Healthcare companies pursuing mergers and acquisitions will be required to submit additional information about their proposals under a final rule approved by the Federal Trade Commission Thursday.
The final rule amends the Hart-Scott-Rodino Act form, which had not been updated for 46 years. When the rule goes into effect, likely early next year, healthcare companies involved in M&A proposals must list acquisitions that occurred within the last five years, disclose private equity and minority stakeholders with decision-making authority and report supplier relationships shared by the merging parties to the FTC, among other requirements.
Related: Healthcare deals may slow under FTC proposal
“By reflecting modern day commercial realities, the HSR form updates in the final rule will provide the antitrust agencies with information that is actually probative as to whether a proposed deal risks violating the antitrust laws,” FTC Chair Lina Khan said in an accompanying statement.
The final rule, which had unanimous support from commissioners, is set to include a series of changes from the June 2023 proposal. Ten of the 29 proposed changes to the HSR form were rejected, while 17 were modified and two remained unchanged.
Here are several of the changes:
- The final rule removed the proposal for entities to disclose the total number of employees in the five largest worker categories, workers’ commutes and worker-related penalties issued by the Labor Department, National Labor Relations Board or Occupational Safety and Health Administration over the last five years.
- The final rule reduced the prior acquisition timeline to five years before the filing, down from 10 years. The regulation also added a $10 million minimum threshold to the prior acquisition disclosure requirement. There was no size threshold in the proposal.
- Healthcare companies will not have to estimate when a deal will close as part of the merger filing, which had been proposed. The final rule also will not require drafts of transaction-related documents.
- The final version eliminated an organizational chart mandate and the disclosure of limited partners who do not have management rights. Both would have been required by the proposed rule.
As part of the final rule, the commission is set to resume its early termination of merger filings.
Early termination allowed merging parties to close their proposed transaction sooner than the customary 30-day waiting period if the FTC determined there were no related competitive harms. The agency ended the early termination process in 2021 amid a growing backlog of filings.
