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Report Details HSR Antitrust Reviews, Enforcement

Melissa Klein Aguilar | February 23, 2011

2010 was apparently a busy year for merger and acquisition activity and, therefore, for antitrust enforcers. Following two years of decline, deals reported to antitrust enforcers under the Hart-Scott-Rodino Premerger Notification Program grew 63 percent in 2010.

The number of transactions reported to the agencies under the HSR Act rose to 1,166 in fiscal year 2010 (Oct. 1, 2009 - Sept. 30, 2010), from 716 in 2009, according to an annual report by the Federal Trade Commission and the Antitrust Division of the Department of Justice on their review of mergers under the Premerger Notification Program. After declines in 2008 and 2009, the total dollar value of reported transactions also increased, to $780 billion.

Depending on the value of the acquisition and, in certain deals, the size of the parties, the HSR Act generally requires certain proposed acquisitions to be reported to the FTC and Antitrust Division prior to consummation, followed by a waiting period (usually 30 days, or 15 days for a cash tender offer or a bankruptcy sale). Either agency can also issue a second request for additional information under the Clayton Act, which extends the waiting period. If either agency believes a proposed transaction may substantially lessen competition, it can seek an injunction in federal district court. The FTC may also challenge a transaction in administrative litigation.

During the year, the FTC challenged 22 transactions, resulting in 19 consent orders, one obtained after the filing of an administrative complaint, and the abandonment of three transactions. The Antitrust Division challenged 19 merger transactions. Ten were resolved by consent decrees, one is in litigation, and eight transactions were abandoned or restructured.

Second requests were issued in 46 merger investigations in 2010 (20 issued by the FTC and 26 issued by the Division), up 48 percent from the 31 second requests issued in 2009 (15 by the FTC and 16 by the Division). The percentage of transactions resulting in second requests decreased slightly from 4.5 percent in 2009 to 4.1 percent in 2010. That's the third highest percentage of the 10 years covered in the report, behind 2009 and 2002, when 4.3 percent of transactions resulted in second requests.

Early termination of the waiting period was requested in 84 percent (953) of the transactions reported in 2010, the same percentage requested in 2009. The percentage of requests granted increased from 69 percent to 74 percent in 2010.

In fiscal year 2010, clearance was granted to one or the other of the agencies to conduct an initial investigation in 19.7 percent of the total number of the transactions reported. In 2010, 24 corrective filings for violations were received, and the agencies brought one enforcement action, United States v. Smithfield Foods, Inc. and Premium Standard Farms, LLC, resulting in the payment of $900,000 in civil penalties.

The report notes that the agencies are collaborating with their international counterparts. During the past year, the FTC worked on more than 15 international merger investigations that involved coordination or cooperation with international counterparts. Of investigations closed during 2010, the Antitrust Division coordinated with one or more non-U.S. competition agencies in 11 matters.

Meanwhile, the HSR form is poised to get a makeover. Last year, the FTC proposed the most extensive overhaul to the form since the program took effect in 1978. The public comment period on the proposed changes ended Oct. 18.