Can we talk about New York for a minute? I grew up there, many of my family members still live there, and I think The Empire State has a lot to recommend it – but the state legislature’s fondness for burdensome bureaucratic requirements is head-scratching at times. The latest area where that tendency has manifested itself is in antitrust regulation. According to a WilmerHale memo, legislation has recently been introduced that would impose a “mini-HSR” pre-merger notification requirement. Here’s an excerpt with the details:
S933 would require companies to notify the New York Attorney General of any transaction that would result in the acquirer holding more than $8 million in assets or voting securities of the target, in the aggregate, if either the acquirer or the target are subject to the jurisdiction of the New York courts. Notice would be required at least 60 days prior to the close of the transaction. This requirement would be the first merger notification provision under state antitrust law in the United States.
For mergers that are reportable to both the FTC and the DOJ under the federal Hart-Scott-Rodino Act (“HSR”) and to New York under the new notice proposal, merging parties would be required to provide their HSR notifications and accompanying materials to the New York Attorney General. Unlike the HSR Act, however, the bill does not impose on the parties any waiting period before they can consummate their transaction beyond the 60-day notice, even if the Attorney General opens an investigation. Still, the 60-day notice requirement could delay some transactions.
Deals reported under the HSR Act that are not subject to an extended “second request” investigation can close after a 30-day initial waiting period (or earlier, if early termination is granted), and the proposed New York statute would capture many deals that are not HSR reportable at all.
The legislation contains a number of other provisions, and is generally aimed at “Big Tech,” but the $8 million threshold has the potential to throw a not inconsequential speed bump in the way of a lot of completely innocuous deals. I guess the good news – aside from the fact that it hasn’t become law yet – is that the memo says that the AG would be authorized to issue rules exempting transactions not likely to violate the statute.
-John Jenkins, DealLawyers.com March 18, 2021