The Federal Trade Commission released finalized changes to its premerger notification form and associated instructions, as well as the revisions to the premerger notification rules implementing the Hart-Scott-Rodino Antitrust Improvements Act of 1976, on Thursday.
The revisions, which represent the first major changes to HSR in almost 50 years, have been in the works for more than a year. The final rule will be effective 90 days after it is published in the Federal Register. A PDF of the final rule is available now.
The changes will mean more HSR filings from senior living and care owners seeking mergers.
“This is going to be a key change … for larger transactions that require HSR. Anything that requires that is going to be much more expensive to do, take a lot more time to do,” attorney Luke Smith of Bass, Berry & Sims told the McKnight’s Business Daily on Tuesday. “I think it’s going to introduce expenses and deal uncertainty. It just makes more uncertainty in the closing, which I think deters deals probably on the margins.”
Smith is an expert in complex litigation and antitrust compliance. He provides antitrust counseling and analysis in proposed mergers and acquisitions, including HSR premerger filing notifications.
He said that the premerger changes might lead to investigations into antitrust issues that previously would not have occurred.
“I think there’s probably more antitrust risk for deals, even very small deals that don’t require HSR, because in the new form, we’ll require you to disclose small deals that didn’t have to be run before the agencies,” Smith said.
But smaller deals that previously were exempt from HSR also will need to be disclosed, he said, and those disclosures could lead to lawsuits.
“I think that’s something else that’s going to be a new wrinkle that is going to be pretty important for these spaces,” Smith said.
Although minor changes to the premerger notification form have been made over the years, he said that the final rule “is changing nearly every aspect of the form.”
The new form will require much more documentation than in the past, Smith said, adding that the officer or director of a company will have to certify, under a penalty for perjury, that all information is included on the form.
“That has always been the case, but now there’s a lot more that they have to certify to, because before it was a fairly limited amount. I think there’s a lot more exposure to these individuals personally,” Smith said. “They’re signing off that a whole lot more information is accurate to the best of their knowledge. That, to me, is a lot scarier when it’s a really gigantic amount of information that they’re going to have to really be relying on their lawyers to get right.”
Shaoul Sussman, associate director for litigation of the FTC’s Bureau of Competition, noted the importance of premerger reviews.
“This rulemaking is a much-needed update to address changes in the marketplace that have undermined the agencies’ ability to detect and prevent illegal mergers, while at the same time creating a more efficient review process,” he said.
