Proposed Changes to the HSR Merger Filing Process: In-House Counsel View

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Emily Manning:  Hello everyone, and welcome to this Federalist Society virtual event. My name is Emily Manning, and I'm an Associate Director of Practice Groups with The Federalist Society. Today we're excited to host a discussion on the draft "HSR Updates and Merger Guidelines: The In-House Counsel View." We're joined today by Gil Ohana; Roman Reuter; Kirstie Nicholson; and our moderator today is Chris Wilson, partner at Gibson Dunn.

 

      If you'd like to learn more about today's speakers, their full bios can be viewed on our website, fedsoc.org. Finally, I'll note, as always, all expressions of opinion today are those of our guest speakers, not The Federalist Society. With that, thank you for joining us today. And Chris, the floor is yours.

 

Chris Wilson:  Thank you, Emily. As Emily noted, we're going to be discussing proposed changes to the Hart-Scott-Rodino, or HSR for short, merger review process and how in-house counsel are navigating these changes. As Emily noted, I'm Chris Wilson. I'm a partner in the Antitrust Practice Group in Gibson Dunn's Washington, D.C. office.

 

      My practice is focused on government investigations in antitrust litigation. And before coming back to Gibson Dunn in 2018, I was a trial attorney at the U.S. Department of Justice. And I focused on merger enforcement in healthcare, transportation, insurance, agriculture, and other industries. And I'll be the moderator for today's panel.

 

      And today, we're joined by Gil, Roman, and Kirstie. Starting with Gil, Gil is the former Senior Director of Antitrust and Competition at Cisco Systems. Gil's an authority on antitrust issues relating to mergers and acquisitions, JVs, standard-setting, distribution, and IP licensing.

 

      He writes and speaks regularly on licensing, standard-setting, patent pools, and other subjects that are at the intersection of antitrust and IP law. And before joining Cisco, Gil was a trial attorney like me at the Antitrust Division at the U.S. Department of Justice and specialized in antitrust issues in high-technology industries.

 

      Also joining us today is Roman Reuter. Roman is Senior Counsel for International Competition Affairs at Deutsche Telekom and has been in this position since 2016. Roman has broad experience in multi-jurisdictional merger control filings and FDI screening proceedings. And he also has experience with foreign direct investment controls in the EU and U.S. Roman advised on the T-Mobile/Sprint merger in the U.S. and recently on the sale of a majority stake in Deutsche Telekom’s tower business in Germany and Austria.

 

      And finally, our third panelist is Kirstie Nicholson. Kirstie is global competition counsel at BHP. Based in Singapore, Kirstie is responsible for the group's competition law compliance work and leads the BHP Competition Law Team, advising clients across the BPH group on the full range of competition law matters, including merger control, investigations, and day-to-day counseling.

      Before joining BHP, Kirstie spent over a decade in private practice as a competition law specialist with international law firms in London, Brussels, Shanghai, and Singapore; and was also among the first European competition lawyers to relocate to China to assist clients with aspects of the developing competition laws in Asia.

 

      Her practice covers all aspects of competition law, including cartels, dominance, mergers, and appeals to the European courts. And Kirstie was also a founding member of Landmark Asia in Singapore, a boutique public affairs consultancy assisting clients with regulation and policy throughout the APAC region.

 

      Kirsty, Roman, and Gil will all give their perspectives and insights on how in-house counsel are navigating their landscape. That said, the views today they express are solely their own, and they do not purport to speak on behalf of their respective companies or entities.

 

      And finally, I'd also like to acknowledge Svetlana Gans. Svetlana did all the hard work in conceptualizing and assembling this panel, and we get to take all the credit. So thank you, Svetlana.

 

      Before we get into our discussion, I'll give a very brief overview of the proposed changes to the HSR merger review process. Very briefly, the current U.S. HSR form is rather short and straightforward to fill out. In most cases, even for a complex transaction, the form can be completed in a matter of a few days.

 

      Last year, the DOJ and FTC announced proposed changes to the HSR farm, effective which could substantially increase the time and effort associated with HSR filings and merger review.

      That said, there's too many changes for me to summarize here, but here are a few key ones. First, the number of documents that would have to be included with the HSR filing is expanded dramatically, including draft versions of deal documents, as well as regularly created business plans, even if these documents have nothing to do with the actual transaction itself.

