Advice

Final FTC Pre-Merger Notification Rule: How an ALSP Can Provide Critical Support

Antitrust

On October 10, 2024, the United States Federal Trade Commission (FTC) issued its Final Rule governing pre-merger notification protocols under the Hart-Scott-Rodino Act (HSR). The Antitrust Division of the US Department of Justice signaled its agreement with the rules the same day.

In June 2023, the FTC published a proposed set of rules containing extensive changes to the filing requirements that observers agreed would substantially increase the time, effort, and cost of compliance. Although the Final Rule pares back some of the more criticized elements of the proposed rule, parties will still encounter increased disclosure requirements once it goes into effect in January 2025. The FTC notes that the Final Rule will increase the time needed for a filer to prepare an HSR filing by an average of 68 hours. Premerger Notification; Reporting and Waiting Period Requirements; Federal Trade Commission; Final Rule, pp. 127-128. Some commentators estimate that the preparation time to assemble the newly requested information and to collect, review, and produce related documentation could take two to three weeks, as opposed to one to three days under the present rules.

The Final Rule requires the merging parties to provide more information and documents than they do currently. An Alternative Legal Services Provider (ALSP) like Epiq can help to reduce the burden, cost and manage the process efficiently in three key areas.

Key Area #1: Identification and Production of Business Documents

“Business Documents” is the new term that applies to responsive HSR 4(c)/4(d) documents. New disclosure requirements include:

Drafts of transaction-related documents related to certain competitive topics shared with individual Board members must be produced. The current rules require the production of only those drafts reviewed by the entire Board or an entire sub-committee of the Board.
Certain plans and reports drafted in the “ordinary course” shared with the Board and the CEOs of the acquiring and acquired companies that discuss competition regarding any product or service of the other party to the transaction, as well as overlapping products, within one year of the filing date.
Transaction documents related to enumerated competitive topics from the “supervisory team lead,” the individual with primary responsibility for supervising the strategic aspects of the transaction.

How an ALSP can support: Business Documents will require analysis for both relevance and privilege and possibly to redact any non-deal related information.

Companies can achieve significant savings by having an ALSP conduct a targeted first-level review of these documents under counsel guidance.
ALSP teams apply advanced analytic tools, Generative Artificial Intelligence (Gen AI), and workflow automation to streamline and reduce the review and analysis process.
ALSPs also help companies systematically identify and collect prior versions of responsive Business Documents to limit the burden of review at the time of collection.

Key Area #2: Foreign Language Documents

All foreign language documents must now be translated. The Final Rule states: “[T]he Commission has determined that the translation requirement contained in the final rule is necessary and appropriate to enable the Agencies to quickly review submitted documents with English translations that have been certified as accurate.” Id. at 192.

How an ALSP can support: Companies and their counsel can work with an ALSP to translate documents in compliance with the Final Rule.

The Final Rule states: “Section 803.8 does not require any particular method of translation but specifies that, whatever translation method the parties choose, all verbatim translations must be readily understood, materially accurate, and complete. . . [I]n complying with the requirement to provide translations, parties must certify that translations are materially accurate even if they do not identify how they were created.” Id.
ALSPs can deploy automated or AI-driven technologies that provide accurate translations in less time and at a lower cost.

Key Area #3: Additional Disclosure Information

The parties must also disclose additional information types in their HSR filing. Some of the highlights include:

Areas of competitive overlap between the transaction parties, including planned or known products that compete with those of the other party.
Sales data for overlapping products or services over the most recent year.
Customer lists in overlapping areas or vertical relationships.
Description of certain supply relationships.
Additional information about minority shareholders, investment funds, and other investment vehicles.
Information on acquisitions over the previous five years.
The identity of certain officers and directors relating to possible interlocking directorate issues when there’s an overlap between parties.
Certain information relating to the ownership structure of the acquiring party.

How an ALSP can support:

An ALSP can identify and collect these types of structured and non-structured data in a manner that is forensically sound and quickly provide it for review and analysis, leveraging Gen AI to query larger volumes of data.
The ALSP team can work with company counsel to review the collected data and assess whether they are responsive to the HSR disclosure requirements or contain privileged content.

Conclusion

Although the Final HSR Rule does not contain some of the more onerous data-related provisions of the proposed rules, there still is an elevated disclosure requirement, drawing from various data sources. An ALSP can provide valuable assistance by identifying and collecting information from shared servers, structured databases, and non-structured data sources (email, messaging apps, etc.). Further, an ALSP can work seamlessly with deal counsel to efficiently organize and analyze the data, identify sensitive and privileged content, and provide production sets that comply with the disclosure rules. In addition to increasing efficiencies, an ALSP can drive lower prices for handling the data component of an HSR filing.

For further information, please reach out to Epiq’s Antitrust and Competition Practice Group team leaders: