1) Is a merger control regulation in force?

Yes. On the federal level, Section 7 of the Clayton Act (15 U.S.C. § 18) prohibits acquisitions which may substantially lessen competition or tend to create a monopoly. The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (15 U.S.C. § 18a, the “HSR Act”) governs premerger notification in the United States. In addition, the Federal Trade Commission (“FTC”), with concurrence of the Antitrust Division of the Department of Justice (“DOJ”, and collectively with the FTC, the “Agencies”), promulgates regulations under the HSR Act. 

Note that individual states within the U.S. also have their own antitrust laws and regulations (this chapter focuses on the U.S. federal regime).  These laws and regulations do not require general merger control filings, but may require notifications for certain industries, such as healthcare, insurance and groceries. Some states require submission of merger control notification for any transaction that has the requisite nexus to that state. The number of states that are adopting general and industry specific merger control notification requirements is presently changing and merging parties should consult counsel before making any determination as to state merger filing obligations.

2) Which authorities enforce the merger control regulation?

Both the FTC and the DOJ enforce the Clayton Act, and may sue to block a merger in federal district court. The FTC also has its own administrative court process. In addition, private parties may bring an action in federal district court.  

Both the FTC and the DOJ enforce the HSR Act, although only the DOJ may bring an action in federal district court to obtain civil penalties for a violation of the HSR Act. Decisions of the FTC or of a federal district court may be appealed to a federal circuit court, and a federal circuit court’s decision may be appealed to the U.S. Supreme Court.

3) Relevant regulations and guidelines with links:

4) Does general competition regulation apply to mergers or ancillary restrictions?

Generally, restrictions of competition that are ancillary to the merger, for instance a standard non-competition obligation on the seller, are acceptable as long as the procompetitive benefit of the restriction outweighs any anticompetitive effect. However, restrictions that go beyond what may be considered ancillary may be caught by the general prohibition on anticompetitive agreements (Section 1 of the Sherman Act, 15 U.S.C. § 1).  While the FTC does not have jurisdiction to enforce the Sherman Act, Section 5 of the FTC Act (15 USC § 45(a)) prohibits unfair and deceptive acts and practices, which the FTC has historically interpreted as prohibiting anticompetitive agreements in line with Section 1 of the Sherman Act.

Section 1 of the Sherman Act or Section 5 of the FTC Act may in special circumstances be used to oppose a transaction as an anticompetitive agreement (not merely a specific restriction in the transaction documents). For example, the general prohibition on agreements in restraint of trade under Section 1 of the Sherman Act or Section 5 of the FTC Act as well as the prohibition on acquisitions that may substantially lessen competition under the Section 7 of the Clayton Act may be applied to full-function joint ventures that have coordination of the market behavior of the parent companies as their object or effect. Furthermore, a company may be found to violate the prohibition on monopolization or attempted monopolization in Section 2 of the Sherman Act (15 U.S.C § 2) by acquiring one or more competitors. 

5) May an authority order a split-up of a business irrespective of a merger?

Yes. Section 2 of the Sherman Act prohibits monopolization or attempted monopolization. If a company is found to be a monopolist, a court may order a split-up of the business.  

6) Other authorities that also require merger filing or may prohibit transaction
(Note that this may not be an exhaustive list and that industry-specific legislation should always be considered. Furthermore, a merger will often require change of registrations with – but not approval from – the companies register, land register and authorities that have issued permits for the activities of the merging parties.)

Electronic communications networks and services

Mergers between two or more businesses that provide electronic communications networks and services are subject to approval by the Federal Communications Commission (FCC) if the acquisition involves an FCC license. Before a company may assign an FCC license to another company or acquire a company holding an FCC license, it must receive FCC approval. The FCC reviews filings to determine whether the transaction is in the public interest.  The approval of the FCC is in addition to antitrust approval of the Agencies.

Financial businesses

Banking organizations are generally required to seek prior approval from the Federal Reserve, the central bank of the United States, to become a bank holding company, to acquire ownership in a bank holding company, or to engage in certain new activities. The Federal Reserve also reviews filings by individuals and companies that seek to acquire ownership in a bank holding company or state member bank. 

For bank holding company applications, the Federal Reserve is required to take into account the likely effects of the acquisition on competition, the convenience and needs of the communities to be served, the financial and managerial resources and future prospects of the companies and banks involved, and the effectiveness of the company’s policies to combat money laundering.

Depending on the applicable banking regulation, the approval of the Federal Reserve may be in addition to antitrust approval of the Agencies.

Electricity and utilities

The Federal Energy Regulatory Commission (FERC) reviews certain mergers and acquisitions and corporate transactions by electricity companies.  FERC generally takes into account three factors in analyzing proposed mergers: the effect on competition, the effect on rates, and the effect on regulation. In general, FERC approval is required for acquisitions of utility companies valued in excess of $10 million.  FERC reviews filings to determine whether the transaction is in the public interest. The approval of FERC is in addition to antitrust approval of the Agencies.

