20230926 Kothari Report
September 27, 2023
Today, the U.S. Chamber of Commerce released a report from Professor Kothari that examined the increased burden faced by merging companies under the Department of Justice and Federal Trade Commission's (collectively "antitrust agencies) proposed update to the HSR form. The agencies planned changes to the merger notification form will make it more difficult for U.S. companies to raise capital and be competitive. These disclosure requirements will mire every merger in government red tape. With more than 2,000 mergers filed in a typical year, the vast majority of which present no antitrust concerns, this new form is not about enhancing merger enforcement but controlling mergers beyond the scope and intent of the law.
According to Professor Kothari’s analysis, this new merger notification form will lead to substantial additional direct monetary costs for HSR filers that could total over $2 billion, with no clearly identifiable benefit. These additional costs will be borne by all filers, not just the very small fraction the Agencies identify each year for further investigation. The proposed rule will also lead to further costs to the economy beyond the direct monetary costs, including burdens on innovation and entrepreneurial activity as well as additional costs on the Agencies themselves to review the new information. The benefits to consumers are likely to be limited due to the small percentage of filings that progress to a preliminary investigation, let alone those that ultimately result in an enforcement action. The Agencies have not demonstrated there will be benefits to consumers in excess of the additional direct monetary and other economic burdens imposed.