Panoramic: Automotive and Mobility 2025
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U.S. Premerger Filings – Key Updates
17 February 2025
Key takeaways
The US antitrust agencies updated the premerger filing requirements under the HSR Act earlier this year. Here we provide updates on the latest guidance and best practices regarding the rule change.
On February 10, 2025, the final rule revising the requirements for premerger filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) went into effect. The Federal Trade Commission (FTC) had announced the final rule on October 10, 2024. The rule greatly increases the information and documents filing parties must submit with their HSR filings for most types of transactions and, as a result, significantly increases the time and cost to prepare HSR filings.
Background on the HSR Act and the final rule
Under the HSR Act, parties to acquisitions of voting shares, assets, and/or controlling interests in non-corporate entities must submit HSR filings to the FTC and the Antitrust Division of the Department of Justice and observe a waiting period before they may close if the transaction satisfies applicable HSR threshold tests and does not qualify for an HSR exemption. During the waiting period, the antitrust agencies decide whether to allow the parties to close or whether to extend the initial waiting period by opening a full-sale investigation of the reported transaction.
The final rule significant changed the HSR Form and its Instructions. The FTC voted 5-0 to issue the final, and the Antitrust Division of the U.S. Department of Justice (DOJ) issued a statement concurring with the final rule shortly after it was issued. The final rule was issued after the FTC considered public comments on the FTC’s June 2023 notice of proposed rulemaking. While the final rule is parred down from the June 2023 NPRM, it is still significantly more burdensome than the prior filing requirements.
When submitting an HSR filing, parties must now submit additional ordinary course and transaction-related documents, provide additional information about the structure and ownership of their business, and assess potential horizontal and vertical overlaps with the other party and provide information about customers or suppliers of overlap products. Many of the new requirements were implemented to provide the FTC and DOJ with information they find necessary to support current enforcement priorities, including their concerns regarding “serial” acquirers, vertical acquisitions, private equity acquisitions, harm to nascent competition, and interlocking directorates. Accordingly, certain aspects of the rule are likely to have distinct implications for certain types of filers.
Summary of key updates
There are now three distinct categories of transactions. The volume of information required to be submitted with each filing depends on the type of transaction being reported.
- Select 801.30 transactions, which are defined as transactions where (i) 16 CFR § 801.30 applies (i.e., transactions where the purchaser acquires voting securities from holders other than the issuer), (ii) the purchasing party will not acquire control of the target, (iii) the purchasing party does not have and will not obtain the right to serve as, appoint, veto, or approve board members, or members of any similar body, of the target (including certain entities that control or are controlled by the target), and (iv) there is no transaction agreement between the parties. Executive compensation transactions qualify as select 801.30 transactions. The FTC estimates this category represents approximately 8% of filings and that these filings require an average of 40 hours for the acquiring party to complete.
- Overlap filings, which are transactions where the “parties report at least one NAICS code overlap or have an existing overlap or supply relationship.” The FTC estimates this category represents approximately 45% of filings and that these filings will require around 160 hours for the acquiring party to complete.
- Non-overlap filings, which are transactions where there are no reportable competitive overlaps or supply relationships. The FTC estimates this category represents approximately 47% of filings.
Disclosures relating to the parties' business structure
Requirement | Summary of requirement | Applicable transaction categories |
Description of ownership structure | The acquiring party must provide a description of the ownership structure of the acquiring entity. If a fund or master limited partnership (MLP) is the ultimate parent entity (UPE) of the acquiring entity, the acquiring party must provide an organizational chart, if one exists in the ordinary course, that shows the relationships between the fund or MLP and any affiliated or associated entities. This is a new requirement. | ✔ Select 801.30 ✔ Non-overlap filing ✔ Overlap filing |
Identification of minority interest holders and limited partners | Parties are now required to report minority shareholders for the acquiring/acquired entity, certain entities that directly or indirectly control or are controlled by the acquiring/acquired entity, and any entity created by the acquiring party for the purposes of the transaction (each a Covered Entity). Parties are also required to disclose the identity of the general partner and certain limited partners of any limited partnerships ("LPs") that are Covered Entities. This expands the disclosure previously in Item 6(b). | ✔ Select 801.30 ✔ Non-overlap filing ✔ Overlap filing |
Identification of certain officers and directors serving at other entities | The acquiring party must identify any officers or directors that (i) serve or recently served as an officer or director of (a) the acquiring entity, (b) any entity that directly or indirectly control or are controlled by the acquiring entity, (c) any entity created by the acquiring party for the purposes of the transaction, and (d) any entity controlled by the acquiring party not identified in (a)-(c) that is responsible for the development, marketing, or sale of products or services that overlap or have a supply relationship with the products or services of the target; and (ii) serve as an officer or director of another entity that derives revenue in the same NAICS codes reported by the target. This is a new requirement. | ✔ Select 801.30 ✔ Non-overlap filing ✔ Overlap filing |
