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Hart-Scott-Rodino Antitrust Improvements Act of 1976


The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) is a United States federal law that requires parties to notify the Federal Trade Commission (FTC) and the Department of Justice (DOJ) before completing certain large mergers, acquisitions, or transfer of assets. The purpose of the HSR Act is to allow regulators to review the potential antitrust implications of proposed transactions and to determine if they would result in a substantial lessening of competition. By requiring prior notification, the act provides the government the opportunity to challenge or impose conditions on transactions that may harm competition, thereby protecting consumers and promoting a competitive market.


The phonetic pronunciation of “Hart-Scott-Rodino Antitrust Improvements Act of 1976” would be:hahrt-skot-roh-dee-noh ant-ee-truhst im-proov-muhnts akt ov nayn-teen sev-uhn-tee-siks

Key Takeaways

  1. The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR) is a US federal law enacted to protect consumers and competitors by requiring certain large-scale mergers and acquisitions to be reviewed by federal antitrust agencies before they can be finalized. This review process helps to prevent the creation of monopolies or excessive market concentration, thus ensuring fair competition in the market.
  2. Under the HSR Act, parties involved in proposed mergers, acquisitions, or joint ventures that meet certain thresholds for transaction size and market concentration must notify the Federal Trade Commission (FTC) and Department of Justice (DOJ), and provide them with detailed information about their business operations. The parties are then required to wait for a specified period, usually 30 days, during which the FTC and DOJ can review the transaction and determine whether it poses any potential antitrust concerns.
  3. If the reviewing agencies believe that the transaction could significantly harm competition, they can either request additional information or take legal action to block the deal. Failure to comply with the HSR Act can result in substantial civil penalties, which may include fines of up to $43,280 per day for each day of noncompliance, as well as potential divestiture or injunction actions by the government.


The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) is a significant piece of legislation in the business and finance world as it establishes a crucial framework for the evaluation of potential mergers, acquisitions, and other transactions that might give rise to anti-competitive effects. Under the HSR Act, parties involved in certain large-scale transactions must notify the Federal Trade Commission (FTC) and the Department of Justice (DOJ) and wait for clearance before they can finalize the deal. This mandatory notification and waiting period allows regulatory agencies to investigate potential antitrust concerns and initiate legal proceedings if necessary, thereby protecting consumer interests, maintaining healthy market competition, and preventing the formation of monopolies or other market-power abuses. Overall, the HSR Act plays an important role in preserving a fair and competitive business environment in the United States.


The Hart-Scott-Rodino Antitrust Improvements Act of 1976 serves a vital role in promoting fair competition within the marketplace by preventing the formation of monopolies and anti-competitive behaviors. Its primary purpose is to ensure that mergers and acquisitions do not lead to an undue concentration of market power, which would ultimately harm consumers, stifle innovation, and undermine the principles of a competitive economy. To achieve this, the Act mandates that companies must notify the Federal Trade Commission (FTC) and the Department of Justice (DOJ) about their intentions to merge or acquire other businesses when they meet certain thresholds, giving regulators the opportunity to review and assess the potential antitrust implications of such transactions before they take place. The Hart-Scott-Rodino Act also establishes specific procedures for notifying the relevant agencies and provides them with the necessary tools to determine whether a proposed transaction would violate antitrust laws. Upon receiving a notification, the FTC and DOJ have a limited period to review the information, request additional data, and decide whether to challenge the deal or let it proceed. If the agencies find that a merger would likely harm competition or create a monopoly, they have the authority to block it or require modifications to the transaction to resolve the competitive concerns. By implementing these measures, the Act acts as a safeguard against anti-competitive business practices, helping to maintain a landscape where businesses can thrive on their merits and consumers can benefit from a diverse array of options and competitive pricing.