Transportation

The Surface Transportation Board (STB) reviews freight rail restructuring transactions, including mergers, line sales, line construction, and line abandonments. The STB has exclusive jurisdiction over railroad mergers. The STB also has jurisdiction over certain passenger rail matters, the intercity bus industry, non-energy pipelines, household goods carriers’ tariffs, and rate regulation of non-contiguous domestic water transportation (marine freight shipping involving the mainland United States, Hawaii, Alaska, Puerto Rico, and other U.S. territories and possessions). The STB reviews filings to determine whether the transaction is in the public interest.  As noted above, the STB has exclusive jurisdiction over railroad mergers and the Agencies do not review such mergers.

Foreign investment control

The Committee on Foreign Investment in the United States (CFIUS) has the authority to review foreign investment in the United States pursuant to Section 721 of Title VII of the U.S. Defense Production Act of 1950, as amended, including by the Foreign Investment and National Security Act of 2007 (FINSA) and the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). CFIUS is an interagency body comprised of representatives from certain U.S. federal government agencies that reviews transactions involving foreign investment to determine the effect of such transactions on the national security of the United States. If CFIUS determines such transactions present national security concerns, CFIUS may require that transaction parties undertake mitigation measures to address the national security concerns, or if such concerns cannot be mitigated, recommend that the President of the United States prohibit the transaction. 

CFIUS jurisdiction

CFIUS has jurisdiction to review transactions involving a foreign person acquiring certain rights and interests in a U.S. business or certain U.S. real estate. CFIUS defines foreign persons as non-U.S. foreign nationals, foreign governments, or foreign entities, as well as U.S. entities that are controlled by such non-U.S. foreign nationals, foreign governments, or foreign entities. Foreign entities include entities that are incorporated outside of the United States and either also maintain a principal place of business outside of the United States or primarily trade their equity securities on foreign exchanges. When a foreign person is involved in a transaction, CFIUS will have jurisdiction to review a transaction on the following three bases:

1. “Covered control transactions”, which are transactions where a foreign person acquires “control” of a U.S. business. CFIUS defines “control” broadly as the power, direct or indirect, whether or not exercised, through ownership, board representation, contractual arrangements, or other means, to determine, direct, or decide important matters affecting an entity.  Accordingly, there is no specific ownership threshold that constitutes “control” for CFIUS purposes, and the determination of “control” is specific to the terms of each transaction upon considering all relevant features that could result in the power to determine, direct, or decide a U.S. business’s important matters. 
2. “Covered investments”, which are transactions where a foreign person acquires a noncontrolling investment with certain enumerated rights in a “TID U.S. business.” Even when a foreign person does not gain control of a U.S. business, CFIUS can still have jurisdiction over a noncontrolling investment if the transaction affords the foreign person certain rights and the U.S. business constitutes a “TID U.S. business”—which is a term defined under the CFIUS regulations to cover particularly sensitive U.S. businesses from a national security perspective that are engaged with critical technology, critical infrastructure, and/or sensitive personal data.  The noncontrolling rights in a TID U.S. business that can result in CFIUS jurisdiction are: (a) access to material nonpublic technical information in the possession of the TID U.S. business; (b) membership, appointment, or observer rights on the board of directors or equivalent governing body of the TID U.S. business; and (c) involvement in the substantive decision making of a TID U.S. business regarding its engagement with critical technology, critical infrastructure, and/or sensitive personal data. 
3. “Covered real estate transactions”, which are certain transactions where a foreign person acquires real estate in the United States. For transactions that involve real estate as opposed to a U.S. business, CFIUS has jurisdiction over such transactions when a foreign person acquires certain property rights in sensitive real estate in the United States. Sensitive real estate that can result in CFIUS jurisdiction is property within a certain distance from certain ports and military installations, as defined and subject to certain exceptions within the CFIUS real estate regulations. 

CFIUS mandatory filing requirements

Certain transactions within CFIUS’s jurisdiction require that a mandatory filing be made with CFIUS. These include:

1. Transactions involving a critical technology TID U.S. business where a U.S. regulatory authorization would be required for the export, reexport, transfer (in-country), or retransfer of such critical technology to that foreign person or certain holders of voting interest in that foreign person; and
2. Transactions involving any TID U.S. business where a foreign person obtains at least 25% voting interest in the TID U.S. business, and a foreign government directly or indirectly holds 49% or more voting interest in that foreign person.

However, excepted investors, which are foreign persons from certain countries that meet specific requirements set forth in the CFIUS regulations are not subject the CFIUS mandatory filing requirement. Currently, excepted investors are limited to investors from Australia, Canada, New Zealand, and the United Kingdom (but not including British Overseas Territories or the Crown Dependences).

If subject to the CFIUS mandatory filing requirement, parties must make a CFIUS filing at least 30 days prior to closing their transaction. Failure to make a CFIUS mandatory filing can result in civil monetary penalties equal to $5 million or the value of the transaction, whichever is greater.

Particularly sensitive sectors and activities 

CFIUS generally has the discretion to find national security concerns in any type of transaction, although certain sectors and activities have been highlighted in CFIUS legislation and executive materials.   

