This week, PULSE joined over 35 leading business and industry stakeholders in calling for leaders of the House Judiciary Committee to overturn the Biden Administration’s Hart-Scott-Rodino (HSR) premerger notification rule changes. In their letter to the Committee, the signers noted that, “The increased burden the final HSR rule imposes is unjustifiable: increased bureaucracy that has the effect of deterring mergers will stifle innovation, reduce market efficiencies, and ultimately harm consumers who benefit from the competitive dynamics that mergers can and do foster.”
The letter comes as Rep. Scott Fitzgerald (R-WI), Chair of the Subcommittee on the Administrative State, Regulatory Reform, and Antitrust, recently introduced a resolution to reverse the new HSR rule under the Congressional Review Act.
The new HSR rule, issued by the Federal Trade Commission (FTC) in late 2024, has risked disrupting life sciences mergers and acquisitions (M&A), which are a critical pathway for early-stage life sciences companies to be able to bring new treatments and cures to patients. The rule dramatically increases the amount of information that merging companies must provide to the federal government—nearly tripling the average time and cost burden of required merger filings, according to the FTC’s own estimate. Many antitrust experts argue that this estimate considerably undercounts the true regulatory burden for American companies.
Leaders from across America’s life sciences industry have asserted that the brunt of these costs will be felt by small, early-stage life sciences companies, where nearly two-thirds of medicines approved by the FDA originate. As many of these companies operate without a profit, the new rule risks impeding the pro-competitive partnerships that companies of all sizes rely on to fuel innovation and competition in America’s life sciences industry, and could chill investment in new breakthroughs. For example, M&A activity enables smaller companies, entrepreneurs, and early-stage investors to benefit from capital formation, liquidity, and growth, as well as the possibility of a future exit. Unfortunately, the FTC’s recent HSR rule changes fail to account for this pro-competitive role of M&A, particularly in America’s life sciences industry.
According to the government’s own data, 98% of mergers raise no competitive concerns. For the small proportion of deals that do warrant further investigation, the FTC can already issue a “Second Request” to get more detailed information. This market reality, and the FTC’s existing enforcement tools, do not justify the FTC’s sweeping increase in the cost and administrative burden placed on all M&A deals.
Overturning the FTC’s HSR rule is critical to restoring a balanced approach to M&A enforcement that supports the unique and fundamental role of M&A in driving innovation, competition and growth in America’s life sciences industry. PULSE joins other leading stakeholders in urging Congress to use its authority under the Congressional Review Act to reverse the new HSR rule.
To read the letter, click here.