Competition Currents | May 2025
United States
A. Federal Trade Commission (FTC)
1. FTC requests public comment on EnCap, Verdun, XCL petition to modify order.
On April 2, 2025, the FTC announced it was seeking public comments through May 2, 2025, on a petition to reopen and modify its 2022 consent order relating to Verdun Oil Company II LLC’s acquisition of EP Energy LLC. Specifically, the parties asked to remove a prior approval requirement in the consent order (requiring the parties to seek prior approval from the FTC before engaging in certain related transactions in the future) that covered Verdun, which was under common management with XCL Resources Holdings, LLC at the time of the transaction, and their parent entities, EnCap Energy Capital Fund XI, L.P. and EnCap Investments L.P. (together, EnCap). See GT’s April 2022 Competition Currents for more information regarding the original consent order. In their request, the parties noted market changes since the consent decree was entered (including EnCap’s and XCL’s exit from crude oil exploration and production in the Uinta Basin area in Utah after a 2024 sale), which they argue obviates the need for a prior approval requirement.
2. FTC approves modification of Enbridge Inc. final order.
On April 8, 2025, the FTC approved a petition by Enbridge Inc. to set aside the 2017 final consent order in Enbridge’s merger with Spectra Energy Corp. At the time of the Spectra acquisition, Enbridge received an indirect ownership interest in the Discovery Pipeline, a competitor to the Walker Ridge Pipeline that Enbridge owns. The FTC was concerned that the acquisition would give Enbridge access to competitively sensitive information about the Discovery Pipeline and required Enbridge to establish firewalls to limit its access to information relating to the Discovery Pipeline as well as requiring Discovery Pipeline board members affiliated with Spectra to recuse themselves from votes involving the pipeline. In December 2024, Enbridge asked the FTC to reopen and set aside the 2017 order after it sold its interest in the Discovery Pipeline, making the consent decree terms obsolete.
3. Mark Meador confirmed as FTC commissioner.
President Trump nominated Mark Meador as FTC Commissioner, the Senate confirmed him on April 10, 2025, and he was sworn in as commissioner on April 16, 2025. Most recently, Meador worked in private practice and served as a visiting fellow at the Heritage Foundation Tech Policy Center. Previously, he was the deputy chief counsel for antitrust and competition policy for Sen. Mike Lee (R-Utah), as well as a trial attorney in the DOJ Antitrust Division. His term as FTC commissioner will expire on Sept. 25, 2031.
4. FTC seeks public comment on petition to modify Chevron-Hess final order.
The FTC announced on April 11, 2025, that it is seeking public comment through May 12, 2025, on a petition to set aside its final consent order (issued in January 2025) relating to Chevron Corporation’s acquisition of Hess Corporation. The consent order prohibited Chevron from appointing Hess CEO John B. Hess to its board of directors, as called for in the transaction’s merger agreement.
5. FTC seeks public comment on petition to modify Exxon-Pioneer final order.
Similarly, the same day, the FTC also announced that it is also seeking public comment through May 12, 2025, on a petition to set aside its final consent order (also issued in January 2025) relating to Exxon Mobil Corporation’s acquisition of Pioneer Natural Resources. The consent order prohibited Exxon Mobil from appointing Scott Sheffield (founder and former CEO of Pioneer) to its board of directors or from having him serve in any advisory capacity.
6. FTC launches public inquiry into anticompetitive regulations.
On April 14, 2025, the FTC announced that in response to President Trump’s executive order “Reducing Anticompetitive Regulatory Barriers,” it was launching a request for information on the impact of federal regulations on competition (to determine whether any regulations unnecessarily exclude new entrants or protect incumbents, for example). Comments can be submitted through May 27, 2025.
7. Illinois and Minnesota join FTC lawsuit challenging medical device coatings deal.
In March 2025, the FTC sued to block GTCR BC Holdings, LLC’s proposed acquisition of Surmodics, Inc., both of whom engage in manufacturing medical device coatings. GTCR is a private equity firm that also owns a majority of Biocoat, Inc., which per the FTC is the second-largest provider of outsourced hydrophilic coatings, with Surmodics being the largest. The FTC’s complaint alleges that the proposed acquisition is anticompetitive because it would give the combined company more than 50% of the market share for outsourced hydrophilic coatings, which medical device manufacturers use in devices including catheters and guidewires. On April 17, 2025, the FTC amended its complaint to add Illinois and Minnesota as co-plaintiffs.
