HSR NPRM _ Supporting Statement-2023-FINAL

Supporting Statement
for Proposed
Amendments to the
Hart-Scott-Rodino Rules and Notification and Report Form
16 C.F.R. Parts 801-803
(OMB Control No. 3084-0005)
The Federal Trade Commission (“FTC” or “Commission”) seeks OMB clearance for
proposed revised information collection requirements under its Hart-Scott-Rodino
Antitrust Improvements Act Rules (“HSR Rules”) and corresponding Premerger
Notification and Report Form for Certain Mergers and Acquisitions (“Notification and
Report Form” or “Form”). The proposed amendments are primarily changes to the
information reported by entities for a proposed merger on the Notification and Report
Form and do not affect the reportability of a proposed transaction. The proposed
amendments would ensure that the FTC and the Assistant Attorney General in charge of
the Antitrust Division of the Department of Justice (“the Agencies”) receive sufficient
information with the Form to conduct a preliminary assessment within the initial waiting
period (typically 30 days) to determine if the proposed transaction is likely to violate the
antitrust laws.
1. and 2.

Necessity for and Use of the Information Collection

Section 7A of the Clayton Act (“HSR Act”), 15 U.S.C. § 18a, as amended by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, Pub. L. 94-435, 90 Stat. 1390,
requires parties to file a Notification and Report Form when a proposed transaction is not
subject to an exemption and meets the Size of Transaction test, subject to other provisions
of the Rules, including a Size of Person test for some transactions. The HSR Act was
intended to improve federal merger enforcement by requiring parties to notify the
Agencies of their proposed acquisition and to wait a short period of time to permit the
Agencies to seek a federal court injunction to stop an illegal merger prior to
consummation.
Parties submit such Forms to the Agencies and must wait a specified time period
before consummating the transaction. Section 7A(d) of the HSR Act states that the
Commission, with the concurrence of the Assistant Attorney General:
shall require that the notification required under subsection (a) [of the Act] be in
such form and contain such documentary material and information relevant to a
proposed acquisition as is necessary and appropriate to enable the Federal Trade
Commission and the Assistant Attorney General to determine whether such
acquisitions may, if consummated, violate the antitrust laws; and . . . prescribe
such other rules as may be necessary and appropriate to carry out the purposes of .
. . [the HSR Act].
Pursuant to its rulemaking authority, the Commission promulgated § 803.1(a) of the
HSR Rules, among other rules, designating the Notification and Report Form together with
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all documentary attachments, as the notification required by the HSR Act. The
information and documentary material required by the Notification and Report Form
provide the Agencies with the opportunity to review mergers and acquisitions and take
appropriate enforcement action before consummation.
The HSR Rules are divided into three parts, which appear at 16 C.F.R. Parts 801,
802, and 803.
 Part 801 defines a number of the terms used in the HSR Act and the HSR
Rules, and explains which acquisitions are subject to the reporting and
waiting period requirements.
 Part 802 contains a number of exemptions from these requirements.
 Part 803 explains the procedures for complying with the HSR Act. The
Notification and Report Form, which is completed by persons required to
file notification, and Instructions are appendices to Part 803 of the HSR
Rules.
Changes of a substantive nature have been made in the premerger notification rules
or the Notification and Report Form and Instructions on several occasions.
In this notice of proposed rulemaking (“NPRM”), the Commission proposes amendments
to the Rules, the Form, and the Instructions (Part 801 and Part 803 and its appendices), to
reorganize the information currently required with an HSR Filing and to require additional
information critical to the Agencies’ initial antitrust review. The proposed amendments would
ensure that the Agencies receive sufficient information with the Form to conduct a preliminary
assessment within the initial waiting period (typically 30 days) to determine if the proposed
transaction is likely to violate the antitrust laws. These changes would improve the efficiency
and effectiveness of that initial review by providing the information the Agencies need to
properly narrow the scope of any additional investigation or eliminate the need to conduct a
more in-depth investigation of the proposed transaction. These amendments also incorporate
changes required to implement the collection of information mandated by the Merger Filing Fee
Modernization Act of 2022 contained within the Consolidated Appropriations Act, 2023 (Pub. L.
117-328, 136 Stat. 4459) to the HSR Act.
3.

