During a recent webinar, Jon Dubrow, Greg Heltzer, Lisa Rumin, and Ryan Tisch provided a comprehensive introduction to the new Hart-Scott-Rodino (HSR) rules and their impact on the US premerger notification filing process. The program concluded with a Q&A moderated by Reese Poncia and featuring Ty Carson, a former Federal Trade Commission Premerger Notification Office lawyer, who shared his insider’s perspective from six years with the agency.
New Premerger Notification Regime to Fundamentally Change M&A Strategy
On October 10, 2024, the Federal Trade Commission issued new final rules governing the US premerger notification filing process. These rules – the first major overhaul to the Hart-Scott-Rodino (HSR) filing form in the nearly 50-year history of the HSR Act – will fundamentally alter the premerger notification process. While the rules omit some of the more extreme aspects proposed in the 2023 draft rules, they impose substantially more burdens on filing parties than the current filing regime. The changes will have wide-ranging implications for all parties required to notify transactions under the HSR Act.
Game-Changing Ruling Looms in Google Antitrust Battle
On 5 September 2024, Advocate General (AG) Laila Medina rendered her opinion in Alphabet and Others, suggesting that the European Court of Justice not apply the strict Bronner criteria when assessing Google’s refusal to grant access to its Android Auto platform for an app that provides a set of features for charging electric vehicles.
Instead, AG Medina concluded that a dominant company that owns a platform and excludes, obstructs, or delays access of an app developed by a third-party infringes Article 102 TFEU, provided that such behaviour gives rise to anticompetitive effects to the detriment of consumers and cannot be objectively justified.
Importantly, AG Medina broke new legal ground in that she believes that a refusal to grant access to a platform cannot be objectively justified by the “mere fact that the dominant undertaking must develop a software template taking into account the specific needs of the operator requesting access.” In other words, simply granting access to a platform is not enough, certain changes to facilitate access have to be undertaken.
Illumina/GRAIL: European Court of Justice Annuls the Commission’s Approach
In a spectacular turn, on September 3, 2024, the Court of Justice of the European Union annulled the European Commission’s decision to review the acquisition of Grail by Illumina. The Commission had previously asserted its authority to examine the merger under Article 22 of the EU Merger Regulation, despite the transaction not meeting the EU or national turnover thresholds for review.
This ruling is significant because it challenges the Commission’s ability to review transactions that do not meet the relevant EU or national thresholds but are referred by EU Member States. This could impact how future mergers are reviewed within the EU, as the Commission is likely to find alternative ways to review transactions that do not meet the relevant EU or national thresholds.
States Want in on the Merger Review Fun
WHAT HAPPENED
While they have long taken a back seat to federal merger reviews, US states are becoming increasingly involved in merger reviews, including potentially requiring premerger notifications on a broad scale. On July 24, 2024, the Uniform Law Commission adopted its Uniform Antitrust Pre-Merger Notification Act (Model Act) as model legislation for states to use to implement premerger filing regimes.
- The Act functions as a template for states to adopt their own premerger notification legislation and provides uniform suggested guidance to states that are considering their own premerger notification regimes.
- The Model Act requires parallel filing of the Hart-Scott-Rodino (HSR) form in a state when:
- The filing person has its principal place of business in the state; or
- The person “directly or indirectly had annual net sales in [the] state . . . of at least 20 percent” of the threshold mandated under the HSR Act. §3(a)(1)-(2). Under the current HSR thresholds, that means sales of approximately $24 million in a state would satisfy the state-level filing requirement.
- The Model Act also provides for automatic confidential treatment of materials submitted to the state.
- Additionally, the attorneys general may communicate with the federal agencies about filing materials.
- This can avoid the current practice of having to negotiate individual confidentiality agreements with any state interested in reviewing a transaction.
- The Model Act does not impose any waiting or suspension period for notified transactions.
- This continues a trend of government agencies obtaining more notice of M&A transactions. At the end of last year, Congress inserted Section 857 into the National Defense Authorization Act, which requires parties to provide their HSR materials to the US Department of Defense (DoD) for any proposed merger or acquisition that will require DoD review.
BACKGROUND
State attorneys general have broad investigatory and enforcement powers with respect to transactions implicating local competition concerns. States generally have the authority to issue investigative subpoenas, compelling production of documents and information to parties who merely sell products in a state without any further physical connection to the state.
- Typically, states focus their efforts on transactions that have a particular impact on the state’s consumers or an industry important to the state’s economy.
- For example, transactions involving hospitals or retail locations are traditionally more likely to draw the attention of a state’s attorney general than transactions involving national markets or consumer goods.
- However, state enforcers have increasingly initiated their own efforts to challenge transactions.
- This trend is illustrated by the Colorado attorney general’s lawsuit that seeks to block the Kroger-Albertsons merger.
- Colorado is seeking a nationwide injunction and not merely an injunction on the acquisition in the state, raising a novel question with potentially significant impact on antitrust enforcement by the states.
- Colorado is [...]
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- This trend is illustrated by the Colorado attorney general’s lawsuit that seeks to block the Kroger-Albertsons merger.
