NWRA opposes proposed premerger notification rules

The National Waste & Recycling Association (NWRA), Arlington, Virginia, announced earlier this month that the association and its coalition allies sent a letter to the chairs and ranking members of the House and Senate Judiciary Committees regarding changes to antitrust policies used by Federal Trade Commission (FTC) and the Department of Justice (DOJ).

The NWRA says the proposed policies “place significant burdens on businesses in the early stages of the merger and acquisition phase.”

According to a news release from the NWRA, the proposal rules, which would require businesses to submit substantial information in their initial notification of a merger or acquisition, “will stifle innovation and affect transactions that could benefit consumers and the U.S. economy. It would impose considerable costs on businesses and inhibit transactions that have no competitive threat.”

“The proposed changes to the premerger notification rules reject the Hart-Scott-Rodino (HSR) Act standards relied upon by businesses for more than 45 years," interim NWRA President and CEO Jim Riley writes in the letter. "Our members depend on regulatory certainty to grow and expand their businesses. We urge Congress to prevent the FTC and DOJ from adopting the proposed overhaul of the premerger filing requirements.”

On June 27, the Federal Trade Commission (FTC) issued its notice of proposed rulemaking (NPRM) regarding the HSR Form change. The NPRM was published in the Federal Register on June 29, and Aug. 28 originally was established as the deadline for the submission of comments. However, this date was extended to Sept. 27 in response to requests by interested parties despite the FTC saying it believed the original 60-day period, which was 62 days after public release of the notice of proposed rulemaking, “was sufficient for meaningful comment and public participation.”

The HSR Act and its implementing rules require the parties to certain mergers and acquisitions to submit premerger notification to the FTC and the Antitrust Division of the U.S. DOJ (the agencies), which involves completing HSR Forms, and to wait a specified period of time before consummating their transaction, generally 30 days or 15 days for cash tender offers and certain types of bankruptcies.

The proposed changes to the HSR Form and instructions would enable the agencies to more effectively and efficiently screen transactions for potential competition issues within the initial waiting period, the FTC says in its announcement of the proposed rulemaking and comment period. This initial competition review is critical for the agencies to identify transactions that require an in-depth investigation, the FTC adds. During an in-depth investigation, the agencies determine whether the proposed transaction would violate the antitrust laws and, if so, seek to block the proposed transaction to prevent harm to the American public.

The proposed changes involve a number of key proposals:

• provision of details about transaction rationale and details surrounding investment vehicles or corporate relationships;
• provision of information related to products or services in both horizontal products and services, and nonhorizontal business relationships such as supply agreements;
• provision of projected revenue streams, transactional analyses and internal documents describing market conditions and structure of entities involved such as private equity investments;
• provision of details regarding previous acquisitions; and
• disclosure of information that screens for labor market issues by classifying employees based on current Standard Occupational Classification system categories.

These proposed changes also address Congressional concerns that subsidies from foreign entities of concern can distort the competitive process or otherwise change the business strategies of a subsidized firm in ways that undermine competition following an acquisition, the FTC says. Under the Merger Filing Fee Modernization Act of 2022, the agencies are required to collect information on subsidies received from certain foreign governments or entities that are strategic or economic threats to the United States.