Davis Polk partner Jesse Solomon was quoted in IFLR discussing the revisions to the Hart-Scott-Rodino (HSR) Act’s pre-merger notification rules.

The article notes that while the final rule is onerous, it is not as tough as it could have been. “This was a meaningful retrenchment on what was in the draft rule,” Jesse said. “Despite the extra burden, cost and time it will take to comply, the draft rule was far more extreme in scope and burden.”

However, it will take some time to see the effect of the final rule. “Some elements of the form are ambiguous and may pose questions about how to implement, such as the new requirement to produce documents from supervisory deal team leads,” he said. “Judgment calls will need to be made. We don’t know yet, and won’t for some time, how this form will be implemented.”

He added that while the new form could produce more streamlined and efficient pre-merger reviews, it could also lead to further FTC action. “It is also possible that more documents and data supplied upfront could generate more agency activity upfront and lead to longer, more complex reviews on more deals which could then prompt requests for increased agency budgets,” Jesse said.

Noting that the final rule received a unanimous vote, Jesse noted, “Clearly some compromises were made to get to a bipartisan 5-0 vote, which may have been to reduce the risk of litigation challenge.”

Jesse noted that the new form changes the U.S. approach of so-called backloading requests for information in this area, compared to other parts of the world. “Many other jurisdictions, such as the European Union and Brazil, require more information upfront,” he said. “The US has historically backloaded information. The new HSR form is tantamount to a transatlantic journey east, though not the full way to Europe.”

“New requirements for US pre-merger information will increase burden on clients,” IFLR (November 22, 2024) (subscription required)

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