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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