 

      Second, for HSR filings where there may be a potential overlap between the acquirer and the target, filers are now having to include substantially more sales data and customer contact information. Third, the proposed changes also would now include subjective, long-form, essay-style descriptions of products or services sold by the filing parties, as well as potential written descriptions or essays regarding potential competitive overlaps.

 

      And fourth, filers would also have to now include labor or workforce classification information and historic violations of labor laws—U.S. labor laws, I should say—such as OSHA. That said, that's only a subset of all the proposed changes that may take effect. Now, there's no actual timeline yet for these changes to go into effect, but many people think that these changes could be final and implemented sometime later this year and possibly as soon as the second quarter.

 

      With that out of the way, let's get into our discussion. Roman, let's start with you. What do you think were DOJ and FTC's objectives in proposing these changes to the HSR form?

Roman Reuter:  Thank you, Chris. And thanks to The Federalist Society for having us here and the opportunity to give our view on those proposed changes. So with respect to the objectives, as you can read from the proposal, the FTC and DOJ basically say that the main goal is to improve the efficiency and effectiveness of the initial review process by obtaining more relevant and comprehensive information from the notifying parties and potentially will be better in a position to identify problematic transactions.

 

      So from my perspective, the question is whether the HSR form and the initial review period is the right place to achieve that goal. No surprise. It's a mixed bag. So from my perspective, you can clearly say yes with respect to the modernization aspects of the proposal so that electronic filings should be the standard, which is a relief, and also the allocation of the revenues to the nice system and to the nice codes, the industry codes, what is, especially for counsel outside of the U.S., sometimes difficult.

 

      On the other hand, it's rather a no, from my perspective, to the effectiveness and identification of potentially problematic mergers or transaction. I think the right place to investigate those and to request all the documents and information and data that is needed is the second request that is already in place today, which is the phase that's foreseen for in-depth investigations.

 

      And just as you mentioned in the introduction, the amount of data, documents, and everything that's now in the proposal simply is too much to be reviewed during the waiting period. And from an in-house perspective, there's the risk that we will enter into much more full and revised scenarios and that clearance timelines might get more difficult in the future.

 

      Generally speaking, I would say the provision of more information and bureaucratic burden for companies is always rather a sign that the process does not become more efficient, but that's a side note. And I would also say, and that's at least to my understanding, the subtext of those requests is that maybe companies should also be discouraged from filing too many transactions because it's too burdensome.

 

      And if this is really the intent or the goal behind those changes, I would see this rather problematic because, to my understanding from outside the U.S., there is some concern that, in the past, some transactions in the big tech sector that were not viewed or not assessed in an in-depth investigation and maybe led to consider it as problematic that we're not covered. But I don't think that those rules and the HSR form is the right place to look after these.

 

Chris Wilson:  Gil, how about turning to you?

 

Gil Ohana:  I express and want to echo Roman's thanks to The Federalist Society for organizing the panel and Chris and Gibson Dunn for putting it together and Svetlana as well. So a couple of observations on top of what Roman said. First, it's notable that the Notice of Proposed Rulemaking never identifies examples of transactions, that either the Federal Trade Commission or the Antitrust Division in the Justice Department failed to catch because of the purportedly low level of information now required under HSR.

      And I'm not an administrative law person, but you'd expect in an EPA regulation imposing a new requirement on power plants, that the EPA would say, if this rule is adopted, a certain number of lives will be saved in estimate. The Federal Trade Commission and the NPRM never really does that, so it's very hard to kind of credit this general vibe that, because the current HSR system doesn't require a lot of information, the agencies are missing potentially problematic transactions.

 

      It's also notable in that regard that investigating staffs today, as they should, go outside the four corners of the HSR forum to do web research, to look at trade press, to educate themselves about an industry that's the subject of a proposed transaction. So in that sense, they're really not limited to the set of information provided in the HSR forum and can, and I would say should, go beyond that information.

 

      It's also important this point that Roman made that I want to double-click on. The goal of an HSR filing is just to trigger the question of whether the agency needs to investigate further. It's not to gather a bunch of information to let the agency kind of build its merger case. They will do that. They'll do that through the issuance of a voluntary request letter, subsequently through the issuance of a second request perhaps, and other discovery that they will take during the course of a merger investigation.