Use of Information Technology

Consistent with the Government Paperwork Elimination Act, 44 U.S.C. § 3504 note, the
Notification and Report Form is available electronically and payment may be made by electronic
funds transfer.
4.

Efforts to Identify Duplication

The information required by the proposed amendments is not available from other
government agencies or public sources. Prior to passage of the HSR Act, efforts were made to
obtain information needed to conduct a preliminary antitrust analysis from other sources but these
sources proved to be inadequate for law enforcement purposes. The information that was
available was not the type of information needed nor was it available on a timely basis. It was
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the lack of alternative sources of information and the need to receive information quickly that
motivated Congress to enact Section 7A. Since the HSR premerger notification program was
instituted approximately 45 years ago, the Commission has periodically updated the information
collected on the Form to reflect changes in technology, the economy, and structures of
transactions. Based upon the experience of the Agencies, there are categories of information
known to filers that are not currently collected on the Form but are important to the Agencies’
initial assessment of transactions.
5.

Efforts to Minimize Small Organization Burden

The HSR Act, HSR Rules, and proposed amendments are designed to have minimal
impact on small entities. First, for a transaction to trigger a reporting requirement under the
Act, the transaction must be valued at more than $50 million (as adjusted).1 Such a high
transaction threshold will typically not catch most transactions involving small entities. In
addition, the HSR Act requires that in cases where the transaction is valued at greater than $50
million (as adjusted) but $200 million (as adjusted) or less, one party to the transaction must
have at least $100 million (as adjusted) in sales or assets and the other party must have at least
$10 million (as adjusted) in assets (or in some instances, sales) in order to trigger reporting
requirements.2
6.

Consequences to Program if Collection Done Less Frequently

The HSR Act requires an HSR Filing when a transaction meets the Size of Transaction
test, subject to other provisions of the Rules, if not exempted. Parties must file with the
Commission and the Antitrust Division before consummating the transaction. Collection of
the proposed information on a less frequent basis would be contrary to the HSR Act since the
enforcement agencies must review proposed acquisitions before they are consummated.
Moreover, individual firms and their acquisition plans, not the enforcement agencies, control
the frequency of filing.
7.

Circumstances Requiring Collection Inconsistent with Guidelines

The collection of information in the HSR Rules and the Notification and Report Form is
consistent with all applicable guidelines contained in 5 C.F.R. § 1320.5(d)(2).

1

The 2000 amendments to Section 7A require the Commission to revise the HSR Act’s jurisdictional and
filing fee thresholds annually, based on the change in gross national product, in accordance with Section
8(a)(5) for each fiscal year beginning after September 30, 2004. See 15 U.S.C. 18a(a)(note). The current
adjusted thresholds appear at 88 Fed. Reg. 5,004 (January 26, 2023), and became effective on February
27, 2023. Under these thresholds, a transaction must be valued in excess of $111.4 million to meet the
minimum size of transaction threshold.
2
Under the current adjusted thresholds, for transactions valued in excess of $111.4 million but less than
or equal to $445.5 million, one party must have sales or assets of at least $222.7 million and the other
party must have assets (or in some instances, sales) of at least $22.3 million for the transaction to be
reportable.
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8.

Public Comments/Consultation outside the Agency

The HSR Rules and the Notification and Report Form have evolved over the last
45 years through informal and formal consultations with the affected public to develop a
fuller understanding of the issues and methods of addressing them. In the instant
context, in accordance with 5 C.F.R. § 1320.8(d), the FTC is seeking public comment
on the proposed collections of information (or proposed amendments to them). 88 Fed.
Reg. 42,178 (June 29, 2023). In addition, the Commission previously invited public
comment in connection with its latest PRA clearance request for this Rule. See 88 Fed.
Reg. 3,413 (Jan. 19, 2023). The Commission received no germane comments.
9.

