FTC and DOJ Antitrust Division weigh premerger protocol changes

With Assistant Attorney General of the Antitrust Division of the U.S. Department of Justice concurrence, the Federal Trade Commission is proposing changes to the premerger notification form and associated instructions, as well as the premerger notification rules implementing the Hart-Scott-Rodino Act. That law and its implementing rules require the parties to certain mergers and acquisitions to submit premerger notification to the FTC and the DOJ Antitrust Division, which involves completing HSR Forms and waiting a specified period before consummating their transaction.

Proposed HSR Form and instructions changes would enable the agencies to more effectively and efficiently screen transactions for potential competition issues within the initial waiting period, typically 30 days. The initial competition review is critical for the agencies to identify transactions that require an in-depth investigation, FTC contends. During an in-depth investigation, the agencies determine whether the proposed transaction would violate antitrust laws and, if so, to seek to block the proposed transaction. Among key proposals, merger parties would be required to provide or disclose:

  • Details about transaction rationale and surrounding investment vehicles or corporate relationships;
  • Information related to products or services in both horizontal products and services, and non-horizontal business relationships such as supply agreements; 
  • Projected revenue streams, transactional analyses and internal documents describing market conditions, and structure of entities involved such as private equity investments;
  • Details regarding previous acquisitions; and,
  • Information that screens for labor market issues by classifying employees based on current Standard Occupational Classification system categories.

The proposed changes also address Congressional concerns that subsidies from foreign entities of concern can distort the competitive process or otherwise change the business strategies of a subsidized firm in ways that undermine competition following an acquisition. Under the Merger Filing Fee Modernization Act of 2022, the agencies are required to collect information on subsidies received from certain foreign governments or entities that are strategic or economic threats to the United States. The FTC will proceed with implementing the proposed rule changes pending feedback from a public comment period concluding this month. The Commission vote to publish for public comment the Notice of Proposed Rulemaking containing proposed amendments to the HSR Rules was 3-0. 

To help create and promote business ownership by America’s workers, the U.S. Department of Labor has launched the Employee Ownership Initiative within its Employee Benefits Security Administration. As part of the Worker Ownership, Readiness, and Knowledge Act (WORK) in the SECURE 2.0 Act of 2022, EBSA will implement a new program to empower workers through ownership arrangements and educate those workers on possible pathways to greater rewards in return for their labor. It includes creation of the Division of Employee Ownership in EBSA’s Office of Outreach, Education and Assistance. The division will support the creation and expansion of worker-owned businesses by:

  • Supporting existing programs designed to promote employee ownership and facilitating the formation of new programs;
  • Developing a clearinghouse of techniques applied by new and existing state programs and sharing information about these techniques with states;
  • Providing education, outreach, and training to inform employees and employers about the possibilities and benefits of worker ownership and business ownership succession planning; and,
  • Providing technical assistance for employee’s efforts to become business owners and helping employers explore the feasibility of transferring full or partial ownership to employees.

“By launching this initiative, the Employee Benefits Security Administration is working to empower the workers who fuel their employers’ ability to be successful day in, day out, while educating employers about how worker ownership can be good for business,” observes Assistant Secretary for Employee Benefits Security Lisa Gomez. In the coming months, she adds, EBSA will hold stakeholder meetings to gain important feedback on how to best achieve the initiative’s goals and carry out the division’s activities. Separately, EBSA will also issue formal guidance on valuation of employer stock in employee stock ownership plans as required by the WORK Act.