8. FTC and DOJ issue letter seeking identification of anticompetitive regulations across the federal government.
Also as part of the antitrust agencies’ response to the executive order “Reducing Anticompetitive Regulatory Barriers,” on May 5, 2025, the FTC and DOJ issued a joint letter to all federal government agency heads requesting a list of anticompetitive federal regulations within the respective agency’s rulemaking authority that could reduce competition and innovation – including the agency’s recommendation for whether the regulation should be kept, amended, or rescinded. After receiving public and agency comments, the FTC and DOJ will provide the Office of Management and Budget with its consolidated recommendations.
B. Department of Justice (DOJ) Civil Antitrust Division
1. Justice Department hosts roundtables to address competition issues in the entertainment industry and unfair practices in the labor market.
On April 4, 2025, the DOJ hosted discussions centered on competition issues in the entertainment industry. First, DOJ Assistant Attorney General (AAG) Gail Slater met with union members and legal experts to discuss how non-compete agreements and no-poach agreements impact employees, with experts weighing in on strategies to protect workers. Second, AAG Slater discussed unfair practices in the live entertainment market in order to identify labor-market conduct that harms workers.
2. AAG Gail Slater welcomes Antitrust Division leadership team.
On May 1, AAG Slater appointed Dina Kallay to serve as DOJ deputy assistant attorney general for international, policy and appellate, joining the DOJ leadership team of Roger Alford (principal deputy assistant attorney general), Omeed Assefi (acting deputy assistant attorney general), Mark Hamer (deputy assistant attorney general), William “Bill” Rinner (deputy assistant attorney general), Dr. Chetan Sangvhi (deputy assistant attorney general), and Sara Matar (chief of staff).
3. Justice Department and FTC seek information on unfair and anticompetitive practices in live ticketing.
On May 7, 2025, the DOJ announced that in response to President Trump’s executive order “Combating Unfair Practices in the Live Entertainment Market,” it was launching, jointly with the FTC, a public inquiry aimed at identifying unfair and anticompetitive practices in the live entertainment market. AAG Slater stated of the inquiry, “Competitive live entertainment markets should deliver value to artists and fans alike,” while FTC Chair Ferguson also added, “Many Americans feel like they are being priced out of live entertainment by scalpers, bots, and other unfair and deceptive practices.” Comments can be submitted through July 7, 2025.
C. U.S. Litigation
1. Chalmers v. National Collegiate Athletic Association, Case No. 1:24-cv-05008 (S.D.N.Y. April 29, 2025).
On April 29, U.S. District Judge Paul A. Engelmayer dismissed a proposed class action by 16 former men’s basketball players against the National Collegiate Athletic Association (NCAA). The antitrust suit was filed last July, a month after the announcement of the $2.78 billion settlement that would compensate past athletes for their name, image, and likeness (NIL) and put a future revenue sharing plan in place. The players’ college careers spanned from 1994 to 2016, and Engelmayer agreed with the NCAA’s argument that the statute of limitations on their claims expired, noting in his opinion that “the NCAA’s use today of a NIL acquired decades ago as the fruit of an antitrust violation does not constitute a new overt act restarting the limitations clock.”
2. Compass Inc. v. Northwest Multiple Listing Services, Case No. 2:25-cv-00766 (W.D. Wash. Apr. 28, 2025).
On April 28, Compass Inc. sued the broker-led Northwest Multiple Listing Service (MLS), claiming that the MLS’s rules in Washington that prohibit “premarketing” real estate before they are officially listed for sale is an anticompetitive boycott. Compass—a broker service operating in Washington—engages in “office exclusive” listing that tests the asking price, pictures, and home specifications to a small set of potential buyers before the home is actually put up for sale. Compass alleges that the practice is used in other states, but that Washington prohibits this premarketing because it is “fundamentally unfair and perpetuates inequities that have long plagued the housing system.”
3. Mack’s Junk Removal LLC v Rouse Services LLC, Case No. 2:25-cv-03565 (N.D. Ill. Apr. 23, 2025).
A nationwide class action was filed alleging several large construction equipment rental companies utilized RB Global Inc.’s product, Rouse, to set rates for construction equipment rental. According to the allegations, rental companies defer all rental-pricing decisions to Rouse, which uses an AI algorithm to set rates at anticompetitive levels. The complaint also alleges that Rouse allows participants to get detailed sales data of local competitors, allowing for a greater chance of price fixing.
