Slight Resurgence? A Hart-Scott-Rodino Act Transaction Update (May FY 2023)

Editor’s Note: The Hart Scott Rodino Act (HSR Act) is a federal law that requires companies planning to merge or acquire certain assets or voting securities to notify the Federal Trade Commission (FTC) and the Department of Justice (DOJ) before completing the transaction. The HSR Act establishes the FTC and DOJ Premerger Notification Program, which is designed to allow the agencies to review the proposed transaction for potential antitrust concerns.

Under the HSR Act, companies are required to file a notification with the FTC and DOJ and to provide certain information about the transaction, including details about the companies involved, the assets or voting securities being acquired, and any overlap between products or services. The agencies will then review the notification and may request additional information or documents to help them assess the potential competitive effects of the transaction. If the agencies determine that the transaction may harm competition, they may challenge it in court or require the parties to take steps to address the concerns before the transaction can be completed.

The HSR Act applies to a wide range of transactions, including mergers, acquisitions, and certain types of asset purchases and stock purchases. Certain thresholds must be met for the HSR Act to apply, such as the size of the companies involved and the value of the assets or voting securities acquired. The HSR Act also applies to transactions involving foreign companies if the companies meet the thresholds and the transaction has a sufficient connection to the United States.

For cybersecurity, information governance, and legal discovery professionals operating in the eDiscovery ecosystem, monitoring the monthly transaction reporting numbers published as part of the FTC and DOJ Premerger Notification Program can provide valuable insight into the potential impact of merger or acquisition activities and pulse rates on their respective areas of expertise.

Background Note: Throughout Fiscal Year 2023, Hart Scott Rodino Act (HSR Act) monthly transaction rates have shown significant fluctuations. The year started off with 181 reported transactions in October. This number spiked considerably in November, hitting a peak of 243 transactions. However, the transaction rates saw a downturn in December, with only 148 transactions reported. This trend carried over into January 2023, which recorded 153 transactions. A slight uptick was seen in February, with 159 transactions being reported. Nevertheless, the volume of transactions plunged to its lowest points in March and April, with only 122 and 120 transactions, respectively, recorded in those months.

The trend, however, experienced a shift in May, with a significant increase in transactions. The Bureau of Competition’s Premerger Notification Office (PNO) reported 144 HSR Act transactions for May 2023. Despite this increase from the previous two months, the figure is still markedly lower compared to the past two years – 226 transactions in May 2022 (FY 2022) and 326 transactions in May 2021 (FY 2021). The fluctuating transaction rates across these months, along with the general decline in May transactions when compared to the previous fiscal years, continue to emphasize the dynamic nature of the current market environment.

Industry Update

A Hart-Scott-Rodino Act Transaction Update (May FY 2023)

Federal Trade Commission

Taken from the latest published Hart-Scott-Rodino (HSR) Premerger Notification monthly transactions as shared by the Federal Trade Commission (FTC) and augmented by released annual reports, the following transaction information and corresponding charts may be useful for law firms, legal departments, and legal service providers seeking to understand the real-time pulse rate of Hart-Scott-Rodino Act mandated transaction reviews. As these reviews may lead to Second Requests, the charts may also be useful as a baseline for considering provider assertions regarding the depth, breadth, and volume of their Second Request support for this unique type of eDiscovery during specific time frames.

Comparing the Operations Tempo for HSR Act Transactions: Informational Charts

Provided for context and comparison are charts that share HSR Act-related metrics for monthly filings based on real-time reporting in fiscal years (FY) 2023 and 2022, and annual reporting in 2010 – 2021.

Chart 1: Monthly HSR Act Transactions Reported in the Fiscal Year 2023 (October-September)*

Chart 2: HSR Act Annual Transactions Reported in Fiscal Years 2000 – 2023*/**

Comparing the Operations Tempo for HSR Act Reported Second Requests: Informational Charts

Background Note: HSR Act Reported Second Requests are reported as part of Annual HSR Transaction Reports and not noted in the monthly running reports. The latest published annual report is for FY 2021.

Chart 3: HSR Act Merger Transaction Candidates for Second Requests in Fiscal Years 2000 – 2021**

Chart 4: HSR Act Reported Second Requests in Fiscal Years 2000 – 2021**

Chart 5: HSR Act Reported Second Requests by the FTC in Fiscal Years 2000 – 2021)**

Chart 6: HSR Act Reported Second Requests by the DOJ in Fiscal Years 2000 – 2021**

Chart 7: Percentage of Transactions Resulting in HSR Act Report Second Requests in Fiscal Years 2000 – 2021**

*Monthly Real-Time Reporting First Report is October 2019 (Monthly Running Report)
**Based on Annual Reporting as Represented in Final Annual HSR Transaction Reports.

Complete Presentation: Market Kinetics – HSR Transactions and Second Requests Overview – May FY 2023 (PDF) – Mouseover to Scroll

Assisted by GAI and LLM Technologies

Additional Reading

• HSR Act Reporting: A ComplexDiscovery Chronology
• FTC Annual Competition Reports (Hart-Scott-Rodino Act Reports)

Source: ComplexDiscovery