CFIUS legislation and regulation primarily focuses on the areas that implicate the TID U.S. business definition—critical technology, critical infrastructure, and sensitive personal data.  Transactions involving U.S. businesses involved in such areas, even if the U.S. business does not formally meet the definition in the CFIUS regulations to be a TID U.S. business, can expect potential CFIUS scrutiny into any foreign investment. Critical technology in particular can cover a variety of items, with the CFIUS regulations’ definition of critical technology potentially covering software developed by a U.S. business, even if only for internal use, that uses or calls upon encryption functionality. 

A February 2025 Presidential memorandum from President Trump outlined the America First Investment Policy, which directed CFIUS to scrutinize strategic sectors including “technology, critical infrastructure, healthcare, agriculture, energy, [and] raw materials.”  Accordingly, under the Trump Administration, CFIUS will likely more closely review foreign investment related to such sectors. Although other objectives of the presidential memorandum do not explicitly mention CFIUS, such as protecting “farmland and real estate near sensitive facilities” and “restrict[ing] foreign adversary access to United States talent and operations in sensitive technologies (especially artificial intelligence),” the Trump Administration can be expected to use CFIUS to implement these policy goals, and CFIUS is thus likely to closely review foreign investment in such areas. 

Additionally, the still-active September 2022 executive order from President Biden directed CFIUS to closely consider foreign investment effects on microelectronics, artificial intelligence, biotechnology and biomanufacturing, quantum computing, advanced clean energy (such as battery storage and hydrogen), climate adaptation technologies, critical materials (such as lithium and rare earth elements), and elements of the agriculture industrial base related to food security.  Even if the Trump Administration rescinds this executive order, CFIUS may still well consider the areas listed in the Biden executive order to be worthy of close review. 

CFIUS filing process

If making a CFIUS filing, parties to a transaction can opt for a long-form “notice” filing or a short-form “declaration” filing. 

A CFIUS notice requires information from the foreign investor and the U.S. business to a transaction that is responsive to specific prompts in the CFIUS regulations.  Parties may file a draft notice with CFIUS, allowing CFIUS to prepare comments on the notice before the formal review period begins.  Once CFIUS accepts a submitted notice as complete, CFIUS begins a 45-day review period, which may be followed by a second 45-day investigation period if CFIUS needs additional time to review the transaction, for a total 90-day review period.  During the review and investigation periods, parties must respond to questions from CFIUS within three business days of receipt.  Should CFIUS find national security concerns, it will negotiate mitigation measures with the parties aimed to address such concerns, often during the investigation period.  In rare circumstances, CFIUS may need more time beyond the initial review and investigation periods to evaluate the transaction or negotiate mitigation measures, which could result in a request to withdraw and refile the CFIUS filing and thus subject the parties to a longer review period. At the end of the notice review process, CFIUS will make a definitive conclusion, to include one of the following:

• Determine that the transaction is not subject to CFIUS jurisdiction;
• Assert jurisdiction and determine that the transaction does not present unresolved national security concerns, thus clearing the transaction; or
• Inform the parties that the transaction presents national security risks that cannot be resolved by mitigation measures and state its intent to recommend that the President block the transaction.   

A CFIUS declaration requires less information from the foreign investor and the U.S. business than a notice, and there is no opportunity to make a draft declaration filing to receive comments prior to the formal review.  Once CFIUS accepts a submitted declaration as complete, CFIUS begins a 30-day assessment period.  During the assessment period, parties must respond to questions from CFIUS within two business days of receipt.  At the end of the declaration review process, CFIUS will make one of the following conclusions:

• Determine that the transaction is not subject to CFIUS jurisdiction;
• Assert jurisdiction determine that the transaction does not present unresolved national security concerns, thus clearing the transaction;
• State that it is unable to clear the transaction but is not seeking further action, although it may in the future (known colloquially as a “shrug”); or
• Request that the parties make a long-form notice filing.

CFIUS cannot negotiate mitigation measures as part of the declaration assessment period; if CFIUS believes mitigation measures are necessary to resolve national security concerns related to the transaction, it will request that the parties file a notice. 

CFIUS filing fees

CFIUS only requires filing fees for notice filings, not declaration filings. The amount of a filing fee for a notice filing is based on the value of the transaction.  CFIUS filing fee amounts as of March 2025 are:

CFIUS Review of Non-Notified Transactions

“Non-notified transactions” are transactions within CFIUS’s jurisdiction for which parties do not make voluntary filings.  CFIUS screens thousands of transactions per year and formally requests information or filings from the parties in a subset of transactions over which it believes it may have jurisdiction and which may present national security concerns.  CFIUS uses a variety of resources to identify such transactions, including tips from the public, referrals from U.S. government agencies and Congress, media reports, commercial databases, and classified reporting. Accordingly, even if parties choose not to voluntarily make a CFIUS filing, CFIUS may still seek information about the transaction, request that the parties make a CFIUS filing, or unilaterally initiate its own investigation of the transaction should the parties decline to make a voluntary filing. 

7) Are any parts of the territory exempted or covered by particular regulation?

No geographic parts of the territory are exempted from federal competition laws. 

U.S. states and territories have their own local competition laws and Attorneys General, who enforce local competition laws within the state or territory, however, these do not for the most part include a general merger control regime. 

The U.S. Congress has in some cases, by statute, exempted certain mergers or joint ventures from antitrust review if they are approved by an industry-specific regulator.

8) Is merger filing mandatory or voluntary?

