DOJ Announces Streamlined Merger Review Process

On July 24, the U.S. Department of Justice announced that it plans to streamline its merger review process, with the goal of alleviating the burden on transacting parties that are subject to merger investigations. The change is expected to significantly reduce the burden of compliance for parties to certain transactions, primarily as the result of a more targeted approach to document requests.

Background

For transactions that meet certain monetary thresholds, parties are required to file premerger notification forms under the Hart-Scott-Rodino Act (HSR Act) to allow the DOJ and the U.S. Federal Trade Commission to review the transaction for potential harm to competition. If the agencies identify antitrust concerns, they can issue expansive requests to the parties for additional information and documents. Compliance with these Second Requests is typically very burdensome and expensive, costing several million dollars and delaying closing by many months.

The DOJ’s practice in recent years has been to issue sweeping Second Requests that cover a broad range of issues and to require substantial compliance with the full Second Request prior to resolving its investigation. Rather than issuing a broad Second Request at the outset, the DOJ now plans to issue more targeted Second Requests in certain transactions. These targeted requests will prioritize the issues and competitive concerns that the government believes are likely to be determinative of the investigation’s outcome. The government expects that in some cases, prioritizing these dispositive issues will allow DOJ officials to resolve their antitrust concerns and clear the transaction on an expedited basis.

Impact on Transacting Parties

While the DOJ does not plan to use this targeted approach in every transaction, the new approach is indicative of the current administration’s deal-friendly approach to antitrust enforcement. Parties that might once have faced onerous Second Requests may instead find that they are able to resolve merger investigations with the DOJ on a significantly shorter timeline and at a reduced cost. The impact will be most significant for deals that present narrow antitrust concerns that affect a limited number of products or geographic markets and are therefore susceptible to resolution through targeted document and information requests. The DOJ and the FTC have used a similar “quick look” approach for certain transactions informally in the past, which was often successful in shortening the time for completing a merger review substantially.

Hughes Hubbard & Reed is closely monitoring these developments and will provide further updates regarding any changes in the DOJ’s approach to the merger review process. Please do not hesitate to contact the attorneys listed below if you have any questions or require further guidance.