In response to the Federal Trade Commission’s (FTC) Notice of Proposed Rulemaking on 16 CFR Parts 801 and 803—Premerger Notification; Reporting and Waiting Period Requirements (NPRM), the Software & Information Industry Association (SIIA) has provided comments. SIIA’s comments revolve around several key points:
- The Role of the HSR Act and the Premerger Notification Program: The comments explain the historical context of the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act) and its role in requiring companies to notify enforcement agencies before certain mergers. The purpose of this notification is to allow the agencies to review and potentially block mergers that could harm competition.
- The FTC’s Proposed Changes: SIIA discusses the FTC’s proposed changes to the premerger notification rules, which aim to expand the scope of documents required for submission, including early drafts, narrative explanations of business operations, and additional information about labor markets, defense contracts, and messaging systems. The comments highlight that these changes would substantially increase the burden on filers, particularly on small- and medium-sized businesses.
- Comments on the Proposed Changes: SIIA argues that the proposed changes could deter innovation, hinder economic growth, and disproportionately affect small companies and startups. The comments point out that the FTC’s estimate of the additional burden on filers is significantly lower than what practitioners in the field believe the actual impact would be. Moreover, the comments question the feasibility of the agencies reviewing the vast amount of additional information during the initial waiting period and highlight concerns about the chilling effect on merger activity.
SIIA notes that the FTC’s proposed changes draw inspiration from practices in the European Union and the United Kingdom but highlights the significant differences in the number of merger notifications received by these jurisdictions compared to the U.S. The comments suggest that these international practices may not be directly applicable to the U.S. context.
SIIA concludes its comments by suggesting that, unless there is a strong justification (which has not been provided), the proposed changes may be inconsistent with the legislative intent behind the HSR Act and the purpose of the Paperwork Reduction Act. Therefore, the association recommends that the Agencies rescind the NPRM and start over.