4. Regeneron Pharmaceuticals Inc. v. Amgen Inc., Case No. 1:22-cv-00697 (D. Del. Apr. 11, 2025).
On April 11, 2025, U.S. District Judge Jennifer L. Hall denied defendant Amgen Inc.’s motion to dismiss an antitrust lawsuit. In the lawsuit, competitor Regeneron Pharmaceuticals alleges that Amgen improperly bundled discounts of its other medications—in which it has market dominance—to pharmacy benefit managers if they would agree to exclusively cover Amgen’s Repatha, a cholesterol-reducing medication. Regeneron, which offers a competing cholesterol medication, claims that such bundling schemes effectively drive other competitors out of the market. In her ruling, Judge Hall held that Regeneron has presented evidence of both improper bundling and “de facto exclusive dealing arrangements” to proceed to further discovery.
The Netherlands
ACM
1. The ACM approves sustainability collaboration in textile sector under competition rules.
The Dutch competition authority (ACM) has issued an informal assessment of the Textile Alliance — an initiative involving companies, trade associations, and civil society organizations in the garments, shoes, leather, and textile sectors — concluding that the initiative complies with Dutch and EU competition law.
The Textile Alliance aims to promote international corporate social responsibility by improving compliance with human rights, environmental, and animal-welfare standards in production and supply chains. According to ACM’s assessment, the arrangements focus on individual company commitments and voluntary tools, such as a collective risk assessment, without mandating uniform actions or exchanging competition-sensitive information. The assessment affirms that competition law does not necessarily pose a barrier to sector-wide sustainability agreements.
2. The ACM approves FincoEnergies’ acquisition of Klaas de Boer with conditions.
The ACM has approved FincoEnergies’ acquisition of Oliehandel Klaas de Boer with conditions to maintain competition in the marine fuel supply market. Both companies are major suppliers of marine fuels in several Dutch ports. The ACM had competition concerns due to limited alternative suppliers and high costs for buyers to switch ports. To address this, FincoEnergies and Klaas de Boer must sell various assets, including tankers and a storage terminal, to GMB Groep and Slurink Transport Services, ensuring continued competition in the affected ports and eliminating competition concerns.
3. The ACM emphasizes the importance of competition for European competitiveness in joint statement.
Certain European competition authorities, including the ACM, have issued a joint statement highlighting the crucial role of competition in enhancing European competitiveness. The statement aligns with the European Commission’s recently presented “Competitiveness Compass” and emphasizes that competition fosters productivity, innovation, and investment. The authorities assert that competition and economies of scale go hand in hand and that competition rules are essential for well-functioning markets. The statement specifically addresses competition in the telecom sector, where the authorities warn that reduced merger scrutiny, particularly in telecommunications, may result in fewer incentives to improve networks, services, and innovation. As such, careful oversight of mergers is deemed necessary. Mergers that harm competition should either be blocked or approved only under strict conditions. The national competition authorities of Belgium, Portugal, Austria, Czech Republic, Ireland, and the Netherlands signed the joint statement.
4. The ACM informs healthcare institutions of competition rules for new cancer and vascular surgery standards.
The ACM has issued guidance to healthcare providers on how to comply with competition law when making regional agreements on the redistribution of care, following new national volume norms for cancer and vascular treatments. These norms limit certain complex procedures to hospitals that perform them frequently, starting in 2026. The ACM emphasized that while cooperation is allowed, such agreements must not amount to unlawful market sharing. The ACM will not intervene in regional care arrangements if all relevant stakeholders are involved and the cooperation pursues clear, measurable goals aimed at improving care accessibility, affordability, and quality.
Poland
A. UOKiK issues conditional clearance for Medicover’s acquisition of CityFit Gyms.
On March 31, 2025, the President of the Polish Office of Competition and Consumer Protection (UOKiK) conditionally approved ABC Medicover Holdings B.V.’s acquisition of 16 fitness clubs. ABC Medicover is a member of the Medicover group, a major private healthcare provider. The transaction consists of the acquisition of sole control over 16 companies operating under the CityFit and CityFit Blue brands. Medicover already has a strong presence in the Polish fitness sector through such brands as Just Gym, Well Fitness, McFit, Stellar, Platinum Fitness, Smart Gym, and Premium Fitness & Gym, operating over 150 clubs nationwide.
