[co-author: Brett Beeman]
In October 2024, the Federal Trade Commission (FTC) issued its final rules governing pre-merger notification protocols under the Hart-Scott-Rodino Act (HSR Act). The Antitrust Division of the US Department of Justice quickly signaled its agreement with the new rules.
On January 10, 2025, the US Chamber of Commerce and certain trade groups filed an action to enjoin the FTC’s new HSR rule. The Complaint seeks declaratory and injunctive relief, alleging that the new rules exceed the FTC’s statutory authority or are arbitrary, capricious, or otherwise contrary to law, and orders setting aside the new rules and enjoining the FTC from enforcing them. That action is currently pending in the Eastern District of Texas.
Subsequently, the updated HSR rules went into effect on February 10, 2025.
The new HSR rules require the merging parties to provide more information and documents than they do currently. The FTC estimates this will increase the time and cost of compliance from one to three days to approximately two to three weeks. Many corporations are looking to partner with an alternative legal services provider, in collaboration with their outside counsel, to reduce the burden of the increased data-related requirements.
What Are the Disclosure Requirements Under the New Rules?
The following is a high-level summary of new disclosure requirements.
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Business Documents: This is the new term that applies to responsive HSR 4(c)/4(d) documents. New disclosure requirements include:
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Drafts of transaction-related documents related to certain competitive topics that have been shared with individual Board members.
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Certain plans and reports drafted in the “ordinary course” shared with the Board and the CEOs of the “acquiring” and “acquired” companies that discuss competition regarding any product or service of the other party to the transaction, as well as overlapping products.
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Transaction documents related to enumerated competitive topics from the “supervisory team lead.”
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Foreign Language Documents: All foreign language documents must now be translated.
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Additional Disclosure Information: The parties must now also disclose additional types of information in their HSR filing. Some of the highlights include:
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Certain areas of competitive overlap between the transaction parties.
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Sales data for overlapping products or services over the most recent year.
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Customer lists in overlapping areas or vertical relationships.
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Description of certain supply relationships.
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Information on acquisitions over the previous five years.
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When an overlap between the parties exists, the identity of certain officers and directors relating to possible interlocking directorate issues.
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Although the Final HSR Rules do not contain some of the more onerous data-related provisions of the original proposal, there is still an elevated disclosure requirement.
How New AI Tools Can Decrease the Burden
The new filing requirements have come at the same time the legal industry is seeing rapid AI-based improvements in eDiscovery tools. Relying on Epiq’s HSR Discovery Services, HSR filers can benefit from first-of-its-kind AI technology, Epiq AI Discovery Assistant™ to increase review speed, accuracy, defensibility, and cost efficiency for an HSR pre-merger filing:
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Uncovering new information using a chat Q&A interface to interrogate the data by asking questions using natural language.
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The ability to analyze documents in any source language.
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Automated tagging of documents for responsiveness, privilege, and personal information.
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The ability to iterate responses for more complete results.
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Security and privacy with an AI model trained only with client data.
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Defensible metrics to support the process.
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Fast analysis with a throughput of 500,000 documents per hour.
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More complete and consistent results.
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Predictable and lower pricing.
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