August 31, 2023

The Honorable Lina Khan

Chairwoman
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, D.C. 20580

Dear Chairwoman Khan,

On June 29, the Federal Trade Commission (“FTC”) published a Notice of Proposed
Rulemaking (“NPRM”) that would dramatically expand the premerger notification requirements.1
No doubt these rules will impose a significant burden on businesses across all industries. The FTC
claims that the burden will not be that great: it will only take companies four times longer to
complete the requisite filings under the new rules, costing industry $350 million annually. Yet the
real cost may be much higher if the FTC underestimated the additional hours of labor that the new
rules demand. It very well may have done so: the FTC bases its estimation on nothing other than an
internal survey of its own staff. What is more, the FTC does not provide any detail into this survey.
The FTC should show its work.

The current FTC regulations already impose numerous requirements on companies seeking to
merge with, or acquire, other companies. Under the Hart-Scott-Rodino (“HSR”) Act, parties to
transactions that exceed a certain monetary threshold must notify the FTC by submitting an HSR
filing and certain documents before they can move forward.2 If the FTC is concerned that the
transaction may violate antitrust laws, then it can issue what is called a Second Request for additional
information and documents. Moreover, under the current rules, the FTC has recently been extremely
active—albeit unsuccessful—in seeking to block mergers based on alleged anticompetitive effects.
The agency keeps losing because of the legal theories it is pursuing, not because it lacks sufficient
information in the premerger notification process.3

Nevertheless, through this recent rulemaking, the FTC seeks to drastically change the
premerger notification process. For example, under the proposed rules, parties would be required to

1
NPRM, Premerger Notification; Reporting and Waiting Period Requirements, 88 Fed. Reg. 42178 (Jun. 29, 2023).
2
See 18 U.S.C. § 18a; 16 C.F.R. §§ 801, 803.
3
See, e.g., FTC v. Microsoft Corp., 2023 WL 4443412, at *12–13 (N.D. Cal. Jul. 10, 2023) (rejecting the FTC’s
arguments that it “need only show the transaction is ‘likely to increase the ability and/or incentive of the merged firm to
foreclose rivals’” or that “the combined firm would have a greater ability and incentive to foreclose” competition); FTC v.
Meta Platforms, 2023 WL 2346238, at *27 (N.D. Cal. Feb. 3, 2023) (“To the extent the FTC implies that—based solely
on the objective evidence of Meta's resources and its excitement for VR fitness—it would have inevitably found and
implemented some unspecified means to enter the market, the Court finds such a theory to be impermissibly
speculative.”).
submit a written submission describing all strategic rationales for the transaction, identifying
horizontal and vertical relationships between the parties, and providing information about their
workers and the labor market.4 In addition, they will need to submit all agreements related to the
transaction, prior agreements between the parties, and documents (including drafts) prepared by or
for the supervisory deal team leads, among other items. Much of this information is of the sort that
the FTC would typically ask of the parties to the two percent of transactions that proceed to the
Second Review stage.5 Yet these new rules will apply to one hundred percent of transactions for
which an HSR filing is necessary.

The critical question is how much the FTC’s proposed changes will cost. The FTC estimates
that parties currently spend, on average, 37 hours per filing and will spend an additional 107 hours
per filing if the FTC adopts its proposed rules.6 From that estimate, the FTC makes several more
assumptions and does some basic math, ultimately concluding that in FY 2023 (the FTC does not
look beyond that), the proposed changes to the premerger notification process will “yield[]
approximately $350,000,000” in compliance costs.7 That enormous amount, however, may be an
underestimate, due to the assumptions on which the FTC’s math depends.

The method by which the FTC reached the 107 hours estimate underlying its calculations is
questionable at best. In the NPRM, the FTC reveals that premerger notification office staff
“canvassed current Agency staff who had previously prepared HSR filings while in private practice
to estimate the projected change in burden due to the proposed amendments.”8 Besides stating that
the FTC staff “were asked to estimate the incremental increase in time to prepare HSR Filings …
taking into account that transactions range in complexity,” and that “[t]he ranges from canvassed
[staff] estimated that the proposed changes would result in approximately 12 to 222 additional hours
per filing, depending on the complexity,” the NPRM provides no insight into how this survey was
conducted or the results.9 There is therefore no way to examine whether the FTC’s estimate captures
the regulation’s actual cost.

The FTC should provide the details that will allow the public to understand the true costs of
the proposed rules. Please provide written responses and documents in response to the questions
below no later than September 14, 2023.

1. Please explain how the survey of FTC employees regarding the estimated time it would
take parties to prepare HSR filings under the new rules was conducted. In answering this
question, please identify:

a. The number of FTC employees that were surveyed;

4
See NPRM, supra note 1.
5
See FTC and DOJ, Hart-Scott-Rodino Annual Report Fiscal Year 2021, FTC.gov (2023),
https://www.ftc.gov/system/files/ftc_gov/pdf/p110014fy2021hsrannualreport.pdf; FTC, Model Second Request (Rev. Oct.
2021), https://www.ftc.gov/system/files/attachments/hsr-resources/model_second_request_-_final_-_october_2021.pdf.
6
NPRM, supra note 1, p. 42208.
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 b. The average number of years the surveyed FTC employees worked in private
practice;
c. The question(s) asked of FTC employees;
d. The optional response(s) for FTC employees;
e. The date range during which the survey was conducted;
f. The method by which the questions were asked and responses submitted.

2. Please provide the full results of the survey, including all responses.

3. Please provide all communications to and from members of the premerger notification
office regarding the survey.

4. Please provide any instructions given by an FTC Commissioner’s office and/or a Director
or Deputy Director of the Bureau of Competition to a member of the premerger
notification office regarding the survey.

5. Please provide support for the following projections and assumptions in the NPRM10:

a. Non-index filings “will total 7,096” in FY 2023;

b. “[E]xecutive and attorney compensation” is $460 hourly;
c. The new rules “are expected to impose either minimal or no additional capital or
other non-labor costs, as businesses subject to the HSR Rules generally have or
obtain necessary for other businesses purposes;”
d. The “ongoing, regular training” necessitated by the new rules “would be a small
portion of and subsumed within the ordinary training that employees receive apart
from that associated with the information collected under the HSR Rules and the
corresponding Instructions.”

Thank you for your attention to this matter.

Sincerely,

________________________
Ted Cruz
Ranking Member

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