Based on its competition assessment, the UOKiK President concluded that while the concentration would not significantly restrict competition on most relevant markets, serious concerns arose in two cities (Bielsko-Biała and Gliwice) where the post-transaction market shares would be particularly high. To address these concerns, the clearance was made conditional on structural remedies. Medicover must divest one club in each of the two concerned cities — either an existing Medicover location or a CityFit club included in the acquisition. The buyer must be an independent third party the UOKiK President approves, with a credible commitment to operating a fitness facility at the divested location for a minimum of two years.
B. UOKiK launches investigation and conducts dawn raids in home appliances sector.
On March 31, 2025, the UOKiK President announced it was launching a preliminary investigation into a suspected price-fixing agreement between Electrolux Poland and major electronics retailers. The proceedings focus on suspicions that Electrolux Poland may have coordinated the retail prices of household appliances—including refrigerators, washing machines, dishwashers, coffee machines, ovens, vacuum cleaners, irons, and kettles—sold under the Electrolux and AEG brands. According to the authority, these practices may have prevented consumers from benefiting from lower prices, both online and in brick-and-mortar stores.
Based on signals received from the market indicating potential antitrust violations, the UOKiK President, after securing court approval, conducted unannounced inspections at the headquarters of Electrolux Poland and several entities operating retail chains, including companies running major home appliances chain stores. The case is still at its preliminary stage and is conducted in rem, meaning that it is not yet directed at any specific undertakings. Should evidence confirm the suspicions, the UOKiK President may open formal antitrust proceedings and bring charges against identified entities.
The investigation follows recent enforcement actions in the sector. Notably, in 2024, the UOKiK imposed over PLN 66 million in fines on companies involved in a decade-long price-fixing scheme concerning Jura-brand coffee machines. That decision also included a close to PLN 250,000 fine on an individual responsible for the agreement.
Italy
Italian Competition Authority (ICA)
1. ICA launches investigation against CNF for alleged concerted practice.
On March 25, 2025, ICA opened an investigation into the National Bar Council (CNF) for an alleged concerted practice in violation of Article 101 of TFEU. The investigation concerns the application of the “fair compensation rule” for lawyers, introduced by Law No. 49/2023. The “fair compensation rule” aims to provide specific protections for legal professionals when dealing with large clients, based on the presumption lawyers are often compelled to accept reduced fees from such clients.
According to ICA, CNF’s interpretation and enforcement of these rules—particularly through the new Article 25-bis of the Lawyers Code of Ethics—exceeds the scope of the law and may restrict competition among lawyers. ICA specifically challenged CNF’s use of ambiguous language prohibiting lawyers from agreeing upon or estimating fees, without specifying the context or limits. In ICA’s view, this lack of clarity failed to specify that the fair compensation obligations (and related disciplinary consequences) apply only to relationships with large corporate clients. By doing so, CNF is allegedly attempting to directly influence the economic behavior of lawyers under its supervision, potentially deterring them from negotiating fees below the indicated benchmarks.
ICA has given CNF a 60-day deadline, starting from the date of notification of this decision, to exercise its right to be heard by the legal representatives of the party. ICA has established that the procedure must conclude by the end of December 2026.
2. Unfair commercial practice: fine of almost EUR 20 million has been imposed on CoopCulture and other tourist operators.
On March 25, 2025, ICA fined Società Cooperativa Culture (CoopCulture) and the following tourist operators: Tiqets International BV, GetYourGuide Deutschland GmbH, Walks LLC, Italy With Family S.r.l., City Wonders Limited, and Musement S.p.A. almost EUR 20 million for making it difficult to purchase tickets online to access the Colosseum Archaeological Park. Specifically, the ICA found that CoopCulture failed to take adequate measures to counter ticket hoarding using automated methods while also reserving significant quantities of tickets for sales offered during its own educational tours, from which it gained considerable economic benefits. This forced consumers to turn to tour operators and platforms that resold tickets bundled with additional services (such as tour guides and pick-up) at significantly higher prices.
At the same time, the six tourist operators purchased tickets using bots or other automated tools, thus contributing to the rapid depletion of base-price tickets on the CoopCulture website. By doing so, these operators took advantage of the systematic unavailability of tickets, which forced consumers who wished to visit the Colosseum to obtain tickets bundled with additional services. ICA found that CoopCulture’s conduct constitutes an unfair commercial practice in violation of Article 20, paragraph 2, of the Italian Consumer Code. Also, the conduct of Tiqets International BV, GetYourGuide Deutschland GmbH, Walks LLC, Italy With Family S.r.l., City Wonders Limited, and Musement S.p.A. was found to be unfair under Articles 24 and 25 of the Italian Consumer Code.
