On June 13, 2012, the Federal Trade Commission and the Department of Justice published their Hart-Scott-Rodino Annual Report Fiscal Year 2011 for the period from October 1, 2010 to September 30, 2011. The Annual Report summarizes Federal Trade Commission and Department of Justice actions conducted under the Hart-Scott-Rodino Antitrust Improvements Act, or HSR Act, in fiscal year 2011. The number of HSR filings in fiscal 2011 increased by 24% over the number of filings in 2010. And the agencies continue to enforce the HSR Act's notification requirements with respect to acquisitions of company stock by corporate officers and directors, often in an inadvertent "failure to file" situation.
This Update provides key highlights of the Annual Report and offers practical advice.
The Annual Report Shows a Slight Decrease in Percentage of Deals Investigated
In fiscal 2011, 1,450 transactions were reported under the HSR Act, a 24% increase from the 1,166 transactions reported in fiscal 2010. The Federal Trade Commission or the Department of Justice investigated approximately 18% of those 1,450 transactions (compared to approximately 20% of the 1,166 transactions investigated in 2010). Of the transactions investigated in fiscal 2011, about 23% resulted in the issuance of second requests, a very slight increase over those in 2010. And of those transactions that were issued second requests, 64% resulted in an abandoned or restructured deal, a consent decree requiring the parties to divest assets, or litigation in federal district court (compared to 87% in 2010).
2007 2008 2009 2010 2011 Change from 2010 Transactions Reported 2,201 1,726 716 1,166 1,450 24% Investigated 14% 18% 23% 20% 18% -8% Investigated – 2nd Request Issued 21% 14% 20% 21% 23% 9% 2nd Requests Resulting in Challenge 54% 90% 100% 87% 64% -27% Agencies Continue to Cast a Broader Net in Investigations. Although the number of acquisition transactions in fiscal 2011 increased 24% over fiscal 2010, the total is still markedly below the average of approximately 1,960 transactions reported for the fiscal years 2007 and 2008. With fewer transactions being reported under the HSR Act, the agencies are investigating and challenging more transactions that are too small to require reporting under the HSR Act, many of which have already been consummated. And reported transactions that raise competition issues are more likely to be investigated than...