Payments of Gifts to Respondents

Not applicable.
10. and 11.

Assurances of Confidentiality/Matters of a Sensitive Nature

The Agencies are prohibited by Section 7A(h) of the HSR Act from disclosing to the
public information and documentary materials filed under the premerger notification program
“except as may be relevant to an administrative or judicial action or proceeding. . . . [or] to
either body of Congress or to any duly authorized committee or subcommittee of the
Congress.” The Agencies have implemented procedures to assure the confidentiality of the
submitted information. Additionally, the Notification and Report Form does not specifically
require any information of a personal and sensitive nature.
12.

Annual Hours Burden

Estimated Annual Hours Burden: 759,272.
The proposed amendments would change the information reported on the Notification
and Report Form and do not affect the reportability of a transaction. Thus, the same number of
filings projected for fiscal year 2023 in the most recent Supporting Statement submitted to OMB
and also appearing in the associated Federal Register notice3 will be used for these burden hour
calculations.
Some of the proposed changes are intended to reduce the burden of filing. The
Commission anticipates that the proposals to report NAICS codes in ranges rather than by
specific dollar amount would reduce the burden on almost all filers. Additionally, the proposed
change to eliminate the requirement for filers that derive revenue from manufacturing operations
to report NAPCS code revenues is also anticipated to reduce the burden for those filers. Finally,
the Commission also proposes to limit the reporting of minority investors of the acquired entity.
Some of the proposed changes offer clarifications to the current rules and are unlikely to
change the burden on filers. These include the proposed changes to eliminate references to paper
and DVD filings (§§ 803.2, 803.5, and 803.10) and to specifically discuss the commencement of
3

88 FR 3413, 3414 (Jan. 19, 2023).

4

the waiting period (§ 803.10).
Certain proposed changes would require the acquiring person to collect and report
information that the Commission believes is held in its ordinary course of business records.
These include proposed requirements for the acquiring person to describe its own business(es);
report minority investors in additional entities related to the transaction; disclose relationships
with individuals or entities that provide credit, hold non-voting securities, have the right to
appoint board observers, or have management agreements with entities related to the transaction;
and to identify members of boards of directors or other individuals who have board observer
rights. Once collected, the Commission anticipates that the burden associated with some of these
proposals will lessen for subsequent filings by the same acquiring person, as the information
would only need to be updated.
Many of the proposed changes would increase the burden on all filers. These include
new document collection requirements to produce transaction-related documents from
supervisory deal team members; business documents that relate to competition topics but were
not produced specifically for the transaction; drafts of responsive documents; other agreements
between the acquiring and acquired persons, and to log the request to which documents are
responsive. Additionally, the proposed requirements to provide narratives regarding transaction
rationale, diagrams of the transaction, and organizational charts for custodians of documents
would be applicable to all filers.
Some of the proposed changes would significantly increase the burden on only certain
filers. These include those filers whose businesses have existing horizontal, non-horizontal, or
labor market overlaps or relationships, with the largest burden falling on filers whose transaction
involves many such relationships; transactions that involve a large number of foreign language
documents; filing persons or transactions that have a complex structure; transactions that are
filed on letters of intent or agreements in principle; and filing persons that receive subsidies from
foreign entities of concern. These filings are the ones most likely to raise potentially significant
competitive issues that require close scrutiny to determine whether the proposed transaction is
likely to violate the antitrust laws.
The Commission canvassed current Agency staff who had previously prepared HSR
Filings while in private practice to estimate the projected change in burden due to the proposed
amendments to the Instructions. All have considerable experience with the HSR Rules and with
preparing HSR Filings for the types of transactions that are most likely to be affected by the
proposed changes.
These experts were asked to estimate the incremental increase in time to prepare HSR
Filings, for both the company and its outside counsel, taking into account that transactions range
in complexity—from relatively simple transactions with no overlaps and few documents (such as
ones only involving executive compensation or other stock purchases by an individual), to
moderately complex transactions (such as a fund buying or selling a portfolio company with
limited overlaps) to very complex (for example, a strategic acquisition by a large company that
sells many overlapping products in competition with the seller). The ranges from canvassed
officials estimated that the proposed changes would result in approximately 12 to 222 additional
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hours per filing, depending on the complexity of the filing at issue. In the past five years,
approximately 45% of filings had reported overlaps. To estimate an average number of
additional hours, the Commission conservatively assumes that 45% of the filings may require an
additional 222 hours to prepare and 55% may require an additional 12 hours to prepare. Thus,
the Commission estimates an average of 107 additional hours (rounded to the nearest hour) will
be allocated to non-index filings.4 Added to the current estimate of 37 hours per filing,5 the total
estimated hours would be 144 per filing.
Net Effect
The proposed Rule and Notification and Report Form changes only affect non-index
filings6 which, for FY 2023, the FTC projects will total 7,096. As described above, the
Commission estimates that the amendments to the HSR Rules and Notification and Report Form
would increase the time required to prepare responses for non-index filings, with an estimated
net increase of 107 hours per filing. Thus, the total estimated additional hours burden is 759,272
(7,096 non-indexed filing x 107 hours/each).
Estimated Annual Labor Costs: $350,000,000.
Applying the revised estimated hours, 759,272, to the previous assumed hourly wage of
$460 for executive and attorney compensation, yields approximately $350,000,000 in annual
labor costs. The amendments are expected to impose either minimal or no additional capital or
other non-labor costs, as businesses subject to the HSR Rules generally have or obtain necessary
equipment for other business purposes. Staff believes that the above requirements necessitate
ongoing, regular training so that covered entities stay current and have a clear understanding of
federal mandates, but that this would be a small portion of and subsumed within the ordinary
training that employees receive apart from that associated with the information collected under
the HSR Rules and the corresponding Instructions.
13.

