Bureau of Corporations

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Monday, January 16, 2023

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Under present law, companies need not give advance notification of a planned merger to the Federal Trade Commission and the Department of Justice.

Key Points:

Under present law, companies need not give advance notification of a planned merger to the Federal Trade Commission and the Department of Justice.
The HSR Act, and its companion rules promulgated by the FTC, fundamentally changed the process of U.S. merger review and finally allowed the antitrust agencies to fulfill the mandate of Section 7 of the Clayton Act to stop anticompetitive combinations in their incipiency.
But passage of the HSR Act was also the end of a journey.
The HSR Act was, in fact, the culmination of years of effort by the FTC and others to review mergers before they occurred.
Proposals would have been subject to government disapproval, although the government could also later challenge a merger that it had not disapproved.
But the idea of premerger review was an idea not ripe for the time: the Hepburn bill did not become law.
And in 1914, Congress passed the FTC and Clayton Acts, including Section 7 which outlawed anticompetitive mergers but did not provide for premerger notification.
President Eisenhower endorsed premerger notification in 1956, and FTC Chairs repeatedly pressed Congress for such legislation: John Gwynne in 1957 and 1958; Paul Rand Dixon in 1961; and Lewis Engman in 1975.
(After the HSR premerger notification program was well established, the Commission decided to rely on HSR filings in lieu of prior approval provisions except in very limited circumstances.)
Title I addressed DOJ civil investigative demands; Title II established premerger notification; and Title III created parens patriae authority for state attorneys general.
Again, this proposal was supported by my Administration, and I am pleased to see it enacted into law.
In the years since its passage, premerger review has become an indispensable part of effective antitrust enforcement.