 

      But that's not what the HSR form is about. The HSR form is about providing enough information to make an initial decision. Does this still require a further look? And, therefore, a lot of the information that the Notice of Proposed Rulemaking seems to contemplate seems to me maybe somewhat overkill relative to the narrow function that the forum is intended to serve.

 

Chris Wilson:  Thank you, Gil. Moving to you, Kirstie, what are some of the potential costs and benefits of these rule changes?

 

Kirstie Nicholson:  Well, first of all, thanks, Chris, to you and Gibson Dunn and The Federalist Society for inviting me to be here. You know, it's an interesting question. And I think we're not going to know the full impact of these changes until we see how they pan out in practice. The devil will be in the detail in how the changes are implemented.

 

      You know, these changes have hit the media, and even my noncompetition lawyer colleagues are asking about them. They're asking what the impact will be at a practical level. And as I say, we don't quite know yet, but based on the information we do have, starting with the positive, as already mentioned, there'll be the introduction of an electronic filing system. That's going to be a benefit. It removes the burden on parties who otherwise had to submit hard copies.

 

      Perhaps in complex cases, there may be potential benefits for parties in being able to have that opportunity to proactively provide information, to proactively provide the narrative in those essay-style sections that you mentioned earlier and get them in up front rather than having to wait for a second request.

      In terms of the potential costs, I think a number of these have already been mentioned for parties. You know, they seem a little easier to identify, perhaps. There's going to have to be a lot more time and other resources spent collecting the information, including information on a whole range of issues that are perhaps not directly relevant to the competition law analysis.

 

      And we do wonder whether the advantages of the more targeted approach of second requests may be lost, as just described by Gil. That's the part at which the process really is set up to envisages getting all that information rather than at the outset.

 

      You know, I think in terms of how burdensome it's actually going to be for parties, I say it will depend upon the implementation. Obviously, I would like to see processes such as short form documents, waivers, fast-track review, etc., being implemented to help support this new process. But we haven't actually seen any proposals like that yet, although they exist in other jurisdictions.

 

      And arguably, these other processes are going to be necessary to ensure that these changes work in practice and achieve what it is they're meant to achieve and keep this process sustainable, both for the parties and for the regulators who are going to potentially get overwhelmed with all this additional information.

 

Chris Wilson:  Thanks, Kirstie. Gil, do you have any thoughts here?

 

Gil Ohana:  Yeah, I agree with everything Kirstie said. I guess I'm skeptical as to the benefits because of some of the points we discussed earlier. Agency staff today can gather a lot of information both from Item 4 documents, for example, in file transactions and notifications but also from public sources.

 

      As to the costs, I think they're quite real. First, there's going to be a lot of additional delay. Today, you can often file and make an HSR filing within a week after a transaction is announced. That, it seems to me, is going to go out the window, and we're going to be looking at four, five, six weeks.

 

      And I think a lot of that additional time is going to come from the preparation of, Chris, what you referred to before as the essay questions, these narratives. And to be very concrete, as in-house counsel, to develop one of those narratives, we're going to have to interview a bunch of businesspeople, many of whom will not have been disclosed on the transaction; and therefore, we're not going to get to them until after the deal has been publicly announced.

 

      We're going to have to interview them. We're going to have to look at internal documents to create defensible narratives that the FTC or the Antitrust Division isn't going to reject and also that are consistent with the arguments we're going to want to make to advocate for our deal, and that'll just take a lot of time.

 

      The document collection effort is going to be much, much bigger. It's going to require likely either the use of internal e-discovery capabilities where they exist or hiring an external firm to help with e-discovery. We're talking about the production of gigabits of information to the agency with the HSR filing, not a second request. And all of that is going to take time and cost a significant amount of money, and I think those burdens should not be understated.

 

Chris Wilson:  Thanks, Gil. Are there particular aspects of the proposed changes that you find especially concerning or problematic? Roman, let's turn to you here for this one.

 

Roman Reuter:  Yeah, thank you. So just to mention a few and not go into detail, I think there's a full list you could discuss here, but I'll limit myself to, at least from an in-house perspective, the ones that I consider as most burdensome and difficult to implement. So let me start with the requirement to provide transaction-related documents, which is new supervisory review team leads and certain strategic plans, which are not prepared for the transaction itself, which may be very difficult, as Gil already said, to identify, collect, and review and may collect also irrelevant or even misleading information.

