- Antitrust regulators are proposing updated rules for merger review that would require companies to provide additional information about proposed deals, likely slowing down the rapid pace of healthcare transactions.
- The Federal Trade Commission and the Department of Justice would ask firms to give more details about reasons for the deal, investment vehicles or other corporate relationships, projected revenue, market conditions, the structure of business entities, earlier acquisitions and workforces.
- The Biden administration and antitrust regulators have been increasingly cracking down on merger and acquisition activity, including in the healthcare space as dealmaking accelerates.
Last year, the FTC and DOJ announced they were modernizing merger guidelines for finding and studying potentially anticompetitive deals, which the regulators argued needed review to function in a modern economy. In response, the American Hospital Association said guidelines don’t need “major revisions,” and that significant change could derail beneficial mergers that take years to put together.
Dealmaking between health services companies soared over the past two years. A recent report from PwC found volumes are holding steady even with high interest rates, increased regulatory scrutiny and other macroeconomic concerns.
The FTC argued its latest proposed rule will allow the agency to keep pace with the larger number and increased complexity of mergers.
The update would mark the first time in 45 years that antitrust regulators have significantly reviewed the Hart-Scott-Rodino Form that companies must complete when pursuing certain transactions. The FTC estimated it would take an additional 107 hours to fill out the new filing, which currently takes about 37 hours to complete.
In a statement, FTC Chair Lina Khan and Commissioners Rebecca Kelly Slaughter and Alvaro Bedoya wrote the House initially estimated the HSR Act would require advance notice for about 150 mergers each year, but regulators now receive more than 150 filings per month.
“Against the backdrop of these vast changes, the information currently collected by the HSR form is insufficient for our teams to determine, in the initial 30 days, whether a proposed deal may violate the antitrust laws,” they wrote. “Our staff are put in the position of expending significant time and effort to develop even a basic understanding of key facts.”
The rule could add months to the merger filing process for companies, Bloomberg Intelligence senior analyst Jennifer Rie told Bloomberg.
The proposed rule will be published in the Federal Register later this week.