Disclosure of foreign subsidies | Parties must disclose whether they have received, within the two years prior to the HSR Filing, any subsidy (or a commitment to provide a subsidy in the future) from any "foreign entity or government of concern." The definition of "foreign entity or government of concern" refers to 42 U.S.C. § 18741(a)(5)(C), which could change in the future through amendment. It currently includes China, Russian, Iran, and North Korea, and entities that are "owned by, controlled by, or subject to the jurisdiction or direction of" those foreign countries. This is a new requirement. | ✔ Select 801.30 ✔ Non-overlap filing ✔ Overlap filing |
Disclosures and documents relating to the transaction
Requirement | Description of requirement | Applicable transaction categories |
Transaction rationale | Both parties must explain the transaction rationale(s) discussed or contemplated by the filing person or any of its officers, directors, or employees. The parties must identify each document and page number produced with the filing that confirms or discusses the rationale(s). For the acquiring party, if the acquiring UPE and the acquiring entity have different transaction rationales, the acquiring party must submit an explanation for each. For the acquired party, if the seller UPE and the target entity have different transaction rationales, the acquired party must submit an explanation for each. This is a new requirement. |
✔ Non-overlap filing ✔ Overlap filing |
Transaction diagram | The acquiring party must submit a diagram of the transaction, if one exists in the ordinary course. This is a new requirement. |
✔ Non-overlap filing ✔ Overlap filing |
Transaction agreements | In addition to the principal transaction agreement, both parties now must submit all other transaction-related agreements “including, but not limited to, exhibits, schedules, side letters, agreements not to compete or solicit, and other agreements negotiated in conjunction with the transaction that the parties intend to consummate.” This requirement excludes clean team agreements. This expands the disclosure previously in Item 3(b). |
✔ Non-overlap filing ✔ Overlap filing |
Other agreements between the parties | The acquiring party must indicate whether the parties have, or had within one year of filing, any contractual agreements with each other. Parties must indicate the type of agreement(s) that exist between the parties but are not required to submit copies of any agreements that are not transaction-specific. This is a new requirement. | ✔ Select 801.30 ✔ Non-overlap filing ✔ Overlap filing |
Additional requirements for term sheets and letters of intent | If the parties plan to fille off a term sheet, the term sheet must include "information regarding some combination of the following terms: the identity of the parties; the structure of the transaction; the scope of what is being acquired; calculation of the purchase price; an estimated closing timeline; employee retention policies, including with respect to key personnel; post-closing governance; and transaction expenses or other material terms" or the parties must submit a draft agreement or other dated document that contains these terms. When submitting the affidavit required with an HSR filing, parties will now be required to attest that "a dated document that provides sufficient detail about the scope of the entire transaction" has been submitted. This is an expanded requirement for non-definitive agreements previously in Item 3(b). |
✔ Non-overlap filing ✔ Overlap filing |
Disclosures relating to horizontal or vertical overlap between the parties
Requirement | Summary of requirement | Applicable transaction categories |
Revenue by NAICS (additional disclosures and street-level reporting) | When reporting revenue by NAICS code, parties are now required to identify each operating business that derived revenue in an overlapping NAICS code. Additionally, certain parties (in particular, those in various manufacturing and wholesaling industries) must now provide the street address for each establishment from which revenues corresponding to a NAICS code that is shared by the other party were derived. This expands the disclosure previously in Items 5(a) and 7(c). | ✔ Select 801.30 ✔ Non-overlap filing ✔ Overlap filing |
Overlap description | Parties must describe their “principal categories of products and services” and identify any products or services including any “known planned product or service” that compete with products or services offered by the other party. The parties are instructed not to exchange information with each other to respond to this item. For each overlapping product or service, the parties must provide: (i) sales revenue for the most recent year, (ii) a description of all categories of customers that purchase or use the product or service, and (iii) the top 10 customers overall in the most recent year and the top 10 customers for each customer category identified. This is a new requirement. |
✔ Non-overlap filing ✔ Overlap filing |
Supply relationships description | Parties must also provide a “supply relationship description” identifying (i) products, services, or assets sold to the other filing persons or to any entity that competes with the other filing person or uses the product as an input to compete with the other filing person or (ii) products, services, or assets purchased from the filing party or from any entity that competes with the other filing party. The parties are instructed not to exchange information with each other to respond to this item. For each product for which a supply relationship exists, the parties must provide information regarding (i) the revenue or purchased amount of these products or services, and (ii) the top 10 customers or suppliers of these products or services. This expands the disclosure previously in Item 6(b). |
✔ Overlap filing |
Defense or intelligence contracts
