The Clayton Act, specifically Section 7, prohibits mergers and acquisitions where the effect 'may be substantially to lessen competition, or to tend to create a monopoly.' This statute requires companies to evaluate the competitive effects of their proposed M&A transactions. The Federal Trade Commission (FTC) and the Department of Justice (DOJ) are responsible for enforcing these antitrust laws. Before certain mergers and acquisitions can proceed, companies must file premerger notifications with the FTC and DOJ, who then review the transaction for potential anticompetitive effects. This review process is governed by the Hart-Scott-Rodino Antitrust Improvements Act, an amendment to the Clayton Act.
The Hart-Scott-Rodino Act establishes the federal premerger notification program, which requires companies to report large M&A transactions to the FTC and DOJ before they can be completed. The Act sets forth filing thresholds that, when crossed, trigger the requirement to file. It also establishes waiting periods during which the transaction cannot be completed while the agencies review it for potential anticompetitive effects. If the reviewing agency believes that the transaction may violate antitrust laws, it may request further information from the companies or seek a court order to prevent the transaction from being completed.
The Securities Exchange Act of 1934 requires public companies to disclose information about significant corporate events, including mergers and acquisitions. Specifically, companies must file reports with the Securities and Exchange Commission (SEC) detailing the terms of the M&A transactions, including the financial statements of the companies involved, and any changes in the ownership of securities. The Act also regulates proxy solicitations and requires disclosure of information to shareholders when seeking their vote on M&A transactions. Additionally, the Act contains provisions against insider trading and fraud in connection with the purchase or sale of securities.
The Williams Act requires any person or group acquiring more than 5% of a company's securities to file a statement with the SEC, which includes information about the identity of the purchaser, the source of funds used for the purchase, and the purchaser's intention. This is to inform the shareholders and the public about potential changes in corporate control. The Act also regulates tender offers by requiring the offeror to disclose detailed information about the offer to the company's shareholders and the SEC, and by providing certain protections to shareholders, such as the right to withdraw from the tender offer within a certain period.