Key takeaways
– The HSR Act requires companies to notify the Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice (DOJ) before completing certain mergers, acquisitions, and some tender offers so regulators can review competitive effects. (FTC; Investopedia)
– Filing an HSR “Notification and Report Form” (commonly called the HSR Form) starts a statutory waiting period (typically 30 days; 15 days in certain cash tender-offer/bankruptcy cases). If regulators have concerns they can issue a “second request,” which extends review. (FTC)
– Whether a transaction must be filed depends on multi-part statutory tests (size-of-transaction and size-of-person thresholds) that are adjusted periodically. Filing fees also vary by transaction size. Always check current thresholds and fees on the FTC HSR website before deciding whether to file. (FTC)
1) Background and purpose
Signed into law in 1976 (Public Law 94‑435), the Hart–Scott–Rodino Antitrust Improvements Act amended U.S. antitrust law (including the Clayton Act) to give federal agencies advance notice of large transactions so they can evaluate and, if necessary, block or remedy mergers that would substantially lessen competition. The HSR process does not replace antitrust enforcement — it provides a premerger review window. (U.S. Congress; Ford Library; FTC)
2) How the HSR process works — overview
– Determine whether the transaction meets the HSR filing requirements (see Section 3 below).
– If filing is required, prepare and submit the HSR Notification and Report Form and pay the applicable filing fee to the FTC/DOJ electronically.
– Filing triggers a statutory waiting period (typically 30 calendar days; 15 days for certain cash tender offers and bankruptcy acquisitions). The parties may not complete the transaction or exercise voting or other control during the waiting period (avoiding “gun-jumping”). (FTC)
– If the agencies are unconcerned, the waiting period ends (or agencies may terminate early) and the parties may close.
– If the agencies believe more information is needed, they issue a “second request” for documents and information. The waiting period is extended until 30 days after the parties have substantially complied with the second request (or the agency grants early termination). Second-request reviews typically take months and can require significant compliance effort. (FTC)
3) Premerger tests — who must file
HSR filing obligations are triggered by statutory tests that combine:
– a size-of-transaction test (transaction value) and
– a size-of-person test (size of the acquiring and target parties).
There is also a “transaction-size only” threshold that can require filing even if size-of-person tests are not met.
Important practical point: the dollar thresholds are adjusted periodically for inflation. Do not rely on historic numbers — always check the current thresholds on the FTC website before deciding whether to file. (FTC; Federal Register)
Example (illustrative only — historical 2020 numbers):
– Base filing threshold (2020): $904 million (this number is updated annually).
– Statutory transaction-size test (2020): $376 million — transactions above this level can trigger filing even if the size-of-person test is not met.
– Statutory size-of-person thresholds (2020): one party with at least $18.8 million in assets or annual net sales and the other party at least $188 million (these banded thresholds shift with annual adjustments).
Because the statutory tests are detailed and nuanced (e.g., how to measure “person” size, when to aggregate assets, how to value stock-for-stock deals), companies should work with antitrust counsel early in the deal process. (FTC)
4) Filing fees
HSR filings require payment of a fee that varies by transaction size. Fees are set in tiers and change periodically. Example historical tiers (2020):
– Transactions > $94 million but < $188 million: $45,000
– Transactions ≥ $188 million but < $940.1 million: $125,000
– Transactions ≥ $940.1 million: $280,000
Check the FTC’s Filing Fee page for current fee levels before filing. (FTC)
5) Common exemptions and special situations
Several types of transfers are exempt from HSR filing requirements or have special rules. Typical examples:
– Transfers by gift, divorce, or death.
– Acquisitions of certain assets or voting securities below small-dollar thresholds or meeting specified exemptions.
– Acquisitions solely of real estate used for business (certain transfers are exempt).
– Acquisitions pursuant to bankruptcy proceedings may have a shortened 15‑day waiting period.
– Passive minority investments and “insignificant” holdings may be exempt if they meet specific criteria (no control, no board representation, no information rights, etc.).
– Cash tender offers for publicly traded companies and certain bankruptcy acquisitions have a 15‑day waiting period instead of 30 days.
– Foreign merger notification regimes: separate filings and timing may be required in the EU, UK, China, Canada, and other jurisdictions; coordination is often necessary. (FTC)
Because exemptions are factual and technical, do not assume a transfer is exempt—confirm with counsel and FTC guidance. (FTC)
6) Enforcement, remedies, and risks of noncompliance
– Remedies for anticompetitive mergers can include negotiated divestitures, injunctions, or litigation seeking to block or unwind transactions. DOJ or FTC can seek preliminary and permanent injunctions in federal court. (FTC)
– Failure to file when required exposes parties to civil penalties (statutory monetary fines), and the agencies can seek injunctive relief. Providing false or misleading information in an HSR filing can carry criminal penalties in some circumstances.
