For the first time in over 45 years, the Federal Trade Commission (FTC) adopted on October 10, 2024, extensive changes to the notification form for acquisitions subject to Hart-Scott-Rodino Act (HSR) review. The new form requires less information than the FTC’s sweeping 2023 proposal. Nevertheless, it will fundamentally change the way in which transactions are reported in the United States and materially increase the burden of preparing HSR filings. 

The FTC has also announced that when the new form becomes effective, it will restore availability of early termination of the 30-day initial HSR waiting period. This will truncate the waiting period for transactions that plainly do not raise antitrust concerns. 

The Final Rule describing the changes runs to 460 pages. We highlight here the most crucial ones, and we will provide more detailed guidance in due course:

• Effective Date.  The new form will become effective 90 days after publication in the Federal Register. We expect the effective date to be mid-January 2025, and all notifications made after that date will be made on the new form.
• Document Submissions.  The new form expands the scope of business documents that must be submitted with an HSR notification. However, the new rule does not adopt some of the components of the 2023 proposal that would have been most onerous for notifiers.  
  • No Drafts.  Parties will not be required to provide drafts of documents prepared by or for officers and directors that analyze the transaction with respect to competition, markets or synergies, or third-party advisor documents. These “Item 4(c)/(d)” documents will continue to be producible only in final form. The proposed rule would have required producing draft Item 4(c)/(d) documents.
  • Supervisory Deal Team Documents.  4(c) documents are now defined to include documents prepared by or for the “supervisory deal team lead.” This person 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.” This is a potentially significant expansion that will for the first time capture as 4(c)s documents that were prepared by or for a senior business executive who is not an officer or director.
  • Ordinary Course Strategic Documents.  The new form substantially changes current practice by requiring parties to submit certain ordinary high-level strategic documents (e.g., periodic business or strategic plans) that are provided to the CEO or Board of Directors, not just documents that are created in contemplation of the notified transaction. The proposed rule would have imposed a broader requirement by requiring that parties produce strategic documents that are provided to individuals reporting to the CEO, not just to the CEO or Board.

• Competition Descriptions.  For the first time, notifying parties will be required to describe overlaps and supply relationships in the notification form. 
  • From “Narrative” to Brief Description.  The 2023 proposal would have required “narrative” responses about overlaps and vertical relations. The Final requires only “brief descriptions” instead. The FTC has clarified that it “does not require the parties to submit an antitrust analysis akin to a “white paper, or hire counsel or experts simply to create narratives for the purpose of an HSR Filing, […] [f]ilers should rely on business personnel to describe the products and services they offer (or that are under development) using terms and language that is natural in the marketplace.” This is a significant modification from the proposed rule and means that HSR filings will continue to differ substantially from notification forms in most other jurisdictions, which require very extensive descriptions and analysis regarding markets that the notified transaction will affect.
  • Horizontal Overlaps.  The parties will need to describe any current or potential overlapping products or services, and, for each, provide (a) sales over the last fiscal year or projected revenues for products or services not yet generating revenues; (b) a description of categories of customers; and (c) a list of the top 10 customers. The Final Rule has eliminated the proposed requirement that notifiers provide any relevant licensing, non-compete, or non-solicitation agreements.
  • Vertical Relationships.  The parties will need to describe their relationships as buyers or sellers of one another’s products and supply arrangements with competitors of the other party. For each such product or service, the parties will need to provide their sales/purchase amount for the last year and their top 10 customers or suppliers. Supply relationships where the sales, licenses, or supplies of the product or service or asset represent less than $10 million in revenues will not be reportable.
  • No Labor Market Information.  The Final Rule eliminated the 2023 proposed requirement to “provide certain information about [the filing party’s] workers in order to screen for potential labor market effects arising from the transaction.” This would have required detailed information that the new form will not require. 

• Other Significant Changes.  Parties will be required to provide additional types of information that the current form does not require, but the requirements are narrower than those in the 2023 proposal. 
  • Prior Acquisitions.  The new form will expand obligations to report prior transactions to (i) the acquired, not just the acquiring, party, and (ii) acquisitions of substantially all of the assets of a business.  
  • Interlocking Directors or Officers.  The acquiring person will need to disclose its officers or directors (and people with similar functions in unincorporated entities) in industries overlapping with the target. This is a significant change from the current form, but the requirement is substantially narrower than what the 2023 proposal would have mandated.  
  • Minority Interests.  The new form will increase the complexity of notifying parties’ obligations to disclose minority interests and large shareholders. For instance, each party now will need to list entities that supply products that overlap with those of the other party in which the notifier holds a minority stake of at least 5%. Under the current rules, parties simply list all entities in which they hold a greater than 5% ownership, regardless of any overlap. Unlike the 2023 proposal, however, the new form does not require disclosure of limited partner investors that do not have management rights, but those with management rights will need to be disclosed.
  • HSR Filings that Do Not Require a Final, Signed Agreement.  Parties can file on an executed letter of intent (LoI) or memorandum of understanding (MoU). For the first time, the new rules will offer substantive criteria for the minimum amount of transaction information to be included in an LoI or MoU. The FTC notes that an LoI or MoU should offer “some combination of the following terms: 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.” Practice will show which of these elements, if any, will become truly indispensable. In the meantime, parties are advised to consider what they can include at the time of the filing, to maximize the likelihood that their LoI or MoU will be accepted.  

Key Implications

First, notwithstanding significant changes from the 2023 proposal that will substantially reduce the burden on notifiers, the new HSR form will generally require much more preparation time and consideration than the current form. The FTC estimates that businesses will need on average 105 hours to prepare the notifications under the new form, or three more times than the current average. Parties will need to take particular care in describing any horizontal overlaps or vertical and non-horizontal relationships, with an eye both to the current transaction and the record that they will be establishing for potential future transactions in the same or related industr(ies). Although the HSR notification with these changes is more burdensome than the current form, it is less onerous than most non-US notification regimes. 

Second, parties will need to produce more documents with the notification – 4(c) documents from a supervisory deal team lead and ordinary course strategic documents. It remains critical that companies be thoughtful and accurate in both deal-related and high-level ordinary course document creation. 

Third, the unanimous Commissioner vote adopting the new form suggests that it will remain in force in the event of a change in Administration, which might not have been the case if the form had been approved in a split vote. 

Fourth, parties are well advised to use the next roughly three months until the new form becomes effective to prepare for the expanded notification obligations. WilmerHale is available to help with this process and answer questions from the adoption of the new form.