Akin Gump Antitrust Leader Corey Roush Discusses Second Requests in Hart-Scott-Rodino Filings
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Akin Gump antitrust/competition practice leader Corey Roush was interviewed for Illuminating eDiscovery, a blog published by software and data management service provider Lighthouse.
In the interview, “A Dynamic HSR Landscape Spells Uncertainty for Second Requests,” Roush discusses shifts in second requests in Hart-Scott-Rodino (HSR) filings since the start of the Biden-Harris administration, as well as the challenges faced by companies concerning large data volumes, strict requirements, and policy and enforcement shifts on the part of the Federal Trade Commission (FTC) and the Department of Justice (DOJ) Antitrust Division.
Roush notes that, per the FTC, “[I]f the initial [merger] review has raised competition issues, the agency may extend the review and ask the parties to turn over more information so it can take a closer look at how the transaction will affect competition (this action often is referred to as a ‘second request.’).”
Following are highlights from his interview:
- The current landscape: “I see outward signs of moderate hostility towards mergers that have created general uncertainty. This owes mostly to statements by leadership at both agencies rather than unexpected actions. For the most part, we are seeing Second Requests issued when one would traditionally expect them, and we are also seeing some high-profile public transactions like Elon Musk/Twitter and PMI/Swedish Match avoiding Second Requests.”
- How regulatory agencies are pursuing enforcement: “Overall, by expecting companies to accommodate the agencies. You see cases where companies agree to delay consummation until three or four months after complying with a Second Request, so that agencies have more time to review. And even when companies agree to delay consummation under a timing agreement, the agencies may ask for even more time.”
- Policy changes that have changed HSR/second request landscape: “The big one in my mind affects prior approval. In July of 2021, the FTC — by a 3-2 party-line vote — adopted a new policy that requires ‘buyers of divested assets in Commission merger consent orders to agree to a prior approval for any future sale of the assets they acquire in divestiture orders.’ This rescinds a nearly 30-year-old policy and creates real complications in the divestiture process. To state the obvious, an asset is less attractive if it comes with a restriction on its sale and a requirement that the divestiture buyer sign a consent decree with the FTC.”
- What to expect from regulators: “Longer reviews, with unpredictable engagement. Some deals that do not present clear competition problems are taking longer than one might traditionally expect…The uncertainty applies mostly to certain high-profile, high-scrutiny areas like tech, pharma, and agriculture. Deals outside of those areas appear to be more predictable and consistent with past scrutiny.”
(To read the full Q&A, click here.)