3. Key takeaways from ICA’s annual report.
On March 31, 2025, ICA published its annual report on its 2024 activities. During 2024, ICA’s activity recorded a notable increase, both in quantitative and qualitative terms, confirming a trend established in recent years. Notably, between January 2024 and March 2025, ICA received 1,452 competition-related reports, examined 121 merger transactions, and concluded two proceedings on restrictive agreements and nine on abuse of dominant position.
In particular, the number of merger filings ICA reviewed increased by approximately 50% compared to the average of the past 10 years. Moreover, in seven cases, ICA exercised its call-in power, pursuant to Article 16, paragraph 1-bis, of Law No. 287/1990, to require notification of a merger not reaching the turnover thresholds for mandatory notification. According to the ICA, recent legislative amendments strengthened its investigative and intervention tools, also contributing to reinforcing enforcement activities against cartels. ICA initiated four proceedings, with over eight investigations covering as many sectors and over 30 companies. ICA reported that the intensified efforts to counter the most serious antitrust violations is also attributable to the establishment of the whistleblowing platform, which received over 200 reports, and to the leniency program, which was recently enhanced.
As for consumer protection, between January 2024 and March 2025, ICA examined 36,900 reports and concluded 71 proceedings; 46 with confirmation of the infringement, 17 with acceptance of commitments, and eight with no violations. According to the ICA’s estimates, the consumer protection activities carried out between 2023 and 2024 enabled savings of over EUR 28 million, as well as the restitution of more than EUR 150 million to 900,000 consumers.
European Union
A. European Commission
1. The European Commission opens investigation into UMG’s acquisition of Downtown after referral from the Netherlands and Austria.
The European Commission has accepted a referral request from the ACM to investigate Universal Music Group’s proposed acquisition of Downtown, a service provider to independent labels and artists. The ACM expressed concerns that the acquisition may negatively affect competition in the Netherlands and potentially other EU countries. Universal Music Group, the world’s largest record company, has a history of acquiring smaller industry players, often without regulatory oversight due to low turnover thresholds.
In this case, the ACM was notified about the acquisition in February 2025, and the deal prompted complaints from industry stakeholders. The Austrian competition authority supported the ACM’s request for a European-level review. The ACM reiterated its call for a “call-in power” to enable review of smaller, potentially harmful mergers even when they fall below standard notification thresholds. The European Commission has now launched a formal investigation into the deal’s cross-border competitive effects.
2. European Commission fines car manufacturers and ACEA EUR 458 million for cartel on end-of-life vehicle recycling.
The European Commission has fined 15 major car manufacturers and the European Automobile Manufacturers’ Association (ACEA) approximately EUR 458 million for their involvement in a long-running cartel concerning the recycling of end-of-life vehicles (ELVs). The cartel, which lasted over 15 years, involved coordination on avoiding payments to car dismantlers and restricting transparency around recycling rates in new vehicles.
Mercedes-Benz was granted immunity under the leniency program for informing the European Commission of the anticompetitive behavior. Other companies admitted their involvement and agreed to settle the case. Some companies received a reduction of their fine for cooperation under the leniency program. This decision is part of the European Commission’s broader efforts to enforce EU competition rules and address anticompetitive practices in the automotive sector.
3. The European Commission approves Safran’s acquisition of Collins Aerospace, with conditions.
The European Commission has approved Safran USA Inc.’s acquisition of parts of Collins Aerospace’s actuation business, subject to commitments to address competition concerns. Safran’s and the target’s businesses are largely complementary, but the initial transaction raised competition concerns, particularly in the market for trimmable horizontal stabilizer actuator (THSA) systems. These systems, used in civil aircraft, were found to have insufficient alternative suppliers post-merger.
To resolve these concerns, Safran committed to divesting its North American THSA business. A market test confirmed the remedy’s effectiveness, and the European Commission approved the deal subject to full compliance, which will be monitored by an independent trustee.
B. European General Court
General Court upholds Symrise raids in cross-border fragrance cartel investigation.
