On October 10, 2024, the Federal Trade Commission voted unanimously to issue its much-anticipated revisions to the Hart-Scott-Rodino (HSR) Act premerger notification form and related instructions (the Final Rule). Pending any legal challenges to the Final Rule, the Final Rule will go into effect 90 days following its publication in the Federal Register, which is anticipated in the coming days. For planning purposes, transacting parties should anticipate the Final Rule will take effect in mid-January 2025.

While there are fewer changes being implemented in the Final Rule than as initially proposed, the Final Rule still effects a large number of material changes from current HSR practices. Below is an abbreviated list of the more notable changes proposed in the Final Rule:

• Item 4(c)/4(d) Documents: The Final Rule increases the amount and type of materials originally requested under Items 4(c) and 4(d) of the HSR Form, including a new requirement to produce any materials prepared by or for the “supervisory deal team lead.” The supervisory deal team lead is the individual with “primary responsibility for supervising the strategic assessment of the deal, and who would not otherwise qualify as a director or officer.” Other materials now required to be produced under Items 4(c) and 4(d) of the HSR Form include ordinary-course materials that discuss market share, competition, or products or services, regardless of whether such materials were prepared in connection with the proposed transaction.
• Deal Rationale and Competition Narratives: Parties must now provide a narrative regarding the acquisition rationale for such filer, including providing any documentation that discusses such rationale. Additionally, filers must provide narratives regarding any overlapping products or services and such party’s supply chain relationships (including whether purchases are made from the other filer or any of its or their competitors).
• Prior Acquisitions: The Final Rule expands the requirement to disclose certain prior acquisitions during the 5 years prior to the filing to also apply to the acquired person. The Final Rule also contains commentary regarding serial acquisitions that fall outside of the scope of HSR filing requirements. This seems to indicate that serial acquirers or those pursuing a “roll-up” strategy may face increased scrutiny.
• Organizational Structure: Filers must now provide increased visibility into its organizational structure, including minority interest holder information (which may include upstream minority interest holders who are invested in an entity above the filer).
• Overlap Description: The Final Rule requires narratives regarding the “principal categories of products or services (current and planned) as well as information on whether [the filer] currently competes with the other filing person.”
• Early Termination: After a multi-year hiatus, the Final Rule now resumes the practice of requesting early termination (e., approval in advance of the statutory 30-day waiting period). However, commentary suggests a grant of early termination may be more limited than historical practice.

The FTC anticipates an average of 68 additional hours will be required to prepare an HSR filing (“with an average low of 10 hours for [certain transactions] and an average high of 121 hours for filings from an acquiring person in a transaction with overlaps or supply relationships”).

In light of this, transacting parties should consider the following:

• Be cognizant of the significant amount of additional work now involved in preparing for and making HSR filings. It is important for transacting parties to calibrate expectations for the impacts on cost and, maybe more importantly, timelines.
• Engage HSR counsel as early as possible in the transaction process to (a) evaluate whether an HSR filing is required, (b) begin preparation of the HSR notification form, (c) coordinate gathering HSR transaction materials with the transacting parties, and (d) assess competitive overlaps.
• Accelerate HSR-eligible transactions, if possible, to file under the current rules prior to mid-January 2025 (or consider filing on a letter of intent instead of an executed purchase agreement).
• Know that the FTC is pressing to have “more” to scrutinize. Be aware of the expanded pool of employees, directors, officers, and others (including the supervisory deal team lead) with respect to whom the FTC is now seeking responsive documents and other materials. Also be aware of the increased scope of documents and other materials required to be disclosed in connection with the HSR filing, particularly materials regarding market share, competition, and other related topics, and discuss the need for careful review of such materials.
• Know that the Final Rule includes specific prohibitions on exchanging certain information with the other filer, particularly regarding competition narratives.
• Be cognizant regarding timelines to close and “gun-jumping,” Parties, including the FTC, are working through the new guidance, and the FTC will likely require new or clarifying information in connection with a filer’s materials, which may have the impact of delaying the start of the waiting period.