Merger Acquisition Newsroom

Changes Are Designed To Streamline The Merger Review Process

FTC Chairman Announces Merger Review Process Reforms: Changes Are Designed to Streamline the Merger Review Process

Federal Trade Commission Chairman Deborah Platt Majoras today announced a series of reforms to the agency’s merger review process. The reforms are designed to reduce the costs and time required to complete merger investigations in which “second requests” have been issued under the Hart-Scott-Rodino (HSR) Premerger Notification Act. Second requests are issued if the Commission needs more information from the merging parties after the initial 30-day HSR waiting period. The reforms, which are set out and explained in a document that is available on the FTC’s Web site, apply to all HSR filings submitted to the FTC on or after February 17, 2006.

“The reforms announced today will turn well-accepted best practices into formal components of the FTC’s merger review process,” Chairman Majoras said. “They are designed to facilitate rapid identification of the relevant issues, preparation of focused second requests, and the use of consistent investigation timetables.”

The primary reforms to the merger review process establish presumptions that the FTC will: (1) limit the number of employees required to provide information in response to a second request, provided the party complies with specified conditions; (2) reduce the time period for which a party must provide documents in response to the second request; (3) allow a party to preserve far fewer backup tapes and produce documents on those tapes only when responsive documents are not available through more accessible sources; and (4) significantly reduce the amount of information parties must submit regarding documents they consider to be privileged.

The reforms contain provisions that should reduce the costs of producing quantitative data in response to many second requests. They also include several changes to definitions and instructions that will eliminate certain production requirements.

The HSR Act is an important component of U.S. antitrust merger policy. The law provides the FTC and U.S. Department of Justice’s (DOJ) Antitrust Division with the time and ability to review and, when appropriate, challenge mergers prior to consummation when they are likely to be anticompetitive. Second requests are essential to the merger review process because they enable the FTC and DOJ to determine whether certain transactions are likely to be anticompetitive.

“Over the past decade, the growth in the number of electronic documents and the greater use of economic tools to analyze mergers have increased the costs involved in second requests,” said the Chairman. “The reforms that we are implementing today should improve the effectiveness and efficiency of the FTC’s review of mergers and reduce the burdens of the second request process, to the benefit of the parties and consumers.”