On August 9, the Federal Trade Commission (the “FTC”) approved by a 4-0 vote the publication of a Federal Register notice concerning proposed amendments to the HSR Rules, 16 C.F.R. Part 803. The proposed amendments would allow parties filing pre-merger documents under the HSR Act to provide Internet links to certain documents in lieu of paper copies for items 4(a) and 4(b) on the notification and report form. The proposed rulemaking also addresses “stale filing” situations, in which parties make premerger filings but then fail to comply with a Request for Additional Information and Documentary Material – commonly known as a second request. The proposed rule is that an acquired person’s notification of the transaction shall expire after 18 months if a second request is still outstanding. The proposed rulemaking was drafted jointly by staff from the Department of Justice’s Antitrust Division (“DOJ”) and the FTC.
On August 16, 2005, the with the concurrence of the Acting U.S. Assistant Attorney General for Antitrust, authorized the release of the Twenty-Seventh Annual Report to Congress Regarding the HSR Premerger Notification Program (the “Report”). The Report summarizes FTC and DOJ actions under the HSR Act in fiscal year 2004. Noteworthy statistics include:
- 1,454 premerger filings were received, up more than 43% from the 1,014 filings received in fiscal year 2003, but still a decrease from the 4,926 filings reported in fiscal year 2000.
- The FTC challenged 15 transactions, leading to 10 consent orders, 1 administrative complaint, 1 litigated case, and 3 abandoned transactions. The FTC also authorized its staff to seek injunctive relief in 1 matter.
- The DOJ challenged 9 merger transactions, leading to 1 litigated case, 5 consent decrees, 2 abandoned transactions, and 1 other transaction that was restructured after the DOJ informed the parties of its antitrust concerns.
- The Commission’s Premerger Notification Office (“PNO”) responded to thousands of telephone calls seeking information concerning the reportability of transactions under the HSR Act and the details involved in completing and filing the Notification and Report Form.
- Second Requests were issued in 35 merger investigations, which was 2.5% of all transactions reported in 2004. This was a decrease from fiscal year 2003.
- Early termination was requested in 85% of the transactions reported and was granted 76% of the time.
- The dollar value of reported transactions rose to about $630 billion.
- The percentage of reported transactions by industry group of acquired entity were: health services: 2.4%; banking/insurance: 18%; consumer goods: 11.5%; energy and natural resources: 3.9%; information technology: 12.4%; transportation: 1.5%; chemicals and pharmaceuticals: 7%; manufacturing: 30.2%; and other: 13.1%.
- The FTC and DOJ continue to monitor compliance with requirements of the HSR Act. In fiscal year 2004, 25 corrective filings for violations were received, and the agencies brought two enforcement actions, resulting in payment of $1.8 million in civil penalties.
The Report also describes the HSR Act and provides a historical overview of how the federal antitrust agencies have implemented the Act since its enactment in the late 1970s. The Report then presents Fiscal Year 2004 developments relating to compliance with the Premerger Notification Rules and Procedures, which details the two enforcement actions resulting in payment of $1.8 million in civil penalties. The next section discussed both the FTC and DOJ’s merger enforcement activities during the year by providing some brief information on each major merger investigated by the agencies. Finally, the report includes a summary of the ongoing reassessment of the effects of the Premerger Notification Program. The appendices provide a summary of transactions for fiscal years 1995-2004 and the number of transactions reported as filings during the same time period. In addition, a statistical table presents data profiling HSR filings and enforcement interest during Fiscal Year 2004.