Agency Challenges to Non-HSR Reportable Transactions

We often hear that some deals are too small to be of interest to the Antitrust Division or the Federal Trade Commission, even if the deal is anticompetitive. More generally, there is a view that if a transaction is not reported to the antitrust agencies pursuant to the Hart-Scott-Rodino Act, the transaction is safe from challenge. Both views are mistaken.

Since January 1, 2001, the DOJ and FTC have challenged 24 non-HSR reportable transactions. Nineteen of these transactions fell below the minimum reporting threshold in effect at the time of the acquisition. The smallest of these transactions was $4.4 million. Of the five remaining transactions, three were covered by an HSR exemption, one did not involve the acquisition of voting securities or assets, and one had no public explanation.  Twenty of the transactions were already consummated at the time of the challenge, and four of the transactions were pending.

The FTC brought 15 challenges and the DOJ brought nine. The number of challenges has increased during the Obama administration, but not significantly so. Nineteen of the challenges ultimately settled, two were adjudicated on the merits in favor of the defendants, one was mooted (a bankruptcy bid failed), and two are still in litigation.  Eight of the challenges settled simultaneously with the filing of the challenge. Fifteen of the challenges involved active litigation, ranging from about one month to 41 months.

The full note contains a summary of each of the 24 challenges, including the products and services in issue, a brief description of the acquisition and the gravamen of the agency's complaint, the reason (if known) why the transaction was not HSR reportable, and the ultimate disposition of the challenge. The note also contains links to the agency's web page on the case, the complaint, and the proposed and final consent orders.

For the full pdf version of the full note, click here.

Dale Collins
+1.212.848.4127
dale.collins@shearman.com

 

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Agency Challenges to Non-HSR Reportable Transactions

Categories: US Mergers

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