Hart-Scott-Rodino Act

Definition

The Hart-Scott-Rodino Antitrust Improvements Act of 1976 is a U.S. federal law that requires companies planning large mergers or acquisitions to notify the Federal Trade Commission (FTC) and the Department of Justice (DOJ) Antitrust Division in advance. This allows the government to review the proposed transaction and determine if it would substantially lessen competition.

5 Must Know Facts For Your Next Test

1. The Hart-Scott-Rodino Act was passed in 1976 to amend the Clayton Antitrust Act and give the FTC and DOJ more effective tools to review and challenge anticompetitive mergers and acquisitions.
2. The Act requires companies planning mergers or acquisitions valued above certain monetary thresholds to file a notification and report form with the FTC and DOJ prior to completing the transaction.
3. The FTC and DOJ have a 30-day review period (which can be extended) to determine if the proposed transaction would substantially lessen competition and violate antitrust laws.
4. If the agencies find the transaction to be anticompetitive, they can challenge it in court and seek to block or place conditions on the merger.
5. The Hart-Scott-Rodino Act has been an important tool for the FTC and DOJ to proactively review and prevent mergers that could harm competition and consumers.

Review Questions

• Explain the purpose and key provisions of the Hart-Scott-Rodino Act.
  • The Hart-Scott-Rodino Act was enacted to give the Federal Trade Commission (FTC) and Department of Justice (DOJ) greater ability to review and challenge large mergers and acquisitions that could substantially lessen competition. The Act requires companies planning mergers or acquisitions above certain size thresholds to notify the FTC and DOJ in advance and provide information about the proposed transaction. This allows the agencies to conduct an antitrust review and determine if the merger would violate antitrust laws. If the agencies find the transaction to be anticompetitive, they can challenge it in court and seek to block or place conditions on the merger.
• Describe the role of the FTC and DOJ in enforcing the Hart-Scott-Rodino Act.
  • Under the Hart-Scott-Rodino Act, the Federal Trade Commission (FTC) and Department of Justice (DOJ) Antitrust Division share jurisdiction over reviewing proposed mergers and acquisitions. When a company files a premerger notification, the FTC and DOJ have a 30-day review period (which can be extended) to analyze the competitive effects of the transaction. During this time, the agencies can request additional information from the parties and conduct an in-depth investigation. If the FTC or DOJ determines the merger would substantially lessen competition, they can challenge the transaction in court and seek to block or place conditions on the merger to preserve competition.
• Analyze how the Hart-Scott-Rodino Act has impacted merger and acquisition activity in the United States.
  • The Hart-Scott-Rodino Act has had a significant impact on merger and acquisition activity in the United States by giving the Federal Trade Commission (FTC) and Department of Justice (DOJ) greater visibility and authority to review large transactions. Prior to the Act, many anticompetitive mergers were able to be completed without the government's knowledge. The premerger notification requirement and antitrust review process established by the Act has allowed the agencies to proactively identify and challenge mergers that could substantially lessen competition, thereby preserving a more competitive marketplace. This has influenced corporate decision-making and deterred some mergers that may have otherwise been pursued. Overall, the Hart-Scott-Rodino Act has been an important tool for maintaining competitive markets and protecting consumers.

Related terms

Premerger Notification: The requirement under the Hart-Scott-Rodino Act for companies to file a notification and report form with the FTC and DOJ prior to completing a proposed merger or acquisition that meets certain size thresholds.

Antitrust Review: The process by which the FTC and DOJ review the proposed merger or acquisition under the Hart-Scott-Rodino Act to determine if it would violate antitrust laws by substantially lessening competition.

Merger Enforcement: The ability of the FTC and DOJ to challenge and block mergers or acquisitions under the Hart-Scott-Rodino Act if they determine the transaction would be anticompetitive.