FTC extends comment period for proposed changes to pre-merger review process

The Federal Trade Commission and the Department of Justice's Antitrust Division said they are extending the public comment deadline on the below proposed changes by 30 days. The new deadline is Sept. 27, 2023.

June 28, 2023

Newly proposed changes to the Federal Trade Commission’s (FTC's) pre-merger notification requirements would give regulators more information to review during a deal’s initial waiting period—likely giving the agency more fuel to block mergers it views as anticompetitive.

The proposed changes also would nearly quadruple the per-hour filing burden on merging organizations.

Released Tuesday, the proposed changes to the Hart-Scott-Rodino (HSR) Form and accompanying instructions would apply to the healthcare sector along with other U.S. regulated industries.

The potential updates were approved 3-0 by the agency’s commissioners. They come as the FTC and lawmakers alike look to clamp down on consolidation and vertical integration within healthcare.

“Much has changed in the 45 years since the HSR Act was passed. Deal volume, for example, has soared,” FTC Chair Lina Khan and Commissioners Rebecca Kelly Slaughter and Alvaro Bedoya wrote in a statement (PDF). “Transactions are increasingly complex, in both deal structure and potential competitive impact. Investment vehicles have also changed, alongside major transformations in how firms do business.

“The HSR form, meanwhile, has largely stayed the same. Against the backdrop of these vast changes, the information currently collected by the HSR form is insufficient for our teams to determine, in the initial 30 days, whether a proposed deal may violate the antitrust laws,” they said.

In their comments, the commissioners cited their agency’s recent inquiries into unreported acquisitions by tech giants such as Apple, Amazon, Google and Microsoft as examples of why better information gathering, particularly for small and non-horizontal acquisitions, is necessary.

The 133-page proposed amendments document also cites multiple deals and articles related to healthcare industry mergers and acquisitions within its footnotes.

Major changes included in the proposal include requirements that merging entities provide:

  • More details on the rationale of their transaction as well as any surrounding investment vehicles or corporate relationships
  • Information related to horizontal products or services and non-horizontal business relationships
  • Projected revenue streams, descriptions of market conditions and the structure of involved entities
  • Details regarding prior acquisitions
  • Disclosures of information that would help screen for labor market concerns

The FTC noted that these proposed updates would also cover congressional concerns of foreign governments or groups considered “strategic or economic threats” by collecting more information from merging entities on the subsidies they’ve received.

For entities planning a merger, one major impact of the proposed changes would be a substantial increase in the public reporting burden.

The FTC estimated that organizations could spend anywhere from 20 to 382 hours reviewing instructions, collecting data and submitting their pre-merger materials. On average, the agency said it expects the proposed changes will run merging entities 144 hours per filing, up from the current 37-hour average.

The FTC said it will be welcoming public comments on ways the burden estimate of its proposal could be reduced during a 60-day public comment period. The countdown will begin once the Notice of Proposed Rulemaking is published in the Federal Register later this week, the agency said.

More broadly, the proposed changes to pre-merger filings would give the FTC a better handle on how specific, complicated deals could impact a business or market.

The regulator has ramped up its scrutiny of deals it views as anticompetitive in the past couple of years. Recent months alone have seen the FTC launch a petition to block Amgen’s $27.8 billion Horizon Therapeutics’ purchase, expand its probe into pharmacy benefit managers to group purchasing organizations and further cement its position against conditional antitrust exemptions for nonprofit health systems.

More information from companies about pending mergers could allow the agency to better justify actions blocking deals with difficult-to-measure impacts on healthcare markets, such as those involving vertical integration or entities currently operating in distinct geographic regions.