Merger filing is mandatory, provided the thresholds are met.

9) Is there a general definition of transactions subject to merger control?

Yes, merger filings are required for three types of acquisitions (provided the thresholds in topic 14 are met):

1. acquisitions of voting securities (i.e., securities that convey the right to vote in an election of directors) of a corporation;
2. acquisitions of control of a non-corporate entity, such as a limited liability company or limited partnership; and
3. acquisitions of assets, including entering into certain exclusive licenses.

The HSR Rules recognize that the legal forms of entities formed under the laws of other jurisdictions may not coincide exactly with the corporate/non-corporate distinctions in the U.S.. In general, if an entity issues shares that allow the holders to vote for the election of a supervisory board of directors, the entity will be treated as a corporation. 

10) Is "change of control" of a business required?

No, unless the acquired entity is a non-corporate entity. Minority acquisitions of corporations are potentially reportable.

11) How is “control” defined?

The regulations under the HSR Act define “control” of corporations and non-corporate entities differently:

• For corporations, control means holding 50% or more of the voting securities of the corporation (measured by the voting power for directors), or having the contractual right to designate 50% or more of the directors. Note, however, the acquisition of control of a corporation is not necessary for a filing to be required if the thresholds are met (see topic 12 for additional information).
• For non-corporate entities, control means having the right to 50% or more of the profits, or the right to 50% or more the assets in the event of dissolution, of the entity, after payment of its debt. 

The tests for “control” apply independently at each level of a holding structure; holding percentages are not multiplied across levels to arrive at an “indirect” ownership percentage.  Thus, if A holds 50% of B, which holds 50% of C, A “controls” both B and C and holds 50% (not 25%) of C.

The ultimate parent entity (“UPE”) is the topmost entity in a chain of “control” that is not itself controlled by any other individual or entity.

A “person” is defined as a UPE and all entities it controls.  Thus the “acquiring person” is the UPE of the acquiring entity (aka buyer) and everything it controls, and the “acquired person” is the UPE of the acquired entity (aka target) and everything it controls.

12) Acquisition of a minority interest

The acquisition of a minority interest in a corporation requires a filing if the thresholds are met and no exemption applies. Acquisitions of assets, including the entry into an exclusive patent license, also require a filing if the thresholds are met. However, the acquisition of a minority interest in a non-corporate entity (such as a limited liability company or a limited partnership) is not reportable, even if the thresholds are met.

See topic 23 about exemption for investments resulting in a shareholding of 10% or less.

13) Joint ventures/joint control – which transactions constitute mergers?

Joint ventures that involve the formation of a new entity or the acquisition of voting securities or controlling non-corporate interests in an existing entity may require a merger filing.  

In the formation of a new entity, the contributors to the new entity are deemed acquiring parties and the new entity is the acquired party. The assets of the joint venture include all assets that will be contributed to the joint venture. If the acquiring person will hold USD 505.8 million or more in voting securities or controlling non-corporate interests of the joint venture, a filing will generally be required, assuming no other exemption applies. If the acquiring person will hold over USD 126.4 million in voting securities or controlling non-corporate interests of the joint venture, but not more than USD 505.8 million, assuming no other exemptions apply, a merger filing would be required if:

1. The acquiring person has annual net sales or total assets of USD 252.9 million or more;
2. The joint venture will have total assets of USD 25.3 million or more; and
3. At least one other acquiring person has annual net sales or total assets of USD 25.3 million or more; 

OR

1. The acquiring person has annual net sales or total assets of USD 25.3 million or more;
2. The joint venture will have total assets of USD 252.9 million or more; and
3. At least one other acquiring person has annual net sales or total assets of USD 25.3 million or more.

Joint ventures that involve the acquisition of voting securities or controlling non-corporate interests in an existing entity will generally require a merger filing is the thresholds are met, assuming no exemptions apply. While the thresholds above apply to worldwide annual net sales and total assets, the foreign exemptions discussed in topic 21 may apply.  Note, thresholds are adjusted annually in February

14) Which thresholds decide whether a merger notification must be filed?
(Unless explicitly stated otherwise, the thresholds described under one threshold category are not cumulative with those described under another category. Thus for instance if there is a market share threshold and a turnover threshold, it is sufficient to meet one of these, unless stated otherwise.)

a) Turnover thresholds

See topic 21 about requirement of assets/turnover in the U.S. for transactions involving foreign businesses.

b) Market share thresholds

N/A

c) Value of transaction thresholds

Size-of-Transaction: 

The Size-of-Transaction test requires that the value of the voting securities, non-corporate interests or assets to be held as a result of an acquisition be over USD 126.4 million. This means the acquiring person’s existing holdings must be aggregated with those being acquired in the upcoming acquisition. For acquisitions of voting securities, an additional filing may required each time the acquiring person crosses any of the following incremental thresholds:

1. Voting securities valued at greater than USD 126.4 million but less than USD 252.9 million;
2. Voting securities valued at USD 252.9 million or greater but less than USD 1.264 billion;
3. Voting securities valued at USD 1.264 billion or greater;
4. 25% of the voting securities, if the 25% is valued at greater than USD 2.529 billion;
5. 50% of the voting securities of an issuer, if the 50% is valued at greater than USD 126.4 million. 