 

      The first point I want to mention here -- And I think this is one you can make more globally. But generally, to me, it gives the impression that there's a level of mistrust versus the companies and that the agencies always assume that we in-house counsel are sitting there fine-tuning the documents so that the final version looks perfect and has no wording that intends any anticompetitive intention or whatever of which the transaction should be.

 

      And this is simply not the case. Everybody who's ever worked in-house or in a law firm knows that we have sometimes 30, 40 versions of documents where sometimes even only one word is just changed. And so you don't notice that version, the draft version you have to send over or not disclose to the authorities, leaving us setting aside SharePoint-hosted documents where many people work at the same time where even sometimes hard to look who has made which changes.

 

      And we also made the experience that, when you start a transaction, there's a lot of documents coming in from outside from banks, from external advisors that use other language than you or the company's used to and which often is interpreted by the authorities as anticompetitive language.

 

      And I think this would create an environment where you will discuss or have a much bigger discussion about certain versions of documents, certain sentences that are put out of context and just used against you as the filing party. So that's one find. It's also, to me, absolutely unclear who the supervisory deal team lead should be. That's a group which is defined.

 

      If I were to ask in my company who's the supervisory deal team lead, people would look at me and say, "We don't know, honestly." And this would change from transaction and transaction. And I would also say in the event which happens sometimes that you get on a very short notice before the 30 days expire, please pull and refile, you will not be able to update all those documents and see whether there have been new custodians who have to take into account in documents.

 

      The other point I want to mention is the requirement to provide those narrative responses for transaction rationale, horizontal overlap, supply relationships, labor markets. I fully agree with what Kirstie said, that this might help in more complex transactions. And at least I think companies are allowed already to provide those with the HSR filing already now, but it's not a mandatory requirement to do those, for example, for transaction like a spectrum swap or things like that, which are only covered due to the thresholds but don't have any aspect that must be addressed or assessed from a competition law perspective.

 

      And I think with respect to those narratives and coming from view perspective, it's really difficult. You don't have decision practice, you don't have guidelines on market definitions, etc., etc., right in place that would help you to draft those sections. So even for that short period of the initial assessment of such a deal will be, I think, in the first two, three, four, five years very difficult to find the standard that the authority might accept and where you might get the feedback, "Sorry, your filing is incomplete," or, "That's not how we want it."

     

      Labor markets is a category which has never been part of, at least to my understanding, merger assessment unless the deal is about a carveout or something like that. So that also might be simply not available. And even if the merging parties do not employ people that are in the same areas, it can question whether this is really necessary to have this this information.

 

      And I think also with respect to the narrative on horizontal overlaps and supply relationship, as Chris described it at the beginning, the more ticking-the-box-style HSR form, which is more a collection of data, and facts would somehow more change to a subjective assessment of the filing parties how to describe those aspects. And even in most cases, I think it's not necessary to understand the transaction.

 

      Last two points I just want to briefly mention is the requirement to provide organization charts, information officers, directors, board observers on subsidies, so on and so forth, and the road. So in global companies, this is an impossible task, so to speak. You know your subsidiaries affiliates, but you don't have that -- like you click on a button and that you have charts or how all these companies are interrelated to each other and which subsidiary is controlled by whom, and this is difficult.

 

      And in those two-tier structures we have here in Europe between the Board of Management and Supervisory Board, many managers are sitting in supervisory boards of other companies just having no influence or role in that company because it's only a supervisory function. And I don't think that this is relevant for any transaction to assess or for any competitive overlap since there are also compliance rules in place.

 

      Last point is, and that's an obvious one. I know the authorities are always interested in the requirement to provide information or communication systems, messaging applications, so on and so forth. I think that's also a topic you can discuss, though, when coming to the secondary requests, which resources do take into account when running your eDiscovery. But it's nothing you can do on a constant basis, in particular not in in Europe, where most of the companies are not used to big eDiscovery procedures like, for example, in the U.S. or UK.

 

Chris Wilson:  Roman, thank you. Gil, anything to add here?

 

Gil Ohana:  No. Roman really went through, I think, the highlights. I would just note that there's a lot in the Notice of Proposed Rulemaking that one could take issue with, and I think Roman's did a great job some of the more important ones.

 

Chris Wilson:  Fair enough. Okay. Let's move forward then. So how might these changes, number one, impact companies; and, number two, affect M&A activity? And Gil, why don't we come back to you for this one?