The EU’s General Court has rejected Symrise’s challenge to annul European Commission’s raids of its premises during a 2023 cross-border cartel investigation into the fragrance industry. The court found that the European Commission had sufficient grounds for inspections, based on credible evidence, including open-source intelligence, suspiciously similar tender bids, and confidential information exchanges. Symrise argued that the raids infringed its privacy and defense rights due to an alleged lack of reasonable suspicion. However, the court ruled that the broader context of international cartel suspicion, including indications from Symrise’s own activities and third-party findings, justified the European Commission’s actions. Symrise stressed that the ruling does not equate to the finding of guilt and reaffirmed its denial of any anticompetitive behavior, stating it continues to cooperate with authorities.
1 Due to the terms of GT’s retention by certain of its clients, these summaries may not include developments relating to matters involving those clients.
Additional Authors: Holly Smith Letourneau, Sarah-Michelle Stearns, Yongho “Andrew” Lee, Alexa S. Minesinger, Alexander L. Nowinski, Miguel Flores Bernés, Valery Dayne García Zavala, Hans Urlus, Dr. Robert Hardy, Chazz Sutherland, Manish Das, Johnny Shearman, Robert Gago, Filip Drgas, Anna Celejewska-Rajchert, Ewa Głowacka, Edoardo Gambaro, Pietro Missanelli, Martino Basilisco, Yuji Ogiwara, Mari Arakawa, Philip Ruan, and Dawn (Dan) Zhang.
Private Equity in Australia: Upcoming Mandatory Merger Laws and Foreign Investment Changes
WHAT’S ON THE AUSTRALIAN REGULATORY HORIZON?
In this publication, we provide an overview of certain upcoming changes for private equity funds and their investors (both Australian and foreign) investing in Australia.
The key takeaways are set out below.
New Mandatory Merger Control Regime
A new mandatory merger control notification regime will be introduced effective from 1 January 2026, with transitional provisions starting from 1 July 2025.
Draft Guidelines by the Australian Competition and Consumer Commission (ACCC) and draft Determinations by the Australian Government have been released for consultation. However, there remains uncertainty about several matters, including how a “change of control” and calculation of monetary thresholds are intended to operate in a private equity context. Future government Determinations may clarify these issues. We are working with industry to make submissions to the government to clarify these issues in a manner that does not “chill” investment.
The government has also published draft notification forms under the draft Determination which require merger parties to specify whether their Sale and Purchase Agreement (SPA) contains any goodwill protection provisions (including noncompetes and restraints of trade). The ACCC will now have the power to declare that the existing “goodwill exemption” to the cartel conduct provisions under the Competition and Consumer Act 2010 (Cth) (CCA) does not apply if it considers that a particular noncompete, restraint of trade or other goodwill protection provision was not necessary for the protection of the purchaser in respect of the goodwill of the target business.
Foreign Investment Framework–Updates for Foreign Private Equity Funds and Foreign Investors
It is currently unclear how the new merger regime (and the ACCC) will interact with the foreign investment framework (and Foreign Investment Review Board (FIRB) processes), including the interaction between the FIRB and ACCC waiver regimes–detailed guidance is yet to be released.
The final stage of Treasury’s new Foreign Investment Portal (the Portal) is expected to launch by the end of May 2025, after which the entire FIRB application process (including communications with Treasury) will be facilitated electronically through the Portal.
Treasury recently released updated the Guidance Note 12–Tax Conditions, which interestingly removed the “standard tax conditions” but included more examples of tax conditions that may be imposed by the Australian Taxation Office (ATO) and Treasury on a case-by-case basis. In addition, it includes an updated tax checklist which the ATO now expects to be answered at the same time as lodging the FIRB application (rather than the current practice of seeking to defer this to after lodgement). Treasury has also updated Guidance Note 10–Fees to introduce a refund/credit scheme for filing fees in an unsuccessful competitive bid.
Next Steps
We will continue to update you on further developments in relation to the new merger control and foreign investment regime, including release of the subordinated merger legislation, which will, amongst other things, determine the final monetary thresholds by which merger notification will be required.
UPCOMING MANDATORY MERGER NOTIFICATION LAWS
In Australia, the merger control regime is underpinned by section 50 of the CCA, which prohibits mergers or acquisitions that would substantially lessen competition (SLC Rule) in any market in Australia.
While at present it is not compulsory for acquisitions to be notified to the ACCC, the Australian Government has passed the Treasury Laws Amendment (Mergers and Acquisitions Reform) Act 2024 (Cth) (the Act) such that as of 1 January 2026, a new mandatory and suspensory merger control regime will be introduced.