| The acquiring party must identify any current contracts or pending RFPs with the U.S. Department of Defense or U.S. Intelligence community (as defined by 10 U.S.C. § 101(a)(6) or 50 U.S.C. § 3003(4)) that (i) are held by the acquiring entity or any entity that directly or indirectly controls the acquiring entity, (ii) are valued at $100mm or more and (iii) involve or relate to an overlap product or service or generate revenues that contribute to a NAICS code overlap. This expands the disclosure previously in Item 6(b). |
✔ Overlap filing |
Mandatory disclosure of international antitrust filings | The acquiring party must list any ex-U.S. filings the parties have submitted or anticipate submitting, along with the dates of the filing or planned filings. This is a new requirement – the disclosure was voluntary previously. | ✔ Select 801.30 ✔ Non-overlap filing ✔ Overlap filing |
HSR updates: Documents relating to horizontal or vertical overlap between the parties
Requirement | Summary of requirement | Applicable transaction categories |
Competition documents from supervisory deal team lead | In addition to the current requirement to produce certain competition- and synergy-related documents prepared by or for officers or directors, both parties must now produce all competition- and synergy-related documents prepared by or for their "supervisory deal team lead." This expands on the document disclosure requirements previously in Item 4(c). | ✔ Select 801.30 ✔ Non-overlap filing ✔ Overlap filing |
Plans and reports | Both parties are required to produce all "plans and reports" provided to the Board of Directors and all "regularly prepared plans and reports" provided to the CEO that (i) were prepared within one year of filing date, and (ii) analyze competition related issues relating to products or services of the filing party that are also produced, sold, or under development by the other party. This is a new requirement. |
✔ Overlap filing |
Translations | Any foreign language documents submitted as an attachment to the HSR filing must be translated verbatim into English. This is a new requirement. | ✔ Select 801.30 ✔ Non-overlap filing ✔ Overlap filing |
Additional changes
In addition to the key changes to the HSR form, the FTC announced two new changes that affect the review of HSR-reportable transactions:
- Return of early termination. The FTC resumed granting early termination on February 10, which had been “temporarily” suspended since February 2021. Grants of early termination are published on the FTC’s website and in the Federal Register, so early termination should not be requested for confidential transactions. Grants can occur at any point within the waiting period, but typically 10-15 days after filing.
- Online comment portal. The FTC launched an online portal where industry participants (e.g., customers, competitors, suppliers) and the public can submit comments anonymously and confidentially on proposed transactions – whether or not reportable under the HSR Act.
Authored by Robert Baldwin and Ashley Howlett.
Practical Implications & Next Steps
- Budget additional time and cost to prepare HSR filings. The FTC estimated that filers would spend an additional 68 hours preparing the new forms, with an average low of 10 additional hours for certain limited types of filings by acquired persons and an average high of 121 additional hours for filings by acquiring persons in transactions where the parties overlap. While most filings typically take about 1-2 weeks for a company and their counsel to prepare, parties should allow 4-6 weeks to prepare filings with the new forms.
- Account for additional preparation time in transaction agreements. Transaction agreements typically include a timing provision requiring the submission of HSR within a certain number of business days from signing– 10 business days was the most common. Going forward, parties may want to revise a business day requirement to “as soon as reasonably practicable” or similar language – comparable to what is used with respect to timing for the submission of foreign antitrust filings – at least until counsel can better estimate the time it will take for a company to complete the form. Some companies that prepared filings well in advance of signing or have already submitted a filing under the new rule have reverted back to 5-15 business days from signing.
- Provide guidance on document creation. Since the forms now require the submission of certain ordinary course documents along with a broader set of transaction-related documents, parties should consider providing document creation guidelines and/or training for those employees most likely to create responsive documents. These documents can provide key insights into how parties view the transaction and its potential impact on the competitive landscape and are critical to the agencies’ review of a deal. Parties should ensure their documents are consistent with the transaction rationale and overlap descriptions disclosed in the form.
- Develop substantive risk assessment and advocacy strategy early on. Parties should take into account their advocacy strategy when drafting the transaction rationale(s) and descriptions of overlaps and supply relationships between the parties. These new sections provide parties with an opportunity to frame the transaction and its potential impact on competition. Parties should involve counsel as early as possible in transactions that involve product or service overlaps to ensure these considerations taken into account. And since more information and documents are being provided to the agencies upfront, parties should be aware of the risk of an inquiry well in advance of submission.
Establish processes for maintaining or quickly gathering necessary information. Many filings require information on organizational structure, board membership, minority investor ownership, customers and supplier relationships, geographic data on where companies derive revenues, information on defense and intelligence contracts, product pipelines, and many other categories. Parties should identify the appropriate contacts who will be responsible for gathering responsive information, documents, and data when filings are required. Frequent filers may want to implement processes to track some of these items in the ordinary course.
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