 

Gil Ohana:  You know, it really comes down to the U.S. review process will take significantly longer, and in the context of M&A transactions, longer time means greater uncertainty. And this is particularly true for deals with, for example, financing contingencies where, to do the deal, the acquirer is going to get a commitment from a bank or a group of banks to do acquisition, financing, and that commitment is likely to be time-bound.

 

      And then you may have to go back to the banks and ask for a new commitment to lend, and conditions may have changed at that point. Interest rates may have increased or decreased. There may have been some geopolitical event, etc. So just a lot more uncertainty, and this is particularly true in the tech world where I spent a lot of my career.

 

      You have early-stage, venture-funded companies that are looking for an exit. And those companies are cashflow negative, sometimes very seriously cashflow negative. They have a great idea. They raise venture money, but they don't yet have a product, or they have a product that's selling to a very small degree.

 

      In that situation, you may have the question of whether they have enough runway, as we say in Silicon Valley, to last for the extended review period. And I think, though Amazon iRobot has become famous for other reasons relative to the competition law, there was an example earlier in that deal of the extended agency review causing iRobot to have to go back and get new financing commitment, raise new money.

 

      And Amazon had to consent to that, as you'd expect in a merger transaction. And Amazon used that apparently as an opportunity to re-trade on price, and iRobot shareholders were impacted by that. Of course, as it happened, the deals collapsed for other reasons. But I think that's an instructive story relative to why longer deal review times can often be prejudicial to particularly the seller and, of course, their shareholders and their employees.

 

Chris Wilson:  Kirstie, anything to add here?

Kirstie Nicholson:  Yeah. I agree with all of that. I think this is going to have quite a significant impact for companies and also their consideration of proposed M&A deals. Something that I see is that, when a transaction is being considered at a very early stage, the deal team wants that initial up-front competition law analysis.

 

      They want to know where merger filings are required, how long it's going to take, the impact of that on the deal timetable, and any red-flag issues. And, as mentioned, all of this just increases the uncertainty around the analysis, and particularly the timing. Also, we do have to consider the whole merger filing process, and that process starts quite early when you're in-house.

 

      And I think regulators don't really appreciate quite how difficult it can be for companies to compile all the information that's required. Information is not always kept in an accessible way and, certainly, rarely in the format that is required for the filings. And this, of course, is just another one of a whole range of filings that may be required in respect of a transaction.

 

      You may have merger filings across different jurisdictions, and now, increasingly, for indirect investment type regulations as well. And all of this combined is a really huge burden on companies that they have to take into account increasingly when considering going forward with a transaction or not.

 

      And I think also just to focus on that information collection a little bit more -- because I don't think we should underestimate what a huge difference this will make to companies. I think, for private companies, they may have a real concern about providing such a large range of information to regulators who don't normally make their documents private. And they may well consider it a phishing exercise, so that's another negative for them in terms of going ahead with a transaction.

 

      And to go back to the point on the Item 4 documents and the drafts, it is quite impressive, the number of different drafts of the same document that you see, many, many iterations of it. And again, I don't think regulators quite understand how many different drafts they may see of the same document. And again, that just goes to this whole vast quantity of information which could overwhelm them as well as the companies who have to provide it.

 

Chris Wilson:  Thank you, Kirstie. Do you believe that changes enable the FTC and DOJ to actually make better informed decisions concerning proposed deals? Gil, why don't we start with you for this one?

 

Gil Ohana:  Thanks, Chris. Yeah. It's really not clear to me that, even if we accept the FTC's premise for the proposed rule changes to improve the quality of merger enforcement, the changes proposed would actually achieve that goal. And it really comes down to understanding the HSR process today.

 

      The agencies have, after all 30 calendar days to receive a file and decide which of the two U.S. agencies is going to review the transaction and then do the substantive review, again, at least to the point of determining that the deal requires more attention.

 

      And the short time period and historically lean agency staffing really raises the question of what agency staff will be able to do with this much larger, much richer set of information that they'll be receiving with HSR filings as contemplated by the Notice of Proposed Rulemaking and how much of that information will actually get read by agency staffs, who are going to be time constrained, who are going to have other things to do.

 

      And I think what you come back to is how much information do agency staffs really need to, again, make the only decision that the Hart-Scott filing is really supposed to inform, which is, do I need to know more? Should we open an investigation? Should we go to the parties and issue a voluntary request letter to get some more information? Should we ultimately issue second request?

