Premerger Notification; Reporting and Waiting Period Requirements
The Federal Trade Commission ("FTC" or "Commission") is proposing amendments to the premerger notification rules ("the Rules") that implement the Hart-Scott-Rodino Antitrust Improvements Act ("the Act" or "HSR") to change the definition of "person" and create a new exemption. The Commission also proposes explanatory and ministerial changes to the Rules, as well as necessary amendments to the HSR Form and Instructions to effect the proposed changes.
What this rule actually says
Before two companies can merge, they often have to notify the FTC and wait for approval—that's the Hart-Scott-Rodino (HSR) rule. This 2020 proposal would change how the FTC defines which entities count as "companies" for that rule, and would create a new exemption. The key shift: the FTC is trying to catch more deal structures that might reduce competition, even if they look small on paper.
Who it applies to
- If you're raising money or selling your startup: This applies once a deal hits ~$111 million in value (the threshold changes annually). Smaller funding rounds and acquisitions are safe.
- If you're in the US: This is a US-only rule. International operations don't trigger it unless the deal involves US entities.
- If your AI startup is acquired by a larger company: This is the main scenario. A hiring-assistant startup acquired by a big HR software vendor, or a medical scribe bought by a hospital network—those deals might need HSR filings if they're large enough.
- Data access doesn't directly trigger this: Collecting user data isn't what triggers HSR. The rule cares about *who owns* the companies merging, not what data they hold. Privacy rules (like HIPAA for medical data) are separate.
- If you're the acquirer buying another company: Same threshold applies. A solo founder buying a competitor's code or customer base needs to check deal value.
What founders need to do
- Learn the current threshold (1-2 hours): Check the FTC website for the annual HSR reporting threshold. As of 2024, it's roughly $111 million. If your deal won't hit that, stop here.
- If deal size matters, hire an M&A lawyer (1-2 days): Don't DIY this. An antitrust lawyer costs money upfront but is mandatory if you're near or over the threshold. They'll handle the filing.
- Monitor FTC proposed rules (ongoing, 30 minutes/quarter): This rule is still *proposed* as of 2020. Check if it's been finalized. If finalized, your lawyer will advise on any new exemptions or definitions that help you.
- Budget for waiting time: If you file, expect a 30-day waiting period (sometimes longer if the FTC asks questions). Factor this into deal timelines.
Bottom line
Monitor only if raising >$100M or doing an acquisition of similar scale; everyone else can ignore this.