Once the 50% threshold is crossed, subsequent acquisitions of securities of that acquired entity are exempt.  

Note that after a period of five years following the submission of a notification for a minority acquisition of voting securities, the clearance expires and the acquiring person must file again for any acquisition valued in excess of USD 126.4 million. 

Size-of-Person:

If the Size-of-Transaction is greater than USD 505.8 million, a filing is required unless an exemption applies. If the Size-of-Transaction is greater than USD 126.4 million but not more than USD 505.8 million, the Size-of-Person test must also be met. The Size-of-Person test is met if:

1. the acquired person is engaged in manufacturing and has annual net worldwide sales or total worldwide assets of USD 25.3 million or more, and the acquiring person has total assets or annual sales of USD 252.9 million or more; 
2. the acquired person is not engaged in manufacturing and has total worldwide assets of USD 25.3 million or more or annual net worldwide sales of USD 252.9 million or more, and the acquiring person has total worldwide assets or annual net worldwide sales of USD 252.9 million or more; or 
3. the acquired person has annual net worldwide sales or total worldwide assets of USD 252.9 million or more, and the acquiring person has total worldwide assets or annual net worldwide sales of USD 25.3 million or more.

Note that the Size-of-Person tests referenced above apply to the acquiring and acquired persons (that is the UPEs), not the acquiring and acquired entities (which may be a line of business or subsidiary of the UPE). The Size-of-Transaction test includes all acquisitions that are occurring between the same set of acquiring and acquired UPEs (or any entities controlled by those UPEs); that is the collective transactions between those same UPEs must exceed the threshold. Likewise, the Size-of-Person test applies to each UPE’s worldwide total assets and worldwide annual sales (consolidating all entities controlled by each UPE). Note, thresholds are adjusted annually in February.

d) Assets requirements

See Size-of-Person thresholds in topic 14c.

Also see topic 21 about requirement of assets/turnover in the U.S. for transactions involving non-U.S. businesses.

e) Other

N/A

15) Special thresholds for particular businesses

The thresholds stated in topic 14 apply to all transactions.

16) Rules on calculation and geographical allocation of turnover

A person’s or entity’s “annual net sales” are as stated on the last regularly prepared annual income statement of that person or entity (consolidating all entities controlled by that person or entity).  Geographical allocation of turnover and assets is not relevant for the Size-of-Transaction and Size-of-Person tests, but is relevant for application of the foreign exemptions discussed in topic 21. For purposes of the foreign exemptions, “sales in or into the U.S.” generally means sales to customers located in the U.S., whether made by a U.S. or a foreign entity.

Is the seller/seller’s group turnover relevant in a standard acquisition of sole control?

No.

17) Special rules on calculation of turnover for particular businesses

Foreign manufacturers who sell products outside the U.S. for sale in the U.S.

Generally, where risk of loss and legal title pass outside the U.S., and the manufacturer has no control over the destination of its products, such sales are not sales in or into the U.S. However, where goods are specifically designed for the U.S. market (e.g., designed to meet U.S. regulatory requirements), but are manufactured abroad and then sold and transferred outside the U.S. to a buyer who resells the goods within the U.S., the initial sale by the foreign manufacturer may be deemed a sale in or into the U.S.

Businesses consisting of movable assets

Generally, movable assets such as freight vessels, rigs, airplanes, etc. are deemed located where they are registered. For freight vessels and airplanes, revenues attributable to trips to or from U.S. destinations are considered sales in or into the U.S. For rigs, revenues attributable to their use while in U.S. waters are sales in or into the U.S. For satellites, revenues from sales to U.S. recipients of the data transmitted by the satellite are sales in or into the U.S.

Businesses consisting of telecom assets

Land-based telecom assets and undersea cables that are located in U.S. territorial waters are located in the U.S. To the extent that the assets are not wholly located in the U.S., sales into the U.S. would include not only all sales generated by the portion of the asset located in the U.S., but also sales to U.S. customers allocated to the portion of the asset located outside the U.S.. The ratio of the cable located in U.S. territorial waters vs. foreign waters is used to allocate the sales to U.S. customers between the U.S. asset and the foreign asset.

18) Series of transactions that must be treated as one transaction

Transactions that are contingent upon one another or negotiated together, between the same parties are generally treated as one. If a transaction includes acquisitions involving a combination of assets, voting securities, and controlling non-corporate interests, all are aggregated for determining whether the transaction meets applicable filing thresholds. Note, however, that this is subject to the requirement (described in Topic 14) that the Size-of-Transaction test applies to acquisitions between the same set of acquiring and acquired persons.  If there are multiple acquiring and/or acquired persons involved in a set of related transactions, the transaction may be viewed as multiple separate acquisitions for HSR purposes, and the threshold tests would apply separately to each such acquisition.

Thus, all acquisitions by the same acquiring person of voting securities and non-corporate interests of the same acquired entity or from the same acquired person are aggregated for purposes of determining the Size-of-Transaction.

Furthermore, if the same acquiring and acquired persons enter into different asset acquisitions within 180 days, such transactions must be aggregated for purposes of determining the Size-of-Transaction.

