During a recent panel discussion at the 2024 National Lawyers Convention, leading antitrust experts underscored the impact of recent policy shifts from the Federal Trade Commission (FTC) and Department of Justice (DOJ). In America’s life sciences ecosystem, the FTC and DOJ’s policies have risked stifling pro-competitive mergers and acquisitions (M&A), which help companies of all sizes bring new treatments to patients.
New HSR Filing Requirements Impose Substantial Burden on Small, Early-Stage Companies
Panelists raised concerns over the significant compliance burdens imposed by the FTC’s recent Hart-Scott-Rodino (HSR) premerger notification rule. The HSR rule has significantly increased the reporting requirements for companies pursuing a merger or acquisition. The impact of the HSR rule is particularly acute for the many pre-profit, early-stage life sciences companies that count on M&A to be able to transform their promising discoveries into approved medicines for patients.
“The new HSR filing requirements… impose a heavy burden across all deals, not just the deals that could be problematic, which is typically the second request form…it’s almost like a regulatory tax on smaller deals.”
– Thomas DeMatteo, General Counsel, Senate Judiciary Committee
Unclear Standards of Competition Have Risked Deterring Pro-Competitive Life Sciences M&A
The FTC and DOJ under the Biden Administration have departed from decades of consensus standards of competition. For example, the 2023 Merger Guidelines replaced widely accepted merger guidance with new, unclear standards of competition, which could be used to justify aggressive merger challenges even without actual evidence of consumer harm. The significant uncertainty created by these guidelines has cast a shadow on the pro-competitive mergers that American biopharmaceutical companies rely on to traverse the long, risky process of drug development.
“The current [Biden] Administration pulled back on some of the informal and formal guidance that had been out there for the marketplace. I view that as a bad idea. You need to tell people where there is going to be a problem so they can self-regulate as best as possible.”
– Alexander Okuliar, Co-Chair, Global Antitrust Law Practice Group, Morrison Foerster
Looking Ahead
Panelists agreed that the FTC and DOJ now have an opportunity to revisit or revoke the HSR rule and 2023 Merger Guidelines, and return to the balanced, consensus-driven standards of competition that America’s life sciences ecosystem relies on to advance new treatments and cures to patients.