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JUNE
**28, 2023**
Dayen on TAP
Big Changes to a Little Form
The antitrust agencies propose that companies actually give them the
information they need to decide whether their mergers are legal.
You might think that something as simple as changes to a government form
would not inspire much interest from journalists, or really anybody. But
the Federal Trade Commission and the Justice Department's
modifications
<[link removed]>
to the form companies fill out to give the government notice of proposed
mergers are actually pretty profound, and show how the process of
regulators can be as critical as the policy.
The premerger notification form is mandated under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976. Every merger above a certain dollar
threshold, currently set at $111.4 million, must be disclosed to the
antitrust agencies. But the form required only a modicum of information
from the companies, thereby forcing the agencies to collect more data to
determine whether or not to challenge the merger.
Per the proposed changes to the form, which will have to go through a
public comment process, companies will have to offer a rationale for why
they are merging. They will have to disclose what investment vehicles
will be used in the transaction, including private equity investments.
They will have to explain what products and business lines the two
companies share in common, and what other business relationships, like
suppliers, would be consolidated in a merger. They will have to hand
over internal documents that project the merged firm's market
conditions and potential revenue streams. They will have to give an
analysis of the relevant labor market, and a rundown of research and
development activity. The acquiring company will have to disclose
previous acquisitions. And per congressional mandate, they will have to
provide information on subsidies received from certain foreign entities.
These are all pieces of data that the antitrust agencies previously had
to collect themselves, but which the companies already had in their
hands. By requiring that data to be provided in the premerger form, the
antitrust agencies can spend less time running down basic facts and
unwinding a complex deal, and more time analyzing whether or not it's
legal.
The agencies only have roughly 30 days in the initial waiting period
after the form is submitted to decide whether a merger merits a deeper
investigation. This new form would massively shrink the amount of time
the agencies spend on data collection before making that determination.
It also would put the companies on the record about their merger in a
way that may prove so damning that they won't even bother. This is the
kind of information that companies don't like to disclose on a
voluntary basis.
This is the first review of the merger notification form in 45 years. In
1976, Congress estimated that Hart-Scott-Rodino would force advance
notice for roughly 150 mergers a year; today, there are typically more
than 150 mergers over the HSR threshold each
**month**. "This proposal is designed to ensure that we can efficiently
and effectively discharge our statutory obligations and faithfully
execute on the mandate that Congress has given us," said FTC chair Lina
Khan in a statement
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joined by the other two Democratic commissioners.
Little things like this are not the stuff of headlines. Making
government more able simply through getting the information needed to
make decisions isn't usually promoted on a campaign bumper sticker.
But you can't make policy on what you can't measure. This is a quiet
revolution for the antitrust agencies that will help them do their job
better.
~ DAVID DAYEN
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