FTC and DOJ Announce Sweeping Changes to Hart-Scott-Rodino Reporting Requirements

The Final Rule is the culmination of a process that was begun last year to streamline the HSR Form. The changes are also focused on gathering new types of information that the FTC and DOJ consider necessary for their initial review of transactions. While many of the changes will simplify the HSR filing process, certain entities, such as Private Equity Firms and Master Limited Partnerships (commonly found in the energy field), will face new challenges in preparing HSR filings. Moreover, all filers will have to submit new categories of documents, including certain documents created by third-party advisors. Ultimately, effective compliance with the revised rule will require greater coordination and consultation with antitrust counsel in the early stages of a transaction.

Key Changes:

• Acquiring persons must now disclose the identity of “Associates,” which are non-controlled entities that are under common investment or operational management, and include information regarding the revenues of Associates that overlap with the revenues of the target company. In addition, acquiring persons must disclose the minority holdings of the Associates that have revenues that overlap with the revenues of the target company. These changes most directly impact master limited partnerships and private equity firms in which a common general partner manages the operations of a number of separate entities within a given family.
• Additional documents must be submitted under new item 4(d) – including all confidential information memoranda, third-party advisor documents, and documents analyzing synergies/efficiencies.
• Parties no longer have to report revenues by North American Industry Classification System (NAICS) code for a base year (currently 2002). In addition, manufacturers that also sell their products through separate wholesale or retail establishments only have to report sales of those products under a 10-digit NAICS manufacturing code for the most recent financial year. Finally, revenues for products manufactured outside the United States and sold into the United States will also be reported under a 10-digit manufacturing code instead of a 6-digit wholesaling or retailing code.

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