The Federal Trade Commission (FTC) and the Department of Justice (DOJ) have released the 2023 Hart-Scott-Rodino (HSR) Annual Report, offering key insights into merger activity over the past fiscal year. The report sheds light on the increasing complexity of transactions, the agencies’ strengthened enforcement efforts, and the need to modernize the antitrust review process. As businesses continue to consolidate, the FTC and DOJ play a critical role in ensuring that mergers do not harm competition or negatively impact consumers.
A Surge in Large, Complex Transactions
A standout finding from the 2023 report is the continued trend toward large and intricate mergers. The report notes that 1,805 transactions were filed under the HSR Act, with nearly 25% of those deals valued at over $1 billion. This represents a significant shift in merger activity, as these billion-dollar deals pose greater risks to competition. Larger mergers typically involve more complex market structures and relationships, making it challenging for regulators to quickly assess their impact on competition.
However, the total number of transactions in 2023 saw a sharp decrease compared to previous years. In fiscal year 2023, 1,805 transactions were reported, down significantly from 3,152 transactions in 2022. This decrease reflects a cooling off after the record-high deal activity in 2021 and 2022, which were driven by post-pandemic recovery and market shifts. Despite the lower number of transactions, the value and complexity of deals have remained high, further emphasizing the need for regulatory scrutiny.
Stronger Merger Enforcement Actions
In response to the growing number of large transactions, the FTC and DOJ have ramped up their enforcement actions. The agencies collectively challenged 28 mergers in 2023, with the FTC leading 16 of these efforts. Ten of the FTC’s challenges resulted in companies abandoning or restructuring their deals after antitrust concerns were raised during investigations.
These enforcement actions targeted critical sectors, including pharmaceuticals, healthcare, technology, and energy. For instance, the FTC challenged Amgen’s $27.8 billion acquisition of Horizon Therapeutics, fearing the deal would eliminate competition in the market for FDA-approved drugs. Another high-profile challenge involved the FTC’s opposition to Intercontinental Exchange’s $13.1 billion acquisition of Black Knight, which raised concerns about competition in the mortgage technology space. The agencies’ proactive stance helped maintain competitive markets in key industries.
Modernization of Antitrust Enforcement Tools
To address the challenges posed by the increasing size and complexity of transactions, FTC Chair Lina M. Khan has emphasized the need to modernize the antitrust review process. The 2023 report coincided with the release of the Final Rule, which updates the HSR premerger notification form for the first time in 46 years. The new form collects more detailed information about merging entities, making it easier for the FTC and DOJ to assess whether a transaction poses a competitive threat.
Chair Khan highlighted that the current HSR Form no longer reflects the intricacies of modern-day corporate structures and investment strategies. The updated form will provide regulators with better insights into non-horizontal mergers, vertical relationships, and emerging competitors—factors that often complicate antitrust reviews. By modernizing the tools used in merger evaluations, the FTC and DOJ aim to stay ahead of corporate strategies that might harm competition.
Industry Breakdown of Acquired Entities in 2023
The 2023 report also provides a detailed breakdown of merger activity by industry, offering insights into which sectors saw the most consolidation. The consumer goods and services sector led the way, accounting for 31.5% of reported transactions. The “Other” category, which includes industries such as construction and educational services, made up 22.1%. Banking and insurance, as well as manufacturing, each represented 10.3% of transactions, while information technology contributed 6.6%. Energy and natural resources accounted for 7.1%, followed by chemicals and pharmaceuticals at 4.8%. Health services and transportation each made up 3.6% of the total.
This industry data highlights the broad scope of merger activity across the U.S. economy and underscores the importance of sector-specific regulatory scrutiny. The high percentage of transactions in the consumer goods sector reflects ongoing consolidation trends in industries that directly affect consumer prices and product availability. Meanwhile, activity in the banking, insurance, and technology sectors suggests that these areas will continue to attract regulatory attention in the coming years.
Corrected Fiscal Year 2022 Report
In addition to the 2023 data, the FTC also issued a corrected version of the Fiscal Year 2022 HSR Report. The correction involved revising the number of merger enforcement actions taken in 2022. Initially, the report stated that the FTC had pursued 24 enforcement actions, but this figure was adjusted to 23 after the correction. This transparency highlights the FTC’s commitment to accurate reporting and reinforces its dedication to holding companies accountable when mergers threaten to reduce competition.
The Role of Regulatory Oversight in an Evolving Landscape
The 2023 Hart-Scott-Rodino Annual Report highlights the critical role that antitrust enforcement plays in preserving competition across the U.S. economy. As mergers grow larger and more complex, the FTC and DOJ are tasked with ensuring that corporate consolidation does not harm consumers or undermine market competition. The report also demonstrates the agencies’ efforts to modernize their tools and processes, particularly through updates to the HSR premerger notification form.
For professionals in sectors such as information governance, cybersecurity, and eDiscovery, the insights from the 2023 HSR Report offer valuable lessons on navigating the evolving regulatory landscape. Understanding the FTC and DOJ’s enforcement priorities can help businesses anticipate challenges and mitigate risks when pursuing mergers and acquisitions. In a time of increased regulatory scrutiny, staying informed about the latest trends in antitrust enforcement is essential for companies operating in competitive markets.
Transaction Charts
Taken from the latest published Hart-Scott-Rodino (HSR) Premerger Notification monthly transactions as shared by the Federal Trade Commission (FTC) and augmented by released annual reports, the following transaction charts may be useful for law firms, legal departments, and legal service providers seeking to understand the real-time pulse rate of Hart-Scott-Rodino Act mandated transaction reviews. As these reviews may lead to Second Requests, the charts may also be useful as a baseline for considering provider assertions regarding the depth, breadth, and volume of their Second Request support for this unique type of eDiscovery during specific time frames.
Chart 1: HSR Act Annual Transactions Reported in Fiscal Years 2000 – 2024*/**
HSR-Act-Merger-Transactions-Reported-Annual-Update-2023-Monthly-2024Chart 2: Monthly HSR Act Transactions Reported in the Fiscal Year 2024 (October-September)*
2-HSR-Act-Merger-Transactions-Reported-FY-2024-August-2024Chart 3: Monthly HSR Act Transactions Reported in the Fiscal Year 2023 (October-September)**
HSR-Act-Merger-Transactions-Reported-FY-2023-Annual-Update*Monthly Real-Time Reporting – First Report is October 2019 (Monthly Running Report)
**Based on Annual Reporting as Represented in Final Annual HSR Transaction Reports.
News Sources
- Premerger Notification Program | Federal Trade Commission (ftc.gov)
- Statement of Chair Lina M. Khan Joined by Commissioner Rebecca Kelly Slaughter and Commissioner Alvaro M. Bedoya Regarding The Final Premerger Notification Form and the Hart-Scott-Rodino Rules and Regarding the FY2023 HSR Annual Report to Congress
- FTC, DOJ Issue Fiscal Year 2023 Hart-Scott-Rodino Notification Report and Announce Corrected Fiscal Year 2022 Report
Assisted by GAI and LLM Technologies
Source: HaystackID with Permission from ComplexDiscovery OÜ