19) Temporary change of control

For U.S. merger control to apply, an “acquisition” of voting securities, controlling non-corporate assets, or assets is required. If such an acquisition occurs, even a temporary change of control, or a temporary acquisition of a minority interest in a corporation, may require notification. If the acquired shares, interests or assets are divested the same day, this is generally treated as contemporaneous; but a temporary acquisition of more than one day may be reportable.

However, certain temporary or partial acquisitions may not be covered under the HSR Act. For example, a lease of an asset for less time than the useful life of the asset, or entry into a management agreement without any plan or intent to acquire the business to be managed, generally does not require a merger filing. Conversely, the entry into or acquisition of an exclusive patent license, even if temporary, is considered an acquisition of an asset and may require a filing if the thresholds are met. (See topic 20 for additional information.)

20) Special industries, owners or types of transactions

Patent licenses

Entering into an exclusive patent license is a potentially reportable acquisition of an asset. Where the value of the license is greater than USD 126.4 million and the acquiring and acquired persons meet the Size-of-Person test (see topic 14), a filing may be required. To be considered an acquisition, the license must be exclusive even against the grantor. If a patent license grants exclusive geographic territories or is limited to a “field of use,” it is nonetheless considered an exclusive license and an acquisition of an asset.  

In addition, special rules apply to patent licenses in the pharmaceutical industry that provide that a license is exclusive if “all commercially significant” rights are transferred. Transfers of pharmaceutical patents are potentially reportable even if (1) the patent holder retains limited manufacturing rights to manufacture the product for the licensee, or (2) the patent holder retains co-rights to assist the licensee in developing and commercializing the products covered by the patent(s).

Copyright acquisitions

The U.S. FTC’s views on reportability of copyright acquisitions have changed in recent years. While acquisitions of copyright interests were previously viewed as not reportable, the FTC rescinded that blanket view in August 2021 and has since been reconsidering such transactions on a case-by-case basis. Proposed acquisitions of copyrights should be discussed with experienced U.S. merger control counsel, and may require specific guidance from the FTC.

Acquisitions by or from state or federal agencies

There are also rules that apply to certain types of owners. Acquisitions by or from state or federal agencies are not subject to merger control. In other words, transfers to or from any U.S. or foreign state, government, or agency are exempt from merger control. Note, however, that corporations or non-corporate entities controlled by state, federal, or foreign governments and engaged in commerce are subject to merger control.

21) Transactions involving only foreign businesses (foreign-to-foreign)

There are two main exemptions for foreign-to-foreign transactions: (1) certain acquisitions of foreign assets and (2) certain acquisitions of foreign issuers. 

A “foreign” entity is one that (i) is not incorporated in the U.S., (ii) is not organized under the laws of the U.S., and (iii) does not have its principal offices within the U.S. “Principal offices” takes into account several factors, including location of registered office, where the entity considers its principal or headquarters offices to be, and whether 50% or more of its officers/executives have their offices outside the U.S.

A natural person is “foreign” if s/he neither is a citizen of, nor resides in, the U.S.

A “person” is foreign if its UPE is foreign (see topic 11 for the definitions of “UPE” and “person”). 

(1) Acquisitions of foreign assets

Acquisitions of foreign assets are exempt from notification if those assets (and any other assets acquired from the same acquired person within the prior 180 days) did not generate over USD 126.4 million in sales in or into the U.S. during the acquired person's most recent fiscal year. 

Acquisitions by foreign persons of foreign assets generating more than USD 126.4 million in sales to the U.S. may still be exempt if the Size-of-Transaction is USD 505.8 million or less, and the aggregate total assets and aggregate annual sales (based on the most recent fiscal year) in or into the U.S. of the acquiring and acquired persons do not exceed USD 278.2 million.

(2) Acquisitions of foreign issuers

The acquisition by a foreign acquiring person of a minority (i.e., non-controlling or less than 50%) interest in a foreign issuer is not reportable regardless of the parties’ U.S. sales or assets.

Further, an acquisition of a foreign issuer (by a U.S. or foreign acquiring person) is exempt if the issuer did not generate over USD 126.4 million in annual sales in or into the U.S. in its most recent fiscal year, and does not hold assets located in the U.S. valued at over USD 126.4 million. Note that the determination of the value of U.S. assets requires a fair market valuation by the buyer; it is not a balance sheet test. 

In addition, where the acquiring person is foreign, and the foreign target exceeds the USD 126.4 million sales or assets threshold, the acquisition may still be exempt if the Size-of-Transaction is USD 505.8 million or less and the acquiring and acquired persons’ aggregate annual sales in or into the U.S. and assets located in the U.S. are less than USD 278.2 million.

Note, thresholds are adjusted annually in February.

22) No overlap of activities of the parties

There is no exemption for transactions with no overlap of activities.

23) Other exemptions from notification duty even if thresholds ARE met?

In addition to the foreign exemptions (see topic 21), other common exemptions include:

Acquisitions of goods in the ordinary course: 

There are exemptions for acquisitions of new goods, supplies, and used durable goods in the ordinary course of business, as long as they are not part of the acquisition of an entire operating unit of a business. This exemption often applies to acquisitions of inventory, office supplies, or raw inputs for a business.

