TL/DR –
California’s Attorney General, Rob Bonta, leading a coalition of five attorneys general, has submitted a comment letter to the Federal Trade Commission (FTC) and the US Department of Justice (DOJ) in response to their request for public input on improving major merger reviews. The coalition supports expanding the Hart-Scott-Rodino (HSR) notice and submission requirements for notifying the FTC and DOJ about large mergers before they close. The comment letter seeks to narrow the exemption for passive investments, increase disclosure of serial acquisitions for better consolidation understanding, and recommends removing exemptions for real estate investment trusts (REITs) to ensure their deals are fully disclosed and reviewed.
California AG Leads Coalition for Stronger Federal Oversight of Mergers
California’s Attorney General Rob Bonta, alongside a consortium of five attorneys general, issued a comment letter addressing a Request for Information by the Federal Trade Commission (FTC) and the U.S. Department of Justice (U.S. DOJ). This initiative addresses the need for improved federal review of significant mergers before completion. The move comes after a 2026 ruling by the U.S. District Court for the Eastern District of Texas discontinued revised merger reporting requirements, leaving an outdated structure in effect.
In this letter, the coalition advocates for an expanded Hart-Scott-Rodino (HSR) notification and submission process- a key method for alerting the FTC and U.S. DOJ about large impending mergers.
“Federal notice and disclosure requirements aid regulators in identifying potential anticompetitive agreements before finalization when intervention is most impactful,” stated Attorney General Bonta. He urged the FTC and U.S. DOJ to bolster these resources to safeguard competition in healthcare, housing, and other crucial economic sectors. The consequences of these mergers often include elevated costs, diminished quality, and reduced options for consumers.”
Key Points in the Comment Letter
The attorneys general emphasized three main points:
- “Passive” investments, despite implying a lack of investor influence, can still wield substantial influence over business decisions. The attorneys general support a narrower application of this exemption, limited to instances where investors genuinely do not exercise control or influence.
- Serial acquisitions often avoid federal scrutiny as each deal may fall below reporting thresholds. The coalition proposes increased disclosure of past acquisitions for a comprehensive understanding of consolidation patterns and competitive impact.
- The attorneys general recommend abolishing the current exemptions for real estate investment trusts (REITs) as they increasingly play a pivotal role in healthcare and residential real estate ownership. This change will ensure full disclosure and review of deals involving REITs for potential competitive effects.
Assisting Attorney General Bonta in this effort are the attorneys general from Connecticut, Rhode Island, Washington, and the District of Columbia.
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