FTC and DOJ Release HSR Annual Report for Fiscal Year 2013

Practical Law Legal Update 1-568-7787 (Approx. 4 pages)

FTC and DOJ Release HSR Annual Report for Fiscal Year 2013

by Practical Law Antitrust

Published on 21 May 2014 • USA (National/Federal)

The Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice (DOJ) recently released their Hart-Scott-Rodino Annual Report to Congress required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) summarizing the agencies' merger enforcement efforts and providing information regarding the premerger notification program for fiscal year 2013.

The Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice (DOJ) recently submitted to Congress their Hart-Scott-Rodino Annual Report (HSR Report) for FY 2013 (October 1, 2012 through September 30, 2013) required under the HSR Act. The HSR Report summarizes the agencies' efforts to identify and investigate transactions that potentially raise antitrust concerns. It provides statistics about both the HSR premerger notification program and the agencies' merger enforcement activity.

The HSR Report contains statistics regarding filings submitted under the HSR program and the agencies' requests for clearance to investigate transactions, the issuance of Second Requests and enforcement activity. Unless otherwise specified, the statistics set out in this Update include only transactions that were correctly reported and do not include transactions for which filings were rejected for any reason by the FTC's Premerger Notification Office.

HSR Filings

The HSR Report states that in FY 2013:

2,628 total HSR filings were received (whether correctly made or not), about a 7% decrease from FY 2012.
1,326 transactions were reported under the HSR Act, a 7.2% decrease from FY 2012.
The cumulative dollar value of reported transactions was $815 billion, a 12% decrease from FY 2012.
Early termination of the HSR waiting period was:
- requested in 77% of reported transactions, down from 78% in FY 2012; and
- granted 80.5% of the time it was requested in those transactions, down from 82% in FY 2012.

Civil Penalties

The FTC and DOJ brought two actions against parties who failed to make HSR filings required under the HSR Act. These cases resulted in aggregate civil penalties of $1.2 million.

Agency Clearance

The HSR Report states that clearance to investigate was granted to the agencies in 16.9% of reported transactions in FY 2013 (217 transactions), or roughly one in six transactions. In FY 2012, clearance was granted in 14.7% of reported transactions (206 transactions).

In FY 2013, clearance was granted:

Most frequently in transactions valued at greater than $1 billion dollars, or 34.5% of the time, as was also the case in FY 2012.
To the FTC in 145 transactions (67% of transactions that obtained clearance).
To the DOJ in 72 transactions (33% of transactions that obtained clearance).

For more information on how the agencies obtain clearance see Practice Note, Hart-Scott-Rodino Act: Overview: Allocation of Cases Between the FTC and DOJ.

Second Request Issuance

In FY 2013, 47 transactions investigated resulted in a Second Request (3.7% of reported transactions). In FY 2012, the percentage of Second Requests issued was lower (3.5%), but the number of investigations was slightly higher (49). The division of Second Requests between the agencies in FY 2013 was as follows:

The DOJ issued 22 Second Requests (47% of those issued).
The FTC issued 25 Second Requests (53% of those issued).

Merger Enforcement

The HSR Report also contains information regarding the agencies' merger enforcement statistics. Together, the agencies brought enforcement actions in just over 2% of reported transactions in FY 2013, totaling 38 transactions. This number includes enforcement actions brought in transactions not reported under the HSR Act.

FTC Merger Enforcement

The FTC challenged 23 transactions that it concluded might have substantially lessened competition, resulting in:

16 consent decrees.
Four cases in which administrative complaints were issued, including one in which a motion for a preliminary injunction was filed in federal court.
One case in which a motion for a permanent injunction was filed in federal court.
Two transactions that were abandoned or restructured.

For summaries of these enforcement actions, see What's Market, Federal Merger Enforcement Actions.

FTC challenges were brought in a variety of industries, including:

Pharmaceuticals.
Hospitals.
High tech and industrial goods.
Casinos.
Energy.

DOJ Merger Enforcement

The DOJ challenged 15 transactions that led to:

Seven merger challenges brought in federal district court, prevailing on one challenge at trial resulting in a consent decree with five court challenges resulting in settlement without trial. One trial is pending.
Three abandoned transactions.
Three restructured transactions.
Two transactions in which the parties changed their conduct to avoid competitive problems.

For summaries of these enforcement actions, see What's Market, Federal Merger Enforcement Actions.

The DOJ challenged transactions in several industries, including:

Airlines.
Beer.
Internet product ratings and review platforms.

FTC and DOJ Release HSR Annual Report for Fiscal Year 2013 | Practical Law