Editor’s Note: Taken from Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice (DOJ) reports and data sets, the numbers represented in the following charts highlight metrics that may be useful for law firms, legal departments, and legal services providers seeking to understand the annual pulse rate of Hart-Scott-Rodino Act mandated merger transaction reviews and Second Requests. The charts may also be useful for considering the claims of eDiscovery providers regarding their expertise and experience in supporting Second Requests.
Given the relatively small number of Second Request opportunities when compared to the traditional opportunities for eDiscovery in support of audits, investigations, and litigation, claims of expertise and experience in this unique type of discovery may be difficult to assess without the context of the actual numbers of Second Requests made annually by the FTC and DOJ. Many providers may claim experience in conducting the tasks required in Second Requests. However, a significantly fewer number of providers may actually have experience in conducting those tasks as part of an actual Second Request case or matter.
The Requirement for Second Requests: The HSR Act
The Hart-Scott-Rodino Antitrust Improvements Act of 1976 was adopted to help the federal government avoid anti-competitive outcomes during the course of mergers and acquisitions. The HSR Act requires parties to mergers or acquisitions of certain sizes to notify the Federal Trade Commission (FTC) or the Antitrust Division of the Department of Justice (DOJ) and to provide information and documentation regarding the proposed transaction. Upon review of submitted information and documentation, the FTC or DOJ may make additional requests, known as Second Requests, before rendering a decision on the proposed transaction. Normally requiring a response within 30 days, most Second Requests result in a settlement, litigation to block the transaction or abandonment of the transaction by involved parties.
Provided for context and comparison purposes are six information charts that share HSR Act related metrics ranging from transactions reported to percentages and numbers of transactions warranting Second Requests.
The Prevalence of Second Requests: Six Informational Charts
Chart 1: HSR Act Merger Transactions Reported1-HSR-Act Merger-Transactions-Reported-2010-2018
Chart 2: HSR Merger Transaction Candidates for Second Requests (Adjusted Transactions)2-HSR-Act-Merger-Transaction-Candidates-for-Second-Requests-2010-2018
These figures are different than the number of transactions reported as they omit all transactions for which the agencies were not authorized to request additional information.
Chart 3: Percentage of Transactions Resulting in HSR Act Second Requests3-Percentage-of-Transactions-Resulting-in-HSR-Act-Second-Requests-2010-2018
These figures are a percentage of the total number of adjusted transactions.
Chart 4: Number of HSR Act Second Requests (Combined FTC and DOJ)4-Number-of-HSR-Act-Second-Requests -2010-2018
Chart 5: Number of HSR Act Second Requests – FTC5-Number-of-HSR-Act-Second-Requests-FTC-2010-2018
Chart 6: Number of HSR Act Second Requests – DOJ6-Number-of-HSR-Act-Second-Requests-DOJ-2010-2018
(1) Federal Trade Commission and the Antitrust Division of the Department of Justice (2019). Hart-Scott-Rodino Annual Report Fiscal Year 2018. [online] Federal Trade Commission. Available at: https://www.ftc.gov/system/files/documents/reports/federal-trade-commission-bureau-competition-department-justice-antitrust-division-hart-scott-rodino/fy18hsrreport.pdf [Accessed 22 Feb. 2020].
(2) Federal Trade Commission (2019). HSR Transactions Filings and Second Requests by Fiscal Year (CSV). [online] Federal Trade Commission. Available at: https://www.ftc.gov/site-information/open-government/data-sets [Accessed 22 Feb. 2020].
(3) Federal Trade Commission (2019). Model Request for Additional Information and Documentary Material (Second Request). [online] FTC Premerger Notification Office. Available at: https://www.ftc.gov/system/files/attachments/merger-review/may2019_model_second_request_final.pdf [Accessed 22 Feb. 2020].
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