Mergers and Acquisitions

In certain merger situations where huge corporations and sums of money are at stake, the Clayton Act imposes certain requirements that further allow the FTC to regulate monopolistic behavior, sometimes even before it occurs. An important provision of the Clayton Act requires a notification to be filed and mandates a waiting period for mergers and acquisitions that meet a threshold amount of net worth.

The notification and waiting period requirements only come into play in certain situations. The first is where what is called a “voting securities and assets” threshold is met. If the acquiring company (call it Raider) or the company being acquired (call it Target) has voting securities and assets in excess of $200 million, then the notification and waiting period requirements come into play. The requirements can also come into play if either company’s voting securities and assets are valued between $50 million and $200 million, and either Target’s net sales are $10 million or more and Raider’s net sales are $100 million or more, or even if Raider’s net sales are $10 million or more and Target’s net sales are $100 million or more. If any of these threshold amounts are met, then both are required to comply with the following requirements.

First, the statute mandates that a notification be filed by both companies with the Federal Trade Commission. The notification must contain documentary material and information surrounding the companies, their financials, and details surrounding the proposed merger or acquisition. Furthermore, the statute mandates a 30-day waiting period after filing the notification before the merger or acquisition may proceed. This gives the FTC time to thoroughly review the merger before it occurs to ensure no monopoly or unreasonable restraint on competition is formed.