By Steven Cernak, a Partner with Bona Law PC in its Detroit, MI office who practiced antitrust law in-house with General Motors for over 20 years.

Government antitrust actions regarding Big Tech made huge headlines in the Fall of 2020. The Antitrust Subcommittee of the U.S. House Judiciary Committee completed its months-long investigation of Google, Apple, Facebook, and Amazon and issued a report in early October. Later that same month, the Department of Justice sued Google for monopolization. According to press reports, the Federal Trade Commission is near the close of its investigations of Facebook and Amazon.

But one other development might have slipped under your radar. FTC Chairman Joseph Simons updated the International Competition Network on the FTC Section 6(b) study of recent acquisitions by Alphabet (including Google), Amazon, Apple, Facebook, and Microsoft that were not reportable under the Hart-Scott-Rodino premerger notification system. As Simons described it, the study was “looking at the possible acquisition of nascent or potential competitors at transaction values below [HSR] filing thresholds.” He then suggested that “[o]ne potential outcome of this study is that we may decide to issue an additional special order requiring premerger filings for acquisitions by these companies at levels well below the normal statutory thresholds.”

One problem with that suggestion: The FTC does not have the authority to change the premerger thresholds under HSR. While the FTC has broad discretion to make HSR rules—and sue to block or unwind non-reportable transactions—HSR’s language and legislative history make it clear that Congress did not delegate its authority to adjust HSR’s thresholds.

HSR Basics

The Hart-Scott-Rodino Antitrust Improvements Act of 1976, codified as 15 U.S.C. § 18a, established notification and waiting requirements for certain large acquisitions and mergers. The goal was to help the federal antitrust agencies identify transactions likely to violate the antitrust laws and sue to block their consummation. Congress established the original minimum size of the transactions subject to HSR’s reporting requirements in the original Act. In 2000, Congress adjusted the thresholds upwards, added a filing-fee requirement, and instituted a mechanism for automatic adjustments of the thresholds based on changes in the country’s gross national product.

Congress delegated to the FTC significant authority to design the HSR notification form and documentary-attachment requirements; define terms; exempt certain transactions unlikely to raise antitrust issues; and “prescribe such other rules as may be necessary and appropriate to carry out the purposes of this section.” The FTC has used that delegated authority to establish rules and formal and informal interpretations advising businesses which transactions must be reported and in what format. The FTC’s adjustments to HSR’s requirements have rarely been challenged; however, one recent challenge, though unsuccessful, is instructive here.

PhRMA Challenge

In 2013, the FTC went through the usual rulemaking procedure to change its interpretation of when the acquisition of an exclusive license to a patent was a reportable acquisition of an asset. The prior rule had made such acquisitions reportable only if the seller transferred all rights to “make, use and sell” as part of the transaction. The FTC had found many transactions in the pharmaceutical industry where the seller had retained a limited right to make, often only for the licensee, that were not reportable but could have antitrust significance. The new rule modified the interpretation and made reportable acquisitions of exclusive licenses in the pharmaceutical industry unless “all commercially significant rights” were transferred.

The pharmaceutical industry’s leading trade association, Pharmaceutical Research and Manufacturers of America or PhRMA, objected to the rule’s focus on a single industry during the rulemaking and then sued to overturn the new rule. Both the lower (Pharm. Res. and Manufc. of Am. v. Federal Trade Commission, 44 F. Supp. 3d 95 (D.D.C. 2014)) and appellate courts (790 F.3d 198 (D.C. Cir. 2015)) upheld the rule. The appellate court found it significant that every one of the HSR filings for, and nearly all requests for guidance on, acquisitions of exclusive licenses came from the pharmaceutical industry. Even so, the FTC did make clear that to the extent similar exclusive licenses existed in other industries, they would “remain potentially reportable.”

The appellate court found that HSR statutory language did not “unambiguously preclude the FTC from promulgating a rule, the substance of which is clearly within its delegated authority, merely because the rule focuses on a specific industry.” Further, the court found that the FTC’s interpretation of HSR in the new rule was rationally related to HSR’s goals and within its delegation from Congress. The court credited the FTC’s statement that the new rule was “simply clarifying” HSR’s applicability, “not expanding the HSR [Act’s] requirements to parties or transactions not covered by the Act.”

Even more pertinently here, the FTC’s arguments with PhRMA regarding the meaning of HSR legislative history revealed that it recognized its lack of authority to reduce HSR’s size thresholds. PhRMA argued that the omission of the following language in the original Senate bill from HSR’s final form meant that Congress intended to prohibit rules focused on a single industry: The FTC may require notification from “any person or persons, or any class or category thereof,” “[n]otwithstanding any other provision of law or the applicability of section (a) of this section.”

The FTC disagreed, pointing out that the “section (a)” referred to was the “section that prescribes size thresholds triggering the premerger notification requirement” and the rejected Senate provision would have allowed “the Commission to require particular categories of persons to report transactions falling below the Act’s minimum thresholds.” (italics in original) Similarly, the FTC’s brief argued that when Rep. Rodino said “the coverage of this bill should be decided by Congress—not the FTC and Justice Department” (122 Cong. Rec. H8140 (Aug. 2, 1976)), he was “talking about who gets to decide the size of the transactions that warrant mandatory pre-closing review.” So in successfully arguing that Congress delegated it authority to adjust definitions to focus on transactions in a single industry, the FTC inadvertently made a strong argument that Congress did not delegate it the authority to require HSR submissions that fall below the minimum thresholds set by Congress.


The FTC clearly has the Section 6(b) authority to gather information about acquisitions large and small by particular industries or companies. Also, it has—and has used—its authority to challenge acquisitions that are not reportable under HSR for whatever reason, including because they fall below HSR’s minimum thresholds.

Following the usual rulemaking process, courts have confirmed that the FTC also has at least some delegated authority to “clarify” HSR’s applicability to particular transactions or companies. But as the HSR legislative history makes unambiguously clear, and as the FTC itself argued in the PhRMA matter, the FTC does not have the authority to expand HSR’s requirements by lowering HSR’s minimum thresholds generally or for particular companies. Congress does. If the FTC now thinks it needs greater authority to investigate small acquisitions by Big Tech companies before they close, it should petition Congress.