1. AT&T and Time Warner Merger (2018): In one of the largest media deals in history, telecommunications giant AT&T acquired Time Warner for $85.4 billion. The companies had to adhere to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) by notifying the Federal Trade Commission (FTC) and the Department of Justice (DOJ) about the transaction. The purpose of this notification was to give the regulatory bodies time to review the deal and determine its potential impact on competition and antitrust law. After a lengthy legal battle and scrutiny, the merger was approved, with the stipulation that AT&T would need to spin off some of Time Warner’s assets to maintain fair competition in the industry. 2. Bayer AG and Monsanto Company Merger (2018): In one of the most significant agribusiness mergers, German-based Bayer AG acquired Monsanto Company for $63 billion. The parties submitted their notification to the FTC under the HSR Act to review the deal for potential antitrust violations. Following a rigorous examination, the DOJ ordered the companies to divest from about $9 billion in assets to preserve competition in the market before approving the merger. These divestitures helped maintain fairness and competition in the global seed and agricultural chemical business, while still allowing for the combined growth and synergy of the two corporations. 3. CVS Health Corporation and Aetna Inc. Merger (2018): This $69 billion deal combined one of the largest retail pharmacy chains, CVS Health, with Aetna, one of the nation’s leading health insurance providers. Under the HSR Act, the parties provided notice of their intent to merge, and the regulatory authorities had time to review the deal to ensure it did not violate antitrust laws. The DOJ eventually approved the merger on the condition that Aetna divest its Medicare Part D prescription drug plans to maintain competition in the market. Following the divestiture and finalization of the deal, the merged entities strengthened their respective positions in the insurance and retail pharmaceutical sectors, while preserving the competitive landscape in those industries.

Frequently Asked Questions(FAQ)

What is the Hart-Scott-Rodino Antitrust Improvements Act of 1976?
The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) is a United States federal law that requires parties to notify the Federal Trade Commission (FTC) and the Department of Justice (DOJ) of their large-scale mergers, acquisitions, and other business transactions before they occur, allowing regulators to review and assess any potential antitrust violations.
When is the HSR Act applicable to a transaction?
The HSR Act applies to transactions that meet certain financial thresholds, such as the size of the transaction and the parties involved. Generally, if the transaction value exceeds $92 million (adjusted annually for inflation) and meets specific size thresholds of the parties involved, the HSR Act is applicable.
How are the size thresholds determined for HSR Act applicability?
Size thresholds are based on two tests: the Size-of-Transaction Test and the Size-of-Persons Test. The Size-of-Transaction Test examines the value of the transaction, while the Size-of-Persons Test looks at the total assets or annual net sales of both the acquiring and acquired entities.
What is the purpose of the HSR Act?
The HSR Act aims to protect consumers and competition by requiring prior notification of mergers and acquisitions to the FTC and DOJ. This process allows regulators to identify and challenge transactions that may lead to a significant reduction in competition, higher prices, or reduced quality in products and services.
How long does the HSR review process take?
Once a complete notification (HSR filing) is submitted by both parties, there is an initial 30-day waiting period for most transactions, during which the FTC and DOJ will review the proposed transaction. This waiting period may be extended if regulators request additional information, known as a “Second Request.” Transactions cannot close until the waiting period has expired or has been terminated early by the authorities.
Are there any exemptions to the HSR Act’s notification requirements?
Yes, some transactions are exempt from the HSR Act’s notification requirements, such as certain acquisitions of real property, acquisitions by creditors in the ordinary course of business, and transactions involving the acquisition of voting securities or assets solely for investment purposes.
How much does it cost to file an HSR notification?
Parties to a transaction must pay a filing fee when submitting an HSR notification. The filing fee varies depending on the value of the transaction, ranging from $45,000 for transactions valued at over $92 million but below $184 million, $125,000 for transactions valued at or over $184 million but below $919.9 million, and $280,000 for transactions valued at $919.9 million or greater. These fee amounts are subject to change.
Can businesses submit an HSR filing before they agree on a definitive agreement or sign a Letter of Intent?
Yes, parties may submit an HSR filing on a “good faith intent” to proceed with the transaction, even if they have not yet executed a definitive agreement or signed a Letter of Intent.
What happens if a business fails to comply with the HSR Act?
Failure to comply with the HSR Act can result in significant fines, with penalties up to $43,792 per day for each day the violation continues, as well as potential additional penalties and injunctive actions.
What is the role of the Federal Trade Commission (FTC) and the Department of Justice (DOJ) in enforcing the HSR Act?
The FTC and DOJ are responsible for enforcing the HSR Act. They review proposed transactions to determine if they could result in antitrust violations and can challenge or block the transaction if it is deemed to potentially reduce competition, increase prices, or decrease product and service quality. They also have authority to take action against noncompliance with the Act’s requirements.

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