Under the new regime:
Any acquisitions of shares, assets, units and other defined interests involving a “change of control” that meet certain monetary thresholds (outlined further below) will be required to be notified to the ACCC and approved (i.e. determined that they do not breach the SLC Rule) prior to completing.
The SLC Rule has been broadened to encompass scenarios where a merger or acquisition results in the “creation, strengthening, or entrenchment of a substantial degree of market power”, not just a lessening.
Businesses can use the Clearance Procedure voluntarily from 1 July 2025, and it will be mandatory from 1 January 2026.
Thresholds–When Notification is Required
Set out on the next page is a flowchart which illustrates which transactions must be notified to the ACCC under the new regime:
Source: James Gray, K&L Gates LLP
As set out above, whether a transaction must be notified to the ACCC essentially depends on whether it results in a “change of control”, and if so, whether it meets certain monetary thresholds. Set out below is some additional detail on the change of control requirements and the monetary thresholds, noting that there remains uncertainty about how these are intended to operate in a private equity scenario.
Future government Determinations may clarify these issues. We are working with industry to make submissions to the government to clarify this issue in a manner that does not “chill” investment.
Control Threshold
A “change of control” is enlivened in respect of acquisitions of full or partial interests in shares, unit trusts and managed investment schemes. Acquisitions that do not result in a change in control are not required to be notified.
“Control” will be defined having regard to section 50AA of the Corporations Act 2001 (Cth) (Corporations Act)–i.e. as being the capacity to determine the outcome of decisions about an entity’s financial and operating policies.
We note that there is a degree of certainty regarding “control” issues. While the Act provides a “safe harbour” from the notification requirements for acquisitions of interests of less than 20%, the government has also foreshadowed that it intends to use its designation powers to require transaction parties to notify the ACCC of acquisitions of less than 20% of the voting rights in private/unlisted companies, where one of the parties to the transaction has an Australian turnover of more than AU$200 million.
This issue was not addressed in the Consultation Draft of the Determination published by the government on 28 March 2025, which otherwise provided considerable detail about the Mandatory Regime, including the information and documentary requirements that will be required to be provided to the ACCC. For more detail about the Determination, click here. Future government Determinations may clarify this issue.
Acquirer Turnover Thresholds
More generally, there is uncertainty as to how the acquirer “turnover thresholds” will be assessed for the economy-wide, large acquirer and serial acquirer thresholds for private equity investments, particularly in relation to:
Taking into account the turnover of “connected entities” (being associated entities for the purposes of section 50AAA of the Corporations Act and entities controlled by a principal party for the purposes of section 50AA of the Corporations Act) to calculate acquirer turnover in a private equity fund context given these Corporations Act concepts do not necessarily fit neatly with private equity fund structures, which may also include cross-shareholdings and cross-directorships.
The creation of a “new” fund for the purposes of industry or deal-specific investments.
Certain changes to the limited partners of a private equity fund (including secondaries) after a primary portfolio acquisition.
Where the fund is seeking to acquire interests/minority interests in entities.
Again, future government Determinations may clarify this issue (e.g. to have regard to the turnover of the specific portfolio company or specific fund only).
For exits which meet the notification thresholds, private equity funds and investors should anticipate longer approval timelines and increased regulatory oversight and cost, potentially influencing deal structuring and exit strategies.
Private equity funds and their portfolio companies must also consider the cumulative competitive impact of their acquisitions in the immediately preceding three-year period, as the ACCC can now assess these transactions together, even if they were not individually reported. This will be particularly relevant to private equity funds and their portfolio companies engaged in “bolt-on” and “roll-up” acquisitions to existing portfolio companies to enhance value. To stay compliant, portfolio entities should track target sales generated at the time of acquisition and in the following years to determine if future deals fall within the relevant monetary thresholds and therefore require notification.
Process Changes–Clearance Timelines and Notification Fees
The new merger regime imposes statutory timelines for the ACCC’s consideration of transactions. We will provide further detail on these timelines in a forthcoming Insight on the ACCC’s draft Merger Process Guidelines.
Treasury has also indicated that it expects notification fees to be around AU$50,000 to AU$100,000 for most notifiable transactions. However, an exemption from fees will be available for some small businesses so that the fees are not a disproportionate burden.
