Companies are rushing to notify antitrust agencies about pending deals before new, stricter merger filing rules, expected to be enacted during President Joe Biden's administration, take effect this week, according to lawyers.
The U.S. Federal Trade Commission is anticipated to face a threefold increase in workload for obtaining regulatory clearance for transactions exceeding $126.4 million.
The new rule aims to modernize merger clearance requirements to accommodate the rise in U.S. private equity deals, offering regulators more insights for faster deal approvals, as stated by the FTC.
With pending deals, companies are hurrying to avoid increased compliance costs of $40,000 or more, and are capitalizing on the existing 40 years of guidance under the old rule rather than navigating the untested new regulations.
Antitrust partner at Fried Frank, Aleksandr Livshits, noted, There is going to be a mad rush to get filings in this week.
The updated merger filing rule under the Hart-Scott-Rodino Act, endorsed unanimously in October by the Federal Trade Commission, expands the data collection requirements. Chairman Andrew Ferguson described the rule as "a lawful improvement over the status quo" upon passing.
Rising merger filings could potentially impact scrutiny levels, amid concerns about deals slipping through without adequate review amidst the increased filings.
The American Economic Liberties Project flagged the surge in filings, emphasizing the need for stringent scrutiny to safeguard fair competition.
While attorneys strive to meet the deadline, there is a watchful eye on whether the enforcement of the new rule could be delayed.
Lisl Dunlop, an antitrust partner at Axinn, Veltrop & Harkrider, expressed optimism about a possible suspension of the rule before it becomes effective, while many firms challenge the new disclosure requirements.
Members of Congress are contemplating legislative measures to assess the rule, with hopes for potential retention of the existing regulations for continuity in deal procedures.