10.27.2010
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Updates
Earlier this month, the Federal Trade Commission and the Department of Justice published their Hart‑Scott‑Rodino Annual Report for Fiscal Year 2009for the period from October 1, 2008 to September 30, 2009. The Annual Report summarizes Federal Trade Commission and Department of Justice actions conducted under the Hart-Scott-Rodino Antitrust Improvements Act, or HSR Act, in fiscal 2009. The number of filings in fiscal 2009 is down (sharply) from earlier years, but the percentage of filings being investigated and challenged is up (moderately).
This Update provides key highlights of the Annual Report and offers practical advice.
The Annual Report Shows an Upward Trend in Investigations
In fiscal 2009, there were only 716 transactions reported under the HSR Act, a 59% decrease from the 1,726 transactions reported in fiscal 2008. The Federal Trade Commission or the Department of Justice investigated approximately 23% of those 716 transactions (compared to an average of approximately 17% over the previous four years). Of the transactions that were investigated, about 20% resulted in the issuance of second requests (compared to an average of about 17% over the previous four years). And of those transactions that were issued second requests, 100% resulted in an abandoned or restructured deal, a consent decree requiring the parties to divest assets, or litigation in federal district court (compared to an average of about 63% over the previous four years).
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| Transactions Reported |
1,675 |
1,768 |
2,201 |
1,726 |
716 |
-59% |
| Investigated |
19% |
17% |
14% |
18% |
23% |
27% |
| Investigated – 2nd Request Issued |
17% |
15% |
21% |
14% |
20% |
44% |
| 2nd Requests Resulting in Challenge |
36% |
71% |
54% |
90% |
100% |
11% |
Agencies Are Likely to Cast a Broader Net in Investigations. Although the number of acquisition transactions in fiscal 2010 is running ahead of those reported in fiscal 2009, the total will still be markedly below that of fiscal 2007. With fewer transactions being reported under the HSR Act, the agencies are investigating and challenging more transactions that are too small to require reporting under the HSR Act, many of which have already been consummated. In addition, reported transactions that raise competition issues are more likely to be investigated than in earlier years. As always, issuance of a second request jeopardizes a transaction or requires major restructuring of it to address agency concerns.
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Practical Tip Address Antitrust Concerns Early in the Process. A company considering an acquisition transaction that is likely to raise agency concerns should confer with its antitrust counsel during the negotiation process. It should prepare to address those concerns with counsel during the preparation and filing of reports under the HSR Act and engage with antitrust authorities as soon as possible in the waiting period in order to avoid a second request. |
Additional Information
This update is intended only as our summary of the Hart-Scott-Rodino Annual Report for Fiscal Year 2009. You can find the full text of the report at http://www.ftc.gov/os/2010/10/101001hsrreport.pdf.
© 2010 Perkins Coie LLP
