Reporter Resources: Merger Process
Steps in Merger Process
Generally, companies proposing a deal – currently valued at more than $63.1 million (the thresholds are adjusted annually) and if no exemptions apply – have to report the proposed transaction to the FTC and DOJ. Once a complete filing is received, the agencies then have 30 days to conduct a preliminary premerger investigation (15 days in the case of a cash tender offer or a bankruptcy) during which time the parties cannot consummate the transaction.
After a preliminary review of the initial filing, the agencies can:
- terminate the waiting period (grant Early Termination or ET), allowing the parties to consummate the transaction;
- allow the waiting period to expire, which allows the parties to consummate the transaction;
- OR one agency may decide to issue a second request to the companies for more information.
If a second request is issued by the Commission, the companies must provide the information requested and certify that they have substantially complied with the request. Once the parties have substantially complied with the request and unless there is an alternate timing agreement, the Commission has 30 additional days (10 in the case of a cash tender offer or a bankruptcy) to complete its review of the transaction and to take action if necessary. The Commission may decide at this point to:
- close the investigation;
- enter into a consent agreement with the companies;
- seek a preliminary injunction in federal district court; and/or
- file a Part III complaint.
Confidentiality of Investigations
The premerger notification process is nonpublic. This is required by statute. The only thing the FTC can do is explain the premerger process in general to reporters and others. The only public information available is an announcement of early termination of the waiting period which is posted on the agency's web page. Information about the Hart-Scott-Rodino (HSR) Act, the act that governs the pre-merger review process, is on the FTC’s Web site.
In limited circumstances, the FTC will confirm the existence of an investigation when:
- the companies have said the FTC is investigating; or
- the parties have confirmed the investigation in a Securities and Exchange Commission filing.
All Commission merger investigations are nonpublic until:
- the investigation is closed and a letter announcing this is posted on the FTC’s Web site;
- an early termination notice is issued;
- a complaint is filed and publicly announced in federal district court and/or in a Part III proceeding; or
- a consent agreement is reached and publicly announced.
Even when these announcements are made, the FTC does not disclose details, documents, evidence obtained in investigations. (this applies to merger and conduct investigations). Daily listings of transactions that have been granted early termination of the HSR pre-merger waiting period can be found on the FTC Web site.
The Commission cannot discuss what it will be looking at in a publicly confirmed merger investigation. Each investigation is handled on a case-by-case basis. For insight into what the agency may consider, please review standards found in the Commission’s Horizontal Merger Guidelines
The Commission does not comment on the issuance of a second request or whether companies have certified substantial compliance with such a request. Unless the Commission issues a statement explaining its reasons for doing so, the FTC does not typically comment on why an investigation was closed without any action being taken.
Useful Links
Recent Hart-Scott Rodino-related rulemakings can be found at:
http://www.ftc.gov/bc/hsr/rulemaking.shtm.
Information on the pre-merger e-filing program can be found at:
http://www.ftc.gov/opa/2006/06/premerger.shtm.
The Bureau of Competition’s Horizontal Merger Guidelines can be found at:
http://www.ftc.gov/bc/bcburguidelines.shtm.
The Commission’s commentary on the Horizontal Merger Guidelines, published in 2006, can be found at: http://www.ftc.gov/os/2006/03/CommentaryontheHorizontalMergerGuidelinesMarch2006.pdf.