     

      And I really have a sense that the drafters of the Notice of Proposed Rulemaking may have conceived of the task of agency staff in a different way than that, and to go back to what Roman made, have asked for a lot of information that is more focused on in the subsequent investigation of a merger than the simple question like, do I need to know more?

 

Chris Wilson:  Kirstie?

 

Kirstie Nicholson:  Yeah, I completely agree with that. I'm quite unconvinced that the answer to your question is yes, it will result in, in better decision-making. You know, my understanding is that, currently, it's actually quite a small percentage of HSR filings that go to a second request. So there doesn't seem to be huge benefit in requesting all this information for every single transaction that is filed, given that the vast majority of them are not considered to require further investigation.

 

      And I think relevant there, of course, is that, due to the way that the thresholds are framed, there are a large number of HSR filings, and that means that there are an increasingly large number that are no issues. And it seems to me that the drafters of this forum have perhaps looked at the filing forms in other jurisdictions, been inspired by those as a way to get additional information, but without really taking full consideration that those forms elsewhere may have a different purpose and that they do go more towards that substantive analysis.

 

      Another relevant factor, of course, is that we don't normally see detailed decisions coming out of the U.S. authorities. We may not even know whether all this information does result in better decision-making if we don't get to see the detail of those decisions, as is the case currently.

 

Chris Wilson:  Thank you, Kirstie. Our last question for the panel: Do the DOJ and FTC's proposed changes put the U.S. on par or on level with international enforcers? And for this one, why don't we start with Roman?

Roman Reuter:  Yes. I think if you look at those proposals—and Kirstie and Gil both mentioned that—it looks a little bit like they studied different jurisdictions and took out all the elements they thought look good if you want to already investigate a transaction in in the initial review period.

 

      And Kirstie already said that they took not into consideration the full picture that those systems provide and also the release that those systems provide for those transactions who really are not worth producing tons of documents and materials.

 

      So let me point, just one -- I'll give you one example. In the EU, for example, DG competition must approve transaction activity. So that means, in the end, you have an approval decision, as Kirstie mentioned. In the U.S., the system is different. You have to sue. You have to go to court if you want to block a transaction, and then you may get a judgment in the end, but that's different.

 

      So that's already providing a lot of information when drafting the so-called Form CO in the EU, which is the corresponding document to the HSR filing and form in the U.S. You have many decisions. You can look into how I draft the market definition section, how do I draft the competitive effects, the relationship between the parties, and so on and so forth. So that's completely missing in the U.S., and I think this will make it very hard for years to come, as I said earlier, to the standard that is accepted by the agencies.

 

      Another aspect which is completely missing in the U.S. system is the pre-notification discussions. And this is something -- It can, in the worst case, take up to a year in EU or national filings here in Europe, but this really helps to streamline the process, to get in early discussions to explain the transaction, to send even drafts of your notification to the authority and see whether this includes all the information, and then be ready when the clock takes off and that the time's really spent on assessing the transaction and not looking what is missing, what is incorrect, what needs to be put differently. So that's another aspect.

 

      One of the most important aspects is, are the thresholds and the transactions covered? I don't want to bore you with figures here, but, for example, in the U.S., in 2022, we had around 3000 HSR notifications because of the low size of transaction threshold and the limited exceptions to it.

 

      Compared to the EU, with DG competition, the competent body, we had 372, so that's roughly 10 percent in which you had to draft such a comprehensive notification, including all the narratives. You can argue, okay, you have also some notifications in the member states. But I would say on par, it's not the amount that requires in the US.

 

      And Kirstie already mentioned that we have flagged simplified procedures for transactions where there is no competitive overlap so that, basically, you don't have to go into that detail for transaction where it's clear from the outset that there is no overlap and where that, for the authority, it's also only to tick the box to file because the thresholds were met.

      One point which I think is also worth mentioning here is that the remedy system for non-compliance is different. So in in the U.S., you will always run into the risk -- If your filing is not complete or not considered complete, you have disagreements about the nature of the filing, the narratives, and everything that will be requested right now, the result can be that you are asked to pull and refile a notification, which starts the clock again and which moves the entire transaction and everything that belongs to that timeline further down the road.

