Don’t Hold Back: FTC Offers New Guidance on HSR Filing Obligations

As discussed previously on this blog, the Hart-Scott-Rodino Antitrust Improvements Act of 1976 requires parties to certain proposed transactions to submit detailed premerger notification filings and wait for clearance before consummating the deal. To facilitate the antitrust review, merging companies that meet the HSR thresholds are required to submit a wealth of information about their businesses and the proposed transaction, including annual reports, market analyses, and agreements and other documents bearing on the deal. Despite these broad requirements, the FTC found that some merging companies were withholding side agreements relevant to the antitrust review process on the theory that they were ancillary to the main agreement and/or protected by a common interest privilege or joint defense agreement.

On December 20, 2017, the FTC issued additional guidance in connection with Item 3(b) of the HSR Form, which requests “copies of all documents that constitute the agreement(s) among the acquiring person(s) and the person(s) whose assets, voting securities or non-corporate interests are to be acquired.” The FTC’s post clarifies that “all” really does mean all:

[A]ny agreement entered by the parties or their representatives that bears on the terms of the transaction and is binding on the parties must be submitted as part of the HSR filing. This includes any agreement that alters the terms of the merger during the antitrust review process, regardless of where those commitments are written down. If there is an enforceable agreement that binds the parties to take actions related to antitrust clearance, it must be submitted as part of the HSR form.  (Emphasis in original).

The FTC noted that nonbinding analyses and recommendations need not be turned over in response to Item 3(b), though they may be responsive to other parts of the HSR Form. But the agreements themselves must be provided and, according to the FTC, are not protected by the work product doctrine or any other privilege or protection.

Practitioners are well advised to take note of this guidance. As the FTC cautions in its post, failure to comply with the HSR Act can result in significant penalties, including restarting the HSR waiting period and civil penalties of over $40,000 per day.