Acquisitions of certain real property:

There are exemptions for certain acquisitions of land and improvements including new facilities, used facilities, unproductive real property, office and residential property, hotels and motels, agricultural property, warehouses, retail rental space, and others, depending on the specific facts regarding the property being acquired.

Acquisitions solely for the purpose of investment: 

Where the acquiring person will hold 10% or less of an issuer and has no intention of influencing the basic business decisions of the issuer, an exemption may apply.  This “passive” exemption is read very narrowly by the FTC, and parties should consult experienced HSR counsel before relying on it.

Stock dividends and splits; reorganizations:

Where an acquiring person’s holdings will not increase as a result of an acquisition, or the acquired entity was already under common control with the acquiring entity, an exemption may apply.

24) May a merging party file voluntarily even if the thresholds are not exceeded?

No, the Agencies will only accept a merger notification if the thresholds are met.

25) May the competition authority request a merger notification or oppose a transaction even if thresholds are not met?

The Agencies may investigate and sue to block any transaction (even consummated transactions), even if the thresholds are not met. The Agencies sometimes take action to challenge mergers that do not meet the notification thresholds, and parties should be aware of that risk, especially if customers are likely to complain about the acquisition. The Agencies have occasionally taken action to unwind mergers that have closed even after conducting a merger review (and clearing the merger) prior to closing. In order to avoid such actions after merger review, it is advisable to engage with the Agencies and be forthright during the merger review process.

26) Referral within the jurisdiction

There is no statutory or administrative system of referrals, the Agencies only receive HSR notifications directly. However, as noted in topic 25, the Agencies have jurisdiction to review any merger (pending or consummated), even when the merger is not subject to the notification requirements of the HSR Act. Thus, the Agencies can review mergers that come to their attention through any means, not just through HSR filings.  In addition, where a transaction will only have a limited competitive impact within a particular state or territory, the Agencies may refer the matter to the state or territory’s Attorney General.  

27) Referral from another jurisdiction

See topic 26.

28) Referral to another jurisdiction

See topic 26.

29) May the merging parties request or oppose a referral decision?

No.

30) Stage of transaction when notification must be filed

There is no prescribed stage at which a transaction must be notified, but the applicable waiting period must expire or terminate before the parties can consummate the transaction. Also, for most types of transactions, there must be a signed agreement (a letter of intent or term sheet could suffice) between the parties in order for the Agencies to accept an HSR notification. 

31) Pre-notification consultations

There are no formal or informal requirements for pre-notification consultations, and the vast majority of HSR notifications are filed without any such consultations. If parties believe the Agencies may need additional time to review a transaction than the statutory waiting period allows, they may engage with the Agencies prior to submitting their filings to help address potential substantive concerns. On issues related to the interpretation of the HSR Rules, including whether a HSR filing is required for a particular transaction, parties can contact the Premerger Notification Office of the FTC. The FTC may issue an informal interpretation that serves as a guideline on the particular question at issue, although such informal interpretations do not have the force of law or bind the Agencies. 

32) Special rules on timing of notification in case of public takeover bids and acquisitions on stock exchanges

Such transactions are still subject to HSR filing requirements. However, cash tender offers are subject to shorter waiting periods (see topic 40).  

33) Forms available for completing a notification

There are standard forms, different for acquiring and acquired persons, for all reportable transactions. The acquiring and acquired persons each submit their filings separately to the Agencies.

The specific instructions relating to forms that the acquiring and acquired persons must file (which instructions are linked above) are too detailed for inclusion herein and merging parties should consult those instructions before completing the HSR notification form.

34) Languages that may be applied in notifications and communication

English. 

For documents that are required to supplied with the notification (see topic 35) that are written in a foreign language, verbatim English language translations must be filed along with the foreign language information or materials. 

35) Documents that must be supplied with notification

The HSR notification forms require submission of agreements related to the transaction, as well as certain annual reports and financial statements for the most recent completed fiscal year. 

Most importantly, the form requires all filers to submit certain transaction-related documents that discuss competition-related aspects of the transaction, specifically markets, market shares, competition, competitors, potential for sales growth or expansion into product or geographic markets, or synergies. These “Transaction-Related” documents are considered by the Agencies to be a critical component of the notification, and parties should take care in the creation and collection of such documents. 

Parties are also required to submit certain ordinary course, regularly prepared reports submitted to CEOs or boards, if the acquiring person and target have products or services that overlap.

The above summarizes the basic filing obligations; however, the specific instructions relating to forms that the acquiring and acquired persons must file are detailed and subject to further interpretations by the FTC Premerger Notification Office. Accordingly, merging parties should consult the instructions and counsel familiar with filing the HSR form to determine the complete list of required documents.

36) Filing fees

37) Is implementation of the merger before approval prohibited?

Yes. The merging parties cannot consummate the transaction until the applicable waiting period has expired or terminated.  

38) May the parties get permission to implement before approval?

No, the parties cannot close on a transaction that would exceed applicable thresholds. However, in an acquisition of voting securities, the acquiring person can acquire up to USD 126.4 million of shares or interests and wait to acquire the remaining amount until the HSR waiting period expires or terminates (although it is advisable not to do so if this initial acquisition would result in control of the acquired entity, as the Agencies may view this as illegal gun jumping). 