 

      In other systems, in the EU, for example, you have the tool of stopping the clock. You can say, okay, the agency stops the clock and says, "There's something missing," or, "We want some additional information." You provide that, and it's up to you how fast you're able to provide that, and then the clock simply continues where it stopped. So I think that's one point.

 

      And the last one is -- And I'm always personally involved in the certification you have to provide by managers or your general counsel that everything is correct you provided and that you complied with the rules. And I think, as it's drafted, and my understanding right now of the draft is no manager would certify or confirm that every custodian has kept his documents, that you did a proper due diligence, and that you provided all the information that has been available because it's simply something as a manager, which is only to some extent under your control.

 

      And I think this is something which is also not existent in any other jurisdiction. This element of personal liability will make it really hard. Or if you put it the other way around, if you want to comply with that and be sure that there is no violation of the rules, this would create a burden for internal monitoring, which outweighs any benefits of such information provision.

 

Chris Wilson:  Gil, anything you'd like to add here?

 

Gil Ohana:  That was a really complete response. I don't have a lot to add. I would just double-click on one point Roman made, the meta point, which is that running through the introduction to the NPRM is the what I'll call interjurisdictional envy that the FTC and the Antitrust Division look at the European system or look at the UK system and see that the forms require all this information and think to themselves, "Hey, that'd be great if we got that too."

 

      But what that ignores us, as I think Roman mentioned, is the institutional context in which those information requirements come up that are completely absent from the U.S. systems. Let's just pick pre-notification discussions. I just went through this last fall with a deal we announced last year where we had rounds and rounds of discussions with DG competition, for example, where the typical process is we do a draft notification.

 

      We received requests for information. We responded to those. We then folded the information we provided in the RFI responses into a revised draft notification, sent that to the case team. They looked at it. They provided comments on that. We got an additional RFI., etc. And as Roman notes, this process can go on for a year. Well, the result of that is a very complete notification but also one that you know the agency staff is going to be okay with.

      Compare that to the US where the requirement in the NPRM is you're going to draft the responses to the essay questions, these long narratives describing product market issues and horizontal overlaps. And the staff may or may not find those to be sufficient or complete. And as Roman noted, the remedial structure under HSR today is somewhat of a blunt force instrument where all they can really do is reject a filing.

     

      Now, if that happens weeks or months after the initial filing, whatever the deal timeline you've advised your clients to anticipate has now gone out the window. And I think that concern -- Particularly as agency staff gets more comfortable with the new rules and as private parties and the lawyers that advise them get more comfortable with the new rules, I think there's going to be a period where there's just a lot of uncertainty in in the U.S. M&A landscape. And I think that's going to be a real a real concern for business.

 

Chris Wilson:  Thank you, Gil. I guess I'll close now by asking all of our panelist—Gil, Kirstie, and Roman—any final observations or thoughts? I know we've covered a lot of ground.

 

Kirstie Nicholson:  I'm happy to say a final -- I agree with everything that's been said. I think there's a lot in here which is going to cause a lot of questions and extra work for in-house competition counsel, and I don't think we have all the answers yet.

 

      We've raised some suggestions of areas where we might want more guidance or we think the process could benefit from other processes to support this new forum, such as we see in other jurisdictions. But we're just going to have to wait and see once all this is implemented and we start to see it working in practice exactly what the impact is going to be for companies. But I think we all agree that there is going to be some kind of significant impact as just how much.

 

Chris Wilson:  Thank you, Kirstie.

 

Roman Reuter:  I would just add, I would encourage DOJ and FTC to speak to the other competition authorities in the world when they are connected via the ICN, for example. And you recently see our competition heads sitting on panels together with Lena and Jonathan. And so I think they should really use also those opportunities to discuss and the pros and cons so that they don't have the companies' or in-house and lawyers' perspective, but also the perspective from the authorities where those ideas or those filing requirements come from, what works, and what is needed to ensure a smooth process here. And so that would be my final comments.

 

Chris Wilson:  Thank you. Okay. Well, then, I'll close by thanking our panelists, especially Kirstie, who's reporting from Singapore. Thank you, everyone, for your time and for your insights today. Very much appreciated. With that, I will pass things back to Emily now.

 

Emily Manning:  On behalf of The Federalist Society, thank you all for joining us for this great discussion today. Check out our website, fedsoc.org, or follow us on all major social media platforms @fedsoc to stay up to date with announcements and upcoming webinars. Thank you once more for tuning in, and we are adjourned.

 

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