A General Counsel’s Guide to the New HSR Rules

The new rules expand the information and documents to be submitted (including the custodians to be searched) for all transactions. In addition, for transactions with actual or potential horizontal overlaps or vertical supply relationships, the new rules require parties to submit substantially more data and information with their initial HSR filing. Because these increased obligations are triggered even by minimal overlaps (globally, not just in the United States), it is likely that the new rules will substantially increase compliance burdens for many transactions.

The final rule is scheduled to take effect on February 10, 2025, absent court intervention, or intervention by the incoming administration. President-elect Trump’s recent announcement that he intends to name Commissioner Ferguson as the new FTC Chair—an act that does not require Senate confirmation—and to nominate Mark Meador, a known quantity inside Republican antitrust circles, to the seat currently held by Democratic Chair Lina Khan, likely will give Republicans 3-2 control of the Commission in early 2025 and the ability to interpret or make adjustments to the new rules, should they so choose.

Once the final rule is effective, the FTC and Department of Justice (DOJ) will resume their prior practice of granting “early termination” of the HSR waiting period for certain transactions that do not raise competitive concerns, which should provide more timing certainty for transactions that are unlikely to raise such issues and need to close on an expedited basis.

Seven Things Every General Counsel Should Know About the New HSR Rules
The most important changes that should be top of mind for general counsels relate to the following:

• Parties must self-identify competitive overlaps in their businesses and whether they participate in the same supply chains.
• If any competitive overlaps are identified, parties must produce non-transaction related documents provided to the CEO and the board of directors, within the year prior to filing, that discuss competitive issues, as well as produce sales/purchase data, and identify customers/suppliers for the most recent year.
• The final rule dropped the required production of responsive draft Competition Documents (i.e., what are now Item 4(c) documents); however, the FTC will amend its longstanding “draft document” guidance to now require the production of all documents containing responsive content, including drafts, once they are given to the board of directors or to any single director (Previously, producing draft documents containing responsive content was only required if they were the most recent version, or they were provided to the entire board.) For companies in which officers (particularly CEOs) are also directors and heavily involved in transaction diligence and negotiations, this will significantly increase the universe of produced documents and the burden on filing parties.^[1]
• Parties must state a rationale for the transaction and would be wise to anticipate this requirement in preparing deal-related press releases and other public announcements.
• Parties must identify a “supervisory deal team lead” from whom transaction-related competition documents (i.e., Item 4(c) documents) must be produced, in addition to officers and directors who have always been custodians of these documents.
• The transaction agreement, including all exhibits, schedules, side letters, and agreements not to compete or solicit, must be produced. Previously, exhibits were not typically included with HSR filings unless they included non-competes.
• Customers, competitors, and other interested parties can now more easily submit comments about proposed transactions through the FTC’s new website, “Comment on a Proposed Merger,” necessitating proactive outreach strategies even earlier in the deal process to mitigate any misunderstandings or concerns held by potential commenters.

Details of the major features of the revised HSR requirements are set forth below and also in  a convenient table-formatted PDF linked here, with notations for obligations that only apply to transactions with identified overlaps, whether they are competitive overlaps (horizontal) or supply relationships (vertical). As the FTC’s Premerger Notification Office releases further guidance in the coming months, these requirements may evolve.

Additionally, once filings are submitted pursuant to the new requirements, companies and law firms should anticipate fielding questions from the FTC and DOJ to clarify and supplement filings. Responding to such questions should be done with care to avoid the agencies “bouncing” filings for failing to comply with evolving interpretations of the new rules. Such responses will be of particular import to repeat filers, since such responses will likely form the basis of the agencies’ filing expectations going forward.

Description of Actual and Potential Competition
(Horizontal Overlaps) 

Written descriptions from each party of their “principal categories of products and services,” as well as those products and/or services that compete with the other party’s offerings, in the United States or abroad. The descriptions must include potential competition from each party—both products or services that “could compete with” the products or services of another party, as well as “known planned” products or services from either party that could or would be in competition. According to the new HSR forms, “[t]he acquiring and acquired person should not exchange information for the purpose of answering this item.” While the FTC has stated that these descriptions should be “brief” and exclude legal argument, parties should engage counsel to carefully consider these descriptions to avoid prejudicing themselves during a more extensive Second Request investigation, as well as for future filings. 

Sales Data, Customer Descriptions, and Lists
(Horizontal Overlaps)

For each identified overlapping product/service, the party must: (1) produce sales data (in dollars) for the most recent year;  (2) describe “all categories of customers” that “purchase or use” the product/service; and  (3) list the top 10 overall customers for the most recent year, as well as the top 10 customers for each customer category.

Supply Relationships
(Vertical Supply Relationships)

Describe any vertical supply relationships where a party is in the same supply chain as the other party to the transaction, such as upstream purchases and downstream sales of products, services, or assets (including data). This includes sales/purchases directly between the parties, as well as sales/purchases with a third party that competes with the other party.  Under the new HSR rules, “[t]he acquiring and acquired person should not exchange information for the purpose of answering this item.” 

Sales/Purchase Data, Customer and Supplier Lists
(Vertical Supply Relationships)

For each identified vertical supply relationship, the party must:  (1) produce sales/purchase data for the most recent year;  (2) list the top 10 customers/suppliers; and  (3) describe the party’s terms of purchase/supply with each of them. 

