Healthcare companies pursuing mergers will have to disclose more information about transactions under new Federal Trade Commission proposals that could slow the health care deal’s execution.
The antitrust body voted on Tuesday to publish a proposed rule that would in part require merger parties to disclose any minority investors in an effort to eliminate any conflicts of interest. ; information about previous acquisitions; supplier agreement; subsidies from foreign organizations; and workforce data, including information about executives and board members. The FTC estimates requests will add an average of 107 hours to the current average of 37 hours required to prepare the merger filing.
Additional details of the transactions could give the agency more ground to challenge merger proposals. It could also speed up the merger review process if the expanded notice requirements limit the FTC’s subsequent information requests.
If approved, the changes would be the first update to the Hart-Scott-Rodino Act pre-merger notice program in 45 years. The proposed rule will be published in the Federal Register later this week, and there will be a 60-day period for comments before it is finalized—a process that could take several months.
“Transactions are increasingly complex, both in terms of transaction structure and potential competitive impact. Investment vehicles have also changed, alongside major shifts in the way companies do business. The [Hart-Scott-Rodino] meanwhile, the form has largely remained the same,” FTC Chair Lina Khan and commissioners Rebecca Kelly Slaughter and Alvaro Bedoya said Tuesday in a joint statement.
The proposal is part of the federal government’s effort to prevent anticompetitive mergers and acquisitions. The FTC is in the process of updating its merger guidelines, which will affect worker-specific impacts on transactions, among other issues.
The agency has challenged several major hospital deals over the past two years, debunking each proposal.
Whether the FTC formally intervenes or not, delays could kill merger efforts. For example, the Santa Barbara, California-based Cottage Health and Sansum Clinics rescinded their merger proposal in 2017 after battling regulatory concerns for years. The higher the costs for the merging parties, the longer it takes to go from letter of intent to close, potentially reducing the value of the transaction.
