11.4.3. Antitrust Approval
As mentioned above, most regulatory issues will vary by industry and other factors. However, there are M&A regulatory issues that are common enough to be fair game for the exam. One is SEC registration, but this is a bigger issue for the buyer so we’re saving it for Chapter 12. Another common type of regulatory hurdle involves antitrust law. All sizable mergers and acquisitions are subject to the pre-merger notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR). If a merger or acquisition is subject to HSR, both parties to the transaction must notify the Federal Trade Commission (FTC) and the Department of Justice (DOJ) of the pending transaction. The formal HSR filing takes place as soon as possible after the signing of the definitive agreement.
After filing, there is a 30-day waiting period before the transaction can close. (The waiting period is only 15 days for cash tender offers.) During this 30-day period, the agencies review the filing to determine whether the transaction poses any antitrust concerns. The parties can request an early termination of the waiting period, but the agencies are not obligated to grant the request.
The government may request additional information before the end of the 30-day waiting period. This “second request” extends the waiting period for up to 30 more days, while both parties provide the additional information. If the feds don’t like what they see, they can seek an injunction against the merger or may demand that one of the parties sell off certain assets or subsidiaries.
So what transactions are subject to the notification requirement and 30-day waiting period? Transactions are subject to size-of-transaction and size-of-person tests. In most cases, both tests must be met to trigger the pre-merger notification. However, for very large transactions, only the size-of-transaction test must be met.
• Size of the transaction. Greater than $