The wait for the final version of the revised Hart-Scott-Rodino (HSR) Filing Requirements is drawing to an end. At the ABA Antitrust Spring Meeting in Washington last week, Andrew Forman, a deputy assistant attorney general in the Department of Justice’s Antitrust Division, stated that the new rules will be issued in “weeks, as opposed to months.” He also noted that the Federal Trade Commission is leading the charge in formulating the new rules.
On June 28, 2023, the FTC and DOJ released a Notice of Proposed Rulemaking that contained significant changes to the premerger filing requirements under the HSR Act (FTC release “FTC and DOJ Propose Changes to HSR Form for More Effective, Efficient Merger Review” (June 27, 2023)). These proposed rule changes were the first comprehensive review of the HSR requirements in over forty years and reflected the view of the Agencies that the information that was currently required to be submitted with HSR filings was insufficient to “conduct an effective and efficient initial evaluation of a transaction’s likely competitive impact…”
The proposed rules generated significant commentary, both positive and negative. Some detractors referred to this new regime as creating a “mini Second Request.” While Deputy Attorney General Forman noted that the final version of the new HSR rules would be less burdensome than the proposed version, he stated that there would be “many changes in the final HSR rule.” Many in the antitrust bar continue to express concern over what the regulators will consider less burdensome given the breadth of comments received.
However the final rules are formulated, it is expected that they will require additional work from forensics, data, analytics, and review teams to handle the following types of disclosures:
- Providing draft versions of all responsive 4(c) and 4(d) documents, which would necessitate review and analysis to assure that all early drafts are identified. These early drafts are also likely to introduce attorney-client privileged data that reflect legal guidance throughout the deal negotiation and due diligence process.
- Expanding the definition of 4(c) and 4(d) documents to include certain ordinary course of business documents that would require a careful review to assess any potential antitrust implications. This could require more expansive data collections and broader custodian lists increasing the upfront burden of data identification and collections.
- Submitting verbatim translations of any responsive foreign-language 4(c) and 4(d) documents. The current context for this process is only from within Second Request ESI protocols, but those instances require robust production tracking and specific endorsements.
- Producing all transaction-related agreements (such as key employee retention agreements, transition services agreements, and future supply agreements), including any side letters, schedules, and exhibits, and certain non-transaction agreements between the parties.
- Expanding the production requirements beyond officers and directors to include “deal team leads.” To date there has been no clarity to how many levels in the organization a deal team lead may be, thus requiring more discussions around custodian identification. That process may expand the document collection for potentially responsive data.
- Increasing focus on providing documents that provide information related to Officers, Directors, and board observers.” This additional language will further expand the 2023 updates of filing thresholds and the focus on interlocking directorates.
The proposed rules also contain expanded provisions affecting a party’s document retention compliance and certification requirements, as well as the need to identify all communication and messaging tools that store information relating to the party’s business operations.
Epiq will continue to follow these developments closely to form our recommendations on handling the forensic, data and analysis components of the final rules in a strategic and cost-effective manner.
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