Certain supply or outsourcing agreements between the merger parties may be allowed before the applicable waiting period has expired or terminated, if they are negotiated at arm’s length and not contingent on the close of the merger. 

39) Due diligence and other preparatory steps

The Agencies recognize that there are important business justifications for legitimate due diligence and integration planning. As long as the merging parties take appropriate precautions, such activities will not raise issues. While the analysis of whether such activities are conducted appropriately is a fact-specific inquiry, parties to a merger should take the following general guidelines:

1. Participation in such activities should be limited to those who are necessary for such activities to legitimately proceed. 
2. Parties should take measures to ensure that competitively sensitive materials are handled appropriately, meaning they are shared on a need-to-know basis, used only for legitimate purposes, and not shared with those who have day-to-day responsibilities for competitive activities such as development, marketing, pricing, and sales.
3. While planning is allowed, the parties may not implement integration until the merger closes. 
4. Generally, the merging parties should be more careful with outward, market-facing activities such as sales and marketing, while back-office activities such as IT- and HR-related activities are safer.

The Agencies can issue fines for due diligence and integration planning activities that go too far, and are vigilant in prosecuting such gun jumping violations.

40) Veto rights before closing and "Ordinary course of business" clauses

The Agencies recognize the need for buyers to protect the value of their investment by ensuring that the target business does not erode the value of its business in the period prior to close, and that such interim conduct provisions are standard in merger agreements. However, if such "ordinary course of business" provisions are too restrictive, they may amount to prohibited gun jumping. As with due diligence and integration planning activities, whether such provisions rise to the level illegal gun jumping is assessed on a case-by-case basis, and the Agencies are vigilant in this area. 

41) Implementation outside the jurisdiction before approval – "Carve out"

The HSR Act does not allow for such “carve outs” for transactions that are subject to its reporting requirements. However, if portions of a transaction are exempt from HSR notification requirements, the parties can close on those portions prior to receiving HSR clearance of the reportable portion. 

42) Consequences of implementing without approval/permission

The Agencies can fine parties for implementing the transaction prior to HSR approval, whether they implement through actual consummation or through gun jumping. Violations of the HSR Act are subject to fines of up to USD 53,088 for every day the parties are in violation. The maximum fine is adjusted annually.

43) Phases and deadlines

44) Tests or criteria applied when a merger is assessed

The Agencies will investigate whether a merger will substantially lessen competition or tend to create a monopoly. This analysis requires a multi-faceted, fact-specific examination of the relevant market, market dynamics, economic analysis, competitive effects, and potential efficiencies. See the relevant Merger Guidelines in topic 3. 

45) May any non-competition issues be considered?

No. The Agencies generally only consider competitive dimensions of the transaction; however, if privacy or security are dimensions in which the parties compete, the Agencies may consider how such factors impact competition during the course of their review.

46) Special tests or criteria applicable for joint ventures

None.

47) Decisions and remedies/commitments available

The Agencies may allow a merger to proceed with no conditions, require conditions, or move to block the merger in court (see topic 2). The parties can elect to accept the Agencies’ conditions (which can be structural or behavioral) and move forward with the transaction, or challenge the Agencies’ decision in court.  

Importantly, the end of the HSR waiting period, whether it expires or is terminated early by the Agencies, does not prohibit them from investigating and challenging a merger in the future, even if the merger has been consummated.

48) How and when will details about the merger be published?

The fact of filing as well as any information contained in a notification form are not disclosed publicly. However, if the parties request and the Agencies grant early termination, the names of the parties and the date of the grant (but nothing else) are published. 

If the reviewing Agency approves the merger with conditions, or moves to challenge the merger in court, its reasoning and view of the merger and affected markets are published (see topic 43).  

If the merger investigation has been made public (for example, if the parties make disclosures in their SEC filings, or if the press has discussed the investigation in news reports), the reviewing Agency can disclose why it chose to close its investigation and sometimes issues a press release at the end of an investigation. 

49) Access to the file for the merging parties and third parties

The merging parties:

The merging parties have no right of access to the Agencies’ internal documents and correspondence, and no right of access to statements or materials collected by the Agencies from third parties. 

Third parties:

Third parties do not have access to the file, and the Agencies protect such information even against Freedom of Information Act requests. 

In rare cases, the Agencies may disclose certain party documents, if directed by Congress or if the Agencies challenge the merger in court, then subject to the Federal Rules of Civil Procedure, certain materials may be disclosed as part of the court record. 

50) Who can appeal and what may be appealed?

See topic 2. 

The DOJ cannot impose conditions on or block a merger unilaterally; they must file suit in federal court. 

Even if the parties agree to the conditions, such approval with conditions needs to be approved by a federal district court, and both the merging parties and the DOJ can appeal court decisions. This is also the case for the FTC, although the FTC can opt to institute administrative proceedings instead of filing suit in federal court. However, even under this administrative process, the parties and the FTC can ultimately appeal to the federal courts. This system of court approvals is an important aspect of merger control in the U.S. 

Third parties may not appeal any decisions under the merger control regulations, but private parties can elect to file suit against the merging parties in court.