Say Again? The HSR Act and the Premerger Notification Program

While the percentage of transactions in which a Second Request was issued by either the FTC or DOJ was only 2.7% in 2015, 3.0% in 2016, and 2.6% in 2017, organizations engaged in merger and acquisition activities, either directly from a participatory position or indirectly from a supporting position, should proactively prepare to support the potential for a Second Request given the short deadlines and potential voluminous information requests that may require extensive use of data discovery and electronic discovery technologies and experts to ensure compliance with requests.

Commonly referred to as the HSR Act, the Hart-Scott-Rodino Antitrust Improvements Act of 1976 was adopted as a way to provide the federal government with a formal process in which to help avoid anti-competitive outcomes during the course of mergers and acquisitions. The HSR Act requires that before consummating a proposed acquisition, the parties to the merger or acquisition notify the Federal Trade Commission (FTC) and the Department of Justice (DOJ) and wait a specific period of time while the agencies review the proposed transaction. The review process is administered and managed as part of the Federal Premerger Notification Program with the goal of avoiding some the difficulties and expenses that the enforcement agencies may encounter if potential impediments to competitive relevant markets are identified.

The Federal Premerger Notification Program

The Premerger Notification Program provides the FTC and the DOJ with information about large mergers and acquisitions before they occur. The program is administered by the FTC and supported by the Premerger Notification Office. Under the program parties to certain proposed transactions must submit a premerger notification to the FTC and DOJ. Premerger notification involves completing and filing an HSR Form, also called a “Notification and Report Form for Certain Mergers and Acquisitions,” with information about each company’s business. After filing the HSR Form, parties typically must wait 30 days (15 days in the case of a cash tender offer or bankruptcy sale) while the FTC and DOJ complete their review of the proposed transaction. The parties may not close their deal until the waiting period has passed or the government has granted early termination of the waiting period. However, if either the FTC or DOJ determines that further inquiry is necessary, they may request additional information and documentary materials. This further inquiry is commonly referred to as a Second Request.

The Second Request Process

A Second Request is a discovery procedure used by the FTC and DOJ to investigate mergers and acquisitions that warrant further investigation regarding the potential impact on competitive relevant markets. The Second Request consists of the formal request for additional information and documentary material and generally follows the framework highlighted in the Model Request for Additional Documentary Material (Second Request), published by the FTC Premerger Notification Office.

Model Request for Additional Information and Documentary Material – May 2019

A Second Request extends the waiting period for a specified time frame, typically 30 days (10 days in the case of a cash tender offer or bankruptcy sale), after required parties have complied with the additional request for information. The additional time provides the reviewing agency with the opportunity to analyze the additionally requested information and take appropriate action if required before the transaction is consummated. If the reviewing agency believes that a proposed transaction may violate the antitrust laws, it may seek an injunction in federal district court to prohibit consummation of the transaction. Once Second Requests are made, a staff attorney from the evaluating agency is usually assigned to manage the request and those parties involved in the Second Request can expect to hear directly from the agency requesting the information on the status of the investigation.

The Bureau of Competition Production Guide

Designed as an eDiscovery resource to help explain what the FTC Bureau of Competition generally requires when they send a formal request for additional information, the BC Production Guide shares suggested formats that both help to organize submissions and minimize the chance of incompatibility with processes and systems.

Bureau of Competition Production Guide - August 2015

Small Percentages. Short Timelines. Proactive Planning.

While the percentage of transactions in which a Second Request was issued by either the FTC or DOJ was only 2.7% in 2015, 3.0% in 2016, and 2.6% in 2017, organizations engaged in merger and acquisition activities, either directly from a participatory position or indirectly from a supporting position, should proactively prepare to support the potential for a Second Request given the short deadlines and potential voluminous information requests that may require extensive use of data discovery and electronic discovery technologies and experts to ensure compliance with requests.

Additional Reading

Source: ComplexDiscovery

Interested in Contributing?

ComplexDiscovery regularly reports on key cyber, data, and legal discovery business spheres of interest ranging from market size and mergers to business confidence and vendor developments.

We do not offer ads on the website but like to support our work with voluntary contributions from those who enjoy and benefit from the research, news, and articles shared. Your support is greatly appreciated and will be directly used to support our publishing efforts for our dynamic community of cyber, data, and legal discovery professionals.

Have a Request?

If you have information or offering requests that you would like to ask us about, please let us know and we will make our response to you a priority.

ComplexDiscovery is an online publication that highlights cyber, data and legal discovery insight and intelligence ranging from original research to aggregated news for use by business, information technology, and legal professionals. The highly targeted publication seeks to increase the collective understanding of readers regarding cyber, data and legal discovery information and issues and to provide an objective resource for considering trends, technologies, and services related to electronically stored information.

ComplexDiscovery OÜ is a technology marketing firm providing strategic planning and tactical execution expertise in support of cyber, data and legal discovery organizations. Registered as a private limited company in the European Union country of Estonia, one of the most digitally advanced countries in the world, ComplexDiscovery OÜ operates virtually worldwide to deliver marketing consulting and services.

Embracing Differences? Interplay of Digital Forensics in eDiscovery
Incidental Growth? Cost of a Data Breach Hits Record High According to New Report
Keeping Cyber Threats At Bay? Cyber Insurance Start Up At-Bay Closes Series D Financing
An Economical Impact? How Cyber Insurance Shapes Incident Response
Cobra Legal Solutions Acquires Digital Discovery

According to Candice Corby, Chief Executive Officer for Cobra Legal Solutions,...

TransPerfect and Semantix Merge

According to TransPerfect President and CEO Phil Shawe, “We have competed...

Braintrace Acquired by Sophos

According to Bret Laughlin, CEO and co-founder of Braintrace, “NDR is...

DISCO Announces IPO Pricing

A registration statement relating to the initial public offering by DISCO...

A New Era in eDiscovery? Framing Market Growth Through the Lens of Six Eras

There are many excellent resources for considering chronological and historiographical approaches...

An eDiscovery Market Size Mashup: 2020-2025 Worldwide Software and Services Overview

While the Compound Annual Growth Rate (CAGR) for worldwide eDiscovery software...

Resetting the Baseline? eDiscovery Market Size Adjustments for 2020

An unanticipated pandemeconomic-driven retraction in eDiscovery spending during 2020 has resulted...

Home or Away? New eDiscovery Collection Market Sizing and Pricing Considerations

One of the key home (onsite) or away (remote) decisions that...

Five Great Reads on Cyber, Data, and Legal Discovery for July 2021

From considerations for cyber insurance and malware to eDiscovery business confidence...

Five Great Reads on eDiscovery for June 2021

From remediating cyberattacks to eDiscovery pricing, the June 2021 edition of...

Five Great Reads on eDiscovery for May 2021

From cyber discovery and data breaches to business of law and...

Five Great Reads on eDiscovery for April 2021

From X-Road® and risk management to business confidence and cybersecurity, the...

Glowing Expectations? Eighteen Observations on eDiscovery Business Confidence in the Summer of 2021

In the summer of 2021, 63.3% of survey respondents felt that...

Issues Impacting eDiscovery Business Performance: A Summer 2021 Overview

In the summer of 2021, 24.4% of respondents viewed increasing types...

Looking Up? eDiscovery Operational Metrics in the Summer of 2021

In the summer of 2021, 80 eDiscovery Business Confidence Survey participants...

Extreme Heat? Summer 2021 eDiscovery Business Confidence Survey Results

Since January 2016, 2,522 individual responses to twenty-three quarterly eDiscovery Business...