On April 4, 2025, Washington became the first state to enact the Uniform Antitrust Premerger Notification Act (Model Act),1 requiring parties to certain notifiable transactions under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) to simultaneously submit their HSR Act filing to the Washington State Office of the Attorney General. While Washington and 14 other states already have premerger notification requirements for certain healthcare-related transactions,2 this is the first time any state has imposed a premerger notification requirement that applies to transactions in all industries. The law will go into effect on July 27, 2025.
Overview
The HSR Act established a federal premerger notification program which, absent an applicable exemption, requires pre-closing notification of most transactions valued over the $50 million size-of-transaction threshold (as adjusted annually for inflation; currently $126.4 million).3 The filing triggers a mandatory waiting period – 30 days in most cases – during which the parties cannot consummate their deal. This process provides the Federal Trade Commission (FTC) and Department of Justice (DOJ) Antitrust Division with information to assess the potential antitrust impact of a transaction before it closes. The FTC recently adopted a new HSR notification form, requiring substantially more information from merging parties than had been the case for almost 50 years. For more information about the new HSR form, see our prior alert.
In 2024, the Uniform Law Commission published the Model Act,4 which provides a template for state legislatures to adopt their own general premerger notification requirements – piggybacking off the federal HSR notification process. The Model Act requires early notification of transactions that could affect state or local markets, regardless of industry. Though, unlike filings under the HSR Act, a notification under the Model Act would not prohibit the parties from closing pending the state’s review.
Washington’s law closely follows the Model Act and requires notification of HSR-notified transactions where one of the parties (i) has its principal place of business in the state or (ii) has annual net sales in the state of goods or services that are at least 20% of the HSR size-of-transaction filing threshold (currently about $25 million). The Washington law goes a step beyond the Model Act and requires notification of HSR-notified transactions involving a healthcare provider or organization conducting business in Washington. If one of the parties has its principal place of business in Washington, the parties must submit a complete copy of the HSR notification and accompanying documents (e.g., transaction-related documents and strategic plans). For other transactions that are subject to the notification requirement, only the HSR form itself must be submitted with accompanying documents to be supplied on request. Failure to make a filing required by the Washington law may result in civil penalties of up to $10,000 per day of noncompliance. The statute also expressly exempts premerger notification filings from the state’s public records act and prohibits the state from disclosing that a filing has been made.
What’s Next?
It is highly likely that other states will follow Washington’s lead and enact their own general premerger notification laws. Five states have pending legislation that mirrors the Model Act, including: Hawaii,5 Nevada,6 Utah,7 West Virginia,8 and the District of Columbia.9 New York and California are actively considering legislation for broader premerger notification regimes that would go beyond the Model Act. In California, for example, the California Law Revision Commission (CLRC) has recommended adopting a law that would require notification of mergers regardless of sector and would prohibit mergers where there is “an appreciable risk of materially lessening competition,” which could be construed as a lower standard the “may be substantially to lessen competition or tend to create a monopoly” standard under Section 7 of the Clayton Act and is similar to the language in Senator Amy Klobuchar’s proposed Competition and Antitrust Law Enforcement Act.10 Historically, the CLRC’s recommended changes have been implemented more than 90% of the time.11 In New York, a proposed bill would require premerger notification of nearly all transactions by a person doing business in New York if the transaction is HSR reportable.12 This is the second time that New York has considered such a bill,13 and it would capture an enormous range of transactions.
Implications
Under state and federal antitrust laws, states have long been authorized to investigate and seek injunctions against transactions where they have concerns regarding a transaction. In practice, states have generally focused their merger enforcement efforts on competitive concerns regarding state or local markets. This recently came up in the various challenges to the proposed Kroger/Albertsons merger, where eight states and the District of Columbia joined the FTC’s lawsuit challenging the deal, and Washington and Colorado brought their own separate challenges.14 However, Washington’s adoption of SB 5122 may signal an increased role for state attorneys general in merger enforcement. Although Washington has not gained any new enforcement powers, Washington and other states that adopt similar merger notification requirements will now automatically learn about relevant HSR-reportable transactions affecting business in their state, and state attorneys general will receive the same HSR materials that the federal antitrust agencies receive – obviating the states’ need to obtain waivers from merging parties to obtain that information from the FTC and DOJ. We suspect that state attorneys general offices will likely establish routinized mechanisms for reviewing the filings, and that will likely lead to more state merger investigations.
The new Washington requirement may well be only the tip of the iceberg for states seeking better opportunities to investigate and potentially challenge deals with localized competitive effects. Moving forward, it will be critical for merging parties to evaluate potential notification requirements on a state-by-state basis early in the potential deal process, particularly as more and more states adopt new legislation. Given the likelihood that new notification requirements will lead to more state investigations, especially of deals where competition is localized (like in many healthcare and retail sectors, where federal and state regulators continue to focus), merging parties should also consider the impact of new state notification requirements on antitrust risk and cost allocation provisions in merger agreements.
Footnotes
