labour market issues. It will also collect details of foreign subsidies that might distort the competitive process, mirroring a concern that the EU is also seeking to address with the Foreign Subsidies Regulation, which we explore in more detail here.

The changes to the U.S. merger control notification forms have not yet been implemented. Once published in the Federal Register there will be a 60-day period for stakeholders to submit comments, following which the final forms and rules may change.

European Commission updates its merger control notification regime

The HSR forms are becoming more “European” in nature, with a significantly heavier information disclosure obligation. At the same time the European Commission has not stood still, and has brought in changes to its merger control filing forms which took effect on 1 September. Its stated aim is to streamline the notification process and reduce the burden on notifying parties, although whether this will ultimately be the case remains to be seen.

The new EC forms remove the need to provide some information and introduce “tick-the-box”-style requirements for others, but additional information requirements have been added elsewhere.

To read our detailed briefing on the proposed U.S. merger filing form changes, click here.

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