Officers and Directors
(Horizontal Overlaps or Vertical Supply Relationships)

Buyer only: For all entities within the acquiring person that are part of either identified horizontal overlapping products or services or identified vertical supply relationships, a list of current and recent officers and directors must be provided, if the officers or directors are also officers or directors of another entity that derives revenue in the same industry as the target. This new requirement is designed to assist the FTC with investigations into potential Clayton Act Section 8 violations for interlocking directorates. 

Transaction Rationale

Describe the strategic rationale for the transaction.  Identify any documents being submitted in response to other items that confirm or discuss the transaction rationale (does not require submission of additional documents). 

Corporate Structure and Minority Ownership

Describe the ownership structure of the acquiring entity, and for funds and master limited partnerships, produce organizational charts that exist in the ordinary course. In addition, identify minority shareholders throughout the ownership structure— from the buyer through the acquiring entity and its subsidiaries—including limited partners holding minority stakes or having the right to the right to serve as, nominate, appoint, veto, or approve board members. Previously, only general partners had to be disclosed. 

Foreign Subsidies

Each filing party must disclose (1) whether it has received any subsidies or subsidy commitments from any foreign entity or government of concern, which currently include China, Iran, North Korea, and Russia, and (2) information about products that are produced in any of those countries. Given that this requirement reaches outside the traditional antitrust ecosystem, additional resources may be required to prepare the HSR filing. 

Competition Documents

Provide all studies, surveys, analyses, and reports prepared by or for any officers, directors, or the supervisory deal team lead for the purpose of evaluating or analyzing the acquisition with respect to market shares, competition, competitors, markets, potential for sales growth, or expansion into product or geographic markets.

This requirement mirrors the types of documents currently required under Item 4(c) but expands the custodians beyond officers and directors to include a supervisory deal team lead. This “lead” individual will be the person “who has primary responsibility for supervising the strategic assessment of the deal, and who would not otherwise qualify as a director or officer.” For ease of document collection, this person should be identified as early in the deal process as possible.

This change only applies to the collection “Competition Documents” and does not impact the collection of documents responsive to former Item 4(d), which include “Confidential Information Memoranda,” “Third Party Documents,” and “Synergies and Efficiencies Documents.”

Regularly Prepared CEO Reports on Overlapping Competition
(Horizontal Overlaps)

Provide all regularly prepared plans and reports that were provided to the CEO, within one year of filing, that analyze market shares, competition, competitors, or markets pertaining to any identified horizontal overlapping products or services. This requirement includes analysis relating to overlapping products or services that each party knows to be under development by the other party. Parties do not need to submit recurring documents that are prepared more frequently than on a quarterly basis (i.e., do not provide weekly or monthly reports), and one-time or special reports are not required to be submitted.

Board Reports on Overlapping Competition
(Horizontal Overlaps)

Provide all plans and reports that were provided to the board of directors (not just an individual director), within one year of filing, that analyze market shares, competition, competitors, or markets pertaining to any identified horizontal overlapping products or services. This requirement includes analysis relating to overlapping products or services that each party knows to be under development by the other party. Such reports do not need to be regularly prepared; one-time or special reports with responsive content must be submitted.

Transaction-Specific Agreements

Provide the transaction agreement, including all exhibits, schedules, side letters, and agreements not to compete or solicit, excluding clean team agreements. This requirement expands on the existing requirement to submit transaction agreements under Item 3(b). Previously, schedules and exhibits could be excluded unless they contained agreements not to compete, other agreements between the parties, or important deal terms. 

Other Agreements Between Buyer and Target

Buyer only: Buyer must identify the existence of certain types of agreements with the target that are current or had expired within one year of filing. These include non-competition agreements, non-solicitation agreements, leases, licensing, master services agreements, operating agreements, supply agreements, and other agreements that affect the antitrust assessment of the transaction.

Identify only: While these documents are not required to be submitted with the filing, their identification will likely require collection and review of a larger set, and they may be requested during an investigation.

Organizational Chart

Buyer only: If the acquiring person is a fund or master limited partnership, provide a pre-existing organizational chart showing affiliates and associates. New charts do not need to be created.

Transaction Diagram

Buyer only: Provide a pre-existing diagram illustrating the transaction. New diagrams do not need to be created.

Defense or Intelligence Contracts
(Horizontal Overlaps or Vertical Supply Relationships)

Parties must identify bids and awarded contracts for U.S. defense or intelligence contracts valued over $100 million if they will result in revenue, products, or services in either identified horizontal overlapping products or services or identified vertical supply relationships.

Identify only: While these documents are not required to be submitted with the filing, their identification will likely require collection and review of a larger set, and they may be requested during an investigation.

Translation

All non-English text and documents must be translated into English. This additional task must be accounted for in the filing timeline. 

^{[1]Of particular note, the two Republican-appointed Commissioners’ support for the final rule turned, in part, on abandoning the proposal to require production of drafts of responsive Competition Documents (i.e., what are now Item 4(c) documents). Statement of FTC Commissioner Melissa Holyoak, Oct. 10, 2024, at 14 (“The Commission ultimately rejected this [draft document] proposal, which was critical to my vote.”); Concurring Statement of FTC Commissioner Andrew N. Ferguson, Oct. 10, 2024, at 11 (“A Final Rule identical to the NPRM would have been little more than a procedural auxiliary to the majority’s general suspicion of mergers and acquisitions. I would not have voted for it.”). Attention should be paid to whether Commissioners Ferguson and Holyoak pushback on amending the FTC’s informal guidance, which is not bound by the rulemaking process, to uphold the negotiated compromise in the final rules.}