How Fund Managers Are Affected By Antitrust Reporting Requirements And Interlocking Officer And Director Rules

The Hart Scott Rodino Act (HSR) provides a federal regulatory scheme to monitor the acquisition of voting securities and assets in an effort to monitor whether such acquisitions may have anticompetitive effects on the marketplace. Section 8 of the Clayton Act has interlocking director/officer rules that may affect fund managers who find themselves holding the voting securities of competing entities and who seek to manage such entities by appointing directors and/or officers that ultimately act on behalf of the fund. This article summarizes some basic principles contained in this regulatory scheme.

When does an acquisition have to be reported under the HSR Act?

Effective February 24, 2014, all acquisitions involving the voting securities of an entity are permissible without notifying the Federal Trade Commission or the Department of Justice (the antitrust agencies) if the acquisition is valued at less than US$75.9 million. Therefore, if a fund sought to acquire a