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Overview of the Hart-Scott-Rodino Annual Report for Fiscal Year 2022

The Federal Trade Commission (FTC) and the U.S. Department of Justice Antitrust Division (DOJ) (collectively, the Agencies) recently issued the Hart-Scott-Rodino Annual Report for Fiscal Year 2022 (the Report). Covering the time period from October 1, 2021 through September 30, 2022, the Report provides data on the Agencies’ activities in connection with the premerger notification program established under the Hart-Scott-Rodino-Antitrust Improvements Act of 1976, as amended (the HSR Act).

The HSR Act requires parties to certain mergers and acquisitions to file a notification with the FTC and DOJ prior to consummating the proposed transaction. Upon filing, a 30-day waiting period (15 days in the case of a cash tender offer or bankruptcy sale) begins during which the parties may not close the transaction. During this window, the Agencies assess whether the transaction is likely to have any anticompetitive effects. If deemed necessary, the FTC and DOJ are authorized to extend the waiting period by issuing a request for additional information and documents (a Second Request). If the Agencies still have concerns after the Second Request review, they may seek a consent order from the parties or bring a court action challenging the merger.

Key Takeaways

  1. FY2022 saw a 10.5% decrease in notified transactions from the prior fiscal year. While this is a drop from the record-breaking activity of FY2021, the amount of notified transactions in FY2022 still represents a 92.5% increase from the number of notified transactions seen during FY2020, indicating a continued, robust recovery from the Covid-19 pandemic.
  2. Similar to prior years, the industries with the most notified transactions were consumer goods & services (representing 31.3% of total notified transactions), manufacturing (10.5%), banking & insurance (10.4%), and information technology (8.7%). FY2022 saw an increase in notified transactions in manufacturing and banking & insurance.
  3. The percentage of early termination requests granted out of the total requested decreased from 19.6% in FY2021 to just a half-percent (0.4%) in FY2022, due to the continued suspension of the granting of early termination that began in February 2021. Even then, the small percentage in FY2022 were in connection with consent orders or after partially responding a Second Request.
  4. Second Request investigations remained steady as a share of notified deals compared to the previous fiscal year, with the Agencies issuing 47 Second Requests, representing 1.6% of notified transactions, compared to last year’s 65 Second Requests, representing 1.9% of notified transactions.
  5. The Agencies’ merger enforcement activity increased, with the Agencies initiating 50 merger enforcement challenges, and bringing 12 actions in administrative or federal court (compared to 32 challenges and 8 cases brought in administrative or federal court in FY2021.) This reflects a record high over the past 20 years.
  6. In a majority of transactions where the Agencies brought a merger enforcement challenge, remedies were required or the transaction was abandoned. Of the Agencies’ 50 challenges, 16 (32%) were resolved by consent orders or settlements containing remedies, 23 (46%) were abandoned (6 after the relevant Agency filed a complaint). Only 11 transactions (22%) were resolved without a remedy imposed (5 after litigation). The 11 resolved transactions represent a higher figure than in previous years—compared to 4 in FY2021 (representing 12.4% of the Agencies’ challenges) and 4 in FY2020 (representing 9.3% of the Agencies’ challenges).
  7. The Agencies received 74 post-consummation corrective filings in FY2022, and the agencies brought 2 civil penalty actions for violations of the HSR Act, resulting in $1.89 million in civil penalties.