– “Gun-jumping” (taking steps to exercise control or integrate businesses before clearance) can lead to enforcement action and remedies. (FTC)
7) Practical steps — pre‑deal through post‑closing (checklist)
A. Pre‑deal planning (as soon as deal contemplated)
– Engage antitrust counsel and M&A advisors early.
– Perform a quick HSR screen:
• Estimate transaction value (consider cash, stock, contingent value instruments, debt assumed, etc.).
• Estimate each party’s size (total assets and annual net sales or revenues).
• Check current HSR thresholds and fee schedule on the FTC site.
– Decide whether to plan for an HSR filing; consider timing (coordinate with other regulatory filings and closing conditions).
– Begin a data checklist and identification of documents likely requested in a second request (customer lists, contracts, financials, market share data, organization charts, etc.). Early organization reduces delay if a second request arrives.
B. Preparing and submitting the HSR filing
– Collect required information: identities of parties, business descriptions, revenues, assets, subsidiaries, competitive overlaps, documents (bylaws, voting agreements, key contracts), board and management information, and stock/asset schedules.
– Draft the HSR Form with counsel and confirm supporting exhibits are in appropriate form (certified copies where required).
– File electronically and pay filing fee. Retain proof of filing and proof of payment.
C. Waiting period management
– Observe the statutory waiting period; do not close or exercise control until clearance or early termination.
– Prepare public messaging and internal instructions to avoid accidental integration steps.
– If the government requests additional information but does not issue a second request immediately, respond promptly and factually; communications should be coordinated with counsel.
D. If you receive a second request
– Understand scope and negotiate narrow scopes where appropriate (second requests can be narrowed).
– Start compliance immediately: identify, collect, review, and produce documents; be prepared for depositions/interviews.
– Keep careful privilege logs and privilege assertion procedures.
– Expect the agency to set deadlines and to seek extensions if compliance is incomplete.
– Consider remedies discussions (divestiture options, conduct remedies) early if competitive overlap is central.
E. Post‑clearance or post‑litigation
– If clearance obtained, proceed to close subject to any agreed hold-separate or divestiture remedies.
– If litigation occurs, be prepared for extended timelines and increased costs; contingency planning for alternative deal outcomes is advisable.
8) Timing expectations
– Initial statutory waiting period: typically 30 calendar days (15 days for certain tender offers/bankruptcy).
– If a second request is issued: the waiting period is suspended until 30 days after the parties have substantially complied with the second request (practical time to substantially comply commonly measured in months — often 3–6 months, but can be longer depending on scope and complexity).
– Early termination requests can shorten review but are not guaranteed. (FTC)
9) Practical tips and best practices
– Do an HSR screen as soon as a transaction is contemplated — don’t wait until signing or structuring is complete.
– Coordinate antitrust counsel with deal counsel, tax, and integration teams to avoid gun-jumping.
– Maintain a centralized data room and document checklist from the early stages to expedite responses.
– Consider whether filing early (voluntary) makes sense to reduce business risk, or whether a strategic delay (if lawful) aligns with negotiation strategy.
– Coordinate U.S. HSR timing with foreign merger filings to reduce overall deal risk and avoid surprise holds.
– Keep communications with regulators responsive, factual, and managed through counsel.
10) Where to go for definitive guidance and the forms
– Federal Trade Commission — HSR overview, guidance, filing thresholds, fees, and the HSR Form:
– HSR Notification and Report Form (official form and instructions) — available on the FTC site.
– U.S. Department of Justice, Antitrust Division — enforcement policies and litigation history:
– For a plain‑language summary: the Investopedia page you provided is a useful primer but always rely on FTC/DOJ and antitrust counsel for transaction-specific determinations. (Investopedia; FTC)
Selected sources
– Federal Trade Commission. “Premerger Notification and the Merger Review Process.” (FTC)
– Federal Trade Commission. “Steps for Determining Whether an HSR Filing is Required.” (FTC)
– Federal Trade Commission. “Filing Fee Information.” (FTC)
– U.S. Congress, Public Law 94‑435 (HSR Act).
– Investopedia. “Hart‑Scott‑Rodino Antitrust Improvements Act of 1976.” (source link you provided)
– Run a sample HSR screen for a hypothetical deal (walk through the size-of-transaction and size-of-person tests), or
– Provide an actionable second‑request readiness checklist (document types, estimated timelines, staffing needs).