When the words “Hart Scott” or “HSR” are mentioned, business executives and deal lawyers often react with indifference. While they recognize the necessity of HSR compliance before closing a transaction, it typically garners little attention unless the deal is expected to face intense scrutiny. The goal is usually to check the HSR box and move forward.

This attitude has shifted recently as the government itself has focused attention on HSR. Over the past few months, the federal government has brought a couple of notable enforcement actions for HSR violations, and the HSR form itself has changed significantly, forcing people to pay closer attention to HSR than perhaps ever before.

Background: The Hart-Scott-Rodino Act

The Hart-Scott-Rodino Antitrust Improvements Act was enacted to allow federal antitrust enforcement agencies a chance to review mergers and acquisitions of a certain size before they closed. The HSR Act requires that parties involved in such transactions notify the antitrust authorities via a “Report and Notification Form” and observe a mandatory 30-day waiting period prior to closing. If the agencies have concerns about the transaction, they can extend the waiting period by issuing what is colloquially known as a “Second Request.” But the key to the Act’s effectiveness is the prohibition that the parties not close until the waiting period expires.

Enforcement actions: “Gun jumping” and incomplete filings

The first recent HSR enforcement action concerned unlawful pre-merger coordination, commonly known as “gun jumping.” Essentially, pre-merger coordination violates the Act’s prohibition against closing until the waiting period expires. The government alleged that the buyer began managing the seller’s business prior to expiration of the waiting period, including halting certain production activities, managing the target’s contracts and coordinating pricing. The defendant agreed to pay a $5.6 million civil penalty, the largest settlement for gun-jumping violations to date.

Shortly after bringing this action, DOJ sued a private equity firm for allegedly filing incomplete and inaccurate HSR forms in at least 16 instances. Many of the alleged deficiencies were related to missing documents that “assessed competition,” previously known as “4(c) documents.” The private equity firm countered by suing the government, claiming it imposed “strict liability for alleged non-compliance with a confusing and at times contradictory web of rules and requirements.”

Significant changes to the HSR form

In October 2024, the Federal Trade Commission voted to finalize changes to the HSR form. Those substantial changes went into effect February 10, 2025. Key changes include:

  • Separate forms for both the buyer and seller
  • Requirement to provide the rationale for the transaction and supporting documents
  • Detailed descriptions of overlapping products and services, sales information and the top 10 customers for each
  • Descriptions of vertical relationship (one sells to the other), brief descriptions of each product/service and sales information
  • Provision of ordinary course strategic analyses for overlapping products/services
  • Submission of documents prepared by/for individuals responsible for strategic assessments of the deal, not just documents prepared by/for officers or directors
  • Disclosure of officers and directors for assessing interlocking directorates
  • Drafts of competition-related documents, even if shared with only one Board member

The FTC estimates that the new requirements will add an average of 68-121 hours to the current filing preparation time.

What does all of this mean?

The bottom line is that businesses must be vigilant from the very start to ensure personnel understand due diligence and integration limitations. Careful attention to document content is crucial, as these may be scrutinized by antitrust agencies. Additionally, it is important to:

  • Analyze antitrust concerns early in the process
  • Allocate sufficient time for document and information collection and form preparation
  • Consider the implications of filing on a Letter of Intent, especially if it lacks key terms, necessitating additional submissions later

If you have any questions, please contact Jay at 202-778-3021 or jlevine@porterwright.com.