Estimated Capital/Other Non-Labor Costs Burden

The proposed amendments should impose minimal or no additional capital or other nonlabor costs, since businesses subject to the HSR Rules generally have standard operating
procedures based on prior experience with respect to the HSR Filing requirements (which have
been in force for 45 years).

4

Clayton Act section 7A(c)(6) and (c)(8) exempt from the requirements of the premerger notification
program certain transactions that are subject to the approval of other agencies, but only if copies of the
information submitted to these other agencies are also submitted to the FTC and the Assistant Attorney
General. Thus, parties must submit copies of these “index” filings, but completing the task requires
significantly less time than non-exempt transactions that require “non-index” filings. The proposed
changes would not require any additional information from indexed filings.
5
88 FR 3413, 3414 (Jan. 19, 2023).
6
Id.
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14.

Estimated Cost to Federal Government

The proposed amendments are not expected to add costs to the federal government.
While costs could go up for data storage and increased review time, this could be offset by
decreased costs associated with access to more relevant reporting information. The proposed
amendments would allow the Agencies to better focus investigations, allocate fewer staff resources
to collect and confirm basic business information, and reduce the need for prolonged investigations
due to lack of information. The Commission plans to update this section in our supplemental
supporting statement at the final rule stage.
15.

Program Changes or Adjustments

The proposed changes to the HSR Rules and Notification and Report Form are expected
to increase the burden on the affected members of the public by 759,272 annual hours from the
currently cleared amount of 262,579 annual hours. The total annual labor costs (currently
estimated at $120,786,340) would increase by approximately $350,000,000.
16.

Statistical Use of Information

Collection of information under the Act is for law enforcement purposes. The Agencies
report to Congress on the program annually7 but there are no other plans to publish information
collected as a result of the premerger notification program.
17.

Requesting Permission Not to Display Expiration Date for OMB Approval

Not applicable.
18.

Exceptions to Certification

Not applicable.

7

See Annual Reports to Congress Pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of
1976, https://www.ftc.gov/policy/reports/annual-competition-reports.
7