New HSR Rule: Practical Guidance for Corporate Counsel

1. The new rule does not change who must file HSR or when filings are required.

The new rule changes the information and documents that must be submitted with the HSR filing, but it does not change when a filing must be submitted. Separate from the new rule, the FTC recently announced its annual update to the HSR notification thresholds, which became effective on Feb. 21, 2025. Under the new thresholds:

• If the transaction is valued at $126.4 million or less, no HSR filing is required.
• Transactions valued between $126.4 million and $505.8 million require an HSR filing only if:
  • One party’s ultimate parent entity has either annual net sales or total assets of at least $252.9 million; and
  • The other party’s ultimate parent entity has annual net sales or total assets of at least $25.3 million.
• Transactions valued above $505.8 million require an HSR filing regardless of the size of the parties.

Even if a transaction requires an HSR filing based on these thresholds, it may qualify for an exemption.  The attorneys at Robinson Bradshaw can help you determine whether an HSR filing is required for a transaction.

2. Assembling HSR filings will now require more time and effort.

Even the FTC acknowledges that the new HSR rule will more than double the average time it takes to prepare an HSR filing. And there “is every reason to suspect the [FTC] significantly underestimates the additional time burden,” according to the U.S. Chamber of Commerce in its lawsuit challenging the new rule.

There are three primary reasons for the increased burden. First, filing parties must collect and submit more documents with their HSR filings. Second, companies must articulate their rationale for the transaction, describe their primary lines of business and any competitive overlap with the other party, and provide detailed customer and supplier information. Third, filers must provide more information about their company structure and minority ownership.

Given the increased complexity, parties should begin collecting information and documents necessary for HSR early, so that filing can be made promptly.

3. More documents must be submitted with HSR filings.

Companies have long been required to submit with their HSR filings documents prepared by or for any officer or director 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, and synergies.

Those documents still must be submitted, but the new rule also requires companies to submit qualifying documents if they were prepared by or for a “supervisory deal team lead,” which is defined as the “individual who has primary responsibility for supervising the strategic assessment of the deal, and who would not otherwise qualify as a director or officer.” For many deals, this could expand (perhaps significantly) the documents that must be reviewed and potentially produced in connection with the HSR filing, because deal supervisors may prepare or receive many documents that are not sent to any officer or director.

In addition, parties must submit draft documents that meet the above criteria if the draft went to any member of the board of directors (or similar body for non-corporate entities). Previously, drafts did not need to be submitted unless they were shared with the entire board.

Finally, for transactions involving businesses that compete (or could compete), the new rule requires parties to produce (1) all regularly prepared plans and reports (excluding special reports and reports prepared more frequently than quarterly) concerning the overlapping business that were provided to the CEO of the acquiring entity or any entity that it controls or is controlled by it, and (2) all reports concerning the overlapping business that were provided to the board of directors (even if not regularly prepared).

4. Company documents are more important than ever, given new narrative requirements.

The new rule requires parties to identify and explain each strategic rationale for the transaction considered by the company or its officers, directors, or employees. For deals that pose potential competitive concerns, the parties’ motivation for the transaction can be critical to the agencies’ antitrust assessment.

Importantly, the instructions require filers to identify each document produced with the HSR filing that confirms or discusses the stated rationales. Companies should be aware that agencies may discount, if not disregard entirely, stated rationales that are not corroborated by company documents. And parties will want to explain any documents that contradict the rationale articulated in the HSR filing.

Similarly, the new rule requires each filer to describe all of its principal categories of products and services (not just those involved in the transaction or where there is overlap)  “as reflected in documents created in the ordinary course of business.” Sometimes, agencies and merging parties disagree about the correct characterization of each parties’ business. Here again, the agencies may scrutinize company documents to determine whether the descriptions in the form align with the business documents.

Companies should establish best practices, in consultation with antitrust counsel, for creating transaction-related documents as well as plans and reports with competitive assessments.

5. The new rule demands more detailed information if filing before a definitive agreement.

Under the new rule, it is no longer possible for parties to file HSR on a bare-bones letter of intent without more. Instead, parties that do not have a definitive agreement must submit a dated document, such as a term sheet or most recent draft agreement, that provides sufficient detail about the transaction, including: the identity of the parties; the structure of the transaction; the scope of what is being acquired; calculation of the purchase price; an estimated closing timeline; employee retention policies, including with respect to key personnel; post-closing governance; and transaction expenses or other material terms.

Robinson Bradshaw attorneys are available to guide clients through the new HSR reporting process. Contact the authors for more information.