FTC Changes Healthcare M&A Rules

FTC Healthcare Premerger Notifications Rule Changed

The Federal Trade Commission (FTC) mission is to promote competition, and protect and educate consumers. Under the Hart-Scott-Rodino Act (HSR), parties to certain mergers and acquisitions are required to submit premerger notification forms that disclose certain information about their proposed deal and business operations. The agencies use this information to conduct a premerger assessment in the short time allowed under the HSR Act, typically 30 days.

After over 45 years with no updates, the FTC has updated the Hart-Scott-Rodino Act (HSR) premerger notification form to require healthcare companies to provide more information to regulators ahead of merger and acquisition deals. 

The agency indicated the changes are intended to improve the ability of the FTC and Antitrust Division of the U.S. Department of Justice (DOJ) to identify illegal mergers and acquisitions prior to finalization of the merger. 

"The final rule requires additional information that is necessary to determine which deals require an in-depth antitrust investigation," the FTC said in a press release.

“Premerger review is a critical task for the antitrust agencies and to do it well, we need information about each deal’s potential antitrust risk,” said Shaoul Sussman, Associate Director for Litigation of the FTC’s Bureau of Competition. “This rulemaking is a much needed update to address changes in the marketplace that have undermined the agencies’ ability to detect and prevent illegal mergers, while at the same time creating a more efficient review process. The Bureau thanks the entire cross-agency team that has worked tirelessly on this important rulemaking.”

The 460-page final rule can be found here (PDF).

FTC Final Rule Requires More Information

The final rule updates the HSR form to screen proposed mergers in advance and identify those that may violate the antitrust laws.

Key reforms included in the final rule require:

• Additional transaction documents from the supervisor of each merging party’s deal team as well as a small set of high-level business plans related to competition;
• A description of the business lines of each filer to reveal existing areas of competition between the merging firms (including for products or services that are in development) and supply relationships; and
• Disclosure of investors in the buyer, including those with management rights.

The FTC’s Premerger Notification Office (PNO) will be working to provide future compliance guidance in advance of the final rule’s effective date.

Kris Gates, connect@healthendeavors.com