These ACCC fees are in addition to any FIRB notification fees that may apply to foreign private equity funds and investors.
Transitional Arrangements
To assist businesses during this transition, the ACCC has released guidance detailing how to navigate the period leading up to the mandatory implementation. Key points include:
Current informal review and merger authorisation processes: Businesses can continue to use the existing voluntary notification regime throughout 2025. Early engagement with the ACCC is advised to ensure sufficient time for assessment before the new regime takes effect.
Voluntary Notification (1 July 2025–31 December 2025): From 1 July 2025, businesses have the option to voluntarily notify the ACCC under the new regime. This provides greater certainty regarding timeframes and ensures that transactions are aligned with the forthcoming mandatory requirements.
Noncompetes, Restraints and Goodwill Protection
Under current laws, noncompetes and restraints of trade included in an SPA are generally exempt from the per se cartel prohibitions to the extent its purpose is solely to protect the goodwill acquired by the purchaser (Goodwill Exemption).
The government has published a draft Determination which provides detail about the forthcoming mandatory merger regime. The draft Determination includes draft notification forms which merger parties will be required to adopt when notifying the ACCC. Notably, merger parties will be required to specify whether their SPA contains any goodwill protection provisions and to specify why they are necessary for the protection of the purchaser in respect of the goodwill of the business.
The ACCC will have the power to declare that the Goodwill Exemption does not apply to any goodwill protection provisions which it considers are “not necessary” for the protection of the purchaser in respect of the goodwill of the target business. A goodwill protection provision (e.g. a noncompete clause) is likely to be deemed as such if the ACCC considers that the duration or geographic scope of the provision is unnecessarily broad. Merger parties should therefore carefully consider the scope of any goodwill protection provisions that they propose to include in any SPA–and ensure that they do not go beyond what is necessary for the sole purpose of protecting the goodwill of the business.
Unnecessarily broad goodwill protection provisions which fall outside the scope of the Goodwill Exemption will expose merger parties to potential liability for engaging in cartel conduct–which is both a criminal and civil offence under the CCA. Merger parties should be aware that even if the ACCC does not object to the goodwill protection provision upon being notified of the transaction, this does not preclude the ACCC from commencing action under the anti-competitive conduct provisions of the CCA in relation to this provision at a later stage.
Interaction with FIRB Regime
FIRB and the Treasury have traditionally consulted with the ACCC about transactions notified to FIRB because competition is a factor relevant to the national interest test in Australia’s foreign investment framework under the Foreign Acquisitions and Takeovers Act 1975 (Cth) and related Foreign Investment Policy and guidance notes.
It is currently unclear how the new merger regime and the ACCC will interact with the foreign investment framework and FIRB processes, including:
How the FIRB waiver regime will operate with the ACCC waiver regime.
How existing FIRB waivers granted by FIRB (after consulting with the ACCC) will operate under the new merger regime.
Whether Treasury may refer to a foreign acquisition to the ACCC for review even if that acquisition does not meet the merger thresholds.
The ACCC has noted in the ACCC’s draft Merger Process Guidelines that it is currently working with the Treasury on the interaction between the foreign investment framework and ACCC’s merger regime and that they will provide further guidance on how the two regimes operate together in due course.
It is expected that an applicant will be able to decide whether to submit a FIRB or an ACCC application first (i.e. there will not be a legal requirement to notify simultaneously, though it may still make sense to do so).
FOREIGN INVESTMENT CHANGES
Recap on Australia’s Foreign Investment Framework and FIRB
Background
Under Australia’s foreign investment framework, foreign persons may be required or encouraged to apply for foreign investment approval prior to taking certain actions. The approval is provided by the Australian Treasurer and confirms that the Commonwealth of Australia does not object to a particular action. It is commonly referred to as “FIRB Approval”, as the Treasurer receives advice from FIRB when deciding whether to approve an action.
Broadly, the framework is comprised of the Foreign Acquisitions and Takeovers Act 1975 (Cth) and the Foreign Acquisitions and Takeovers Regulations 2015 (Cth). Additionally, Australia’s Foreign Investment Policy and guidance notes provide further commentary and guidance.
Get Legal Advice Early
Australia’s foreign investment framework is complex, factually specific and continually changes. For foreign private equity investors (including sponsors, funds and their portfolio companies), Australia’s foreign investment framework and rules present a threshold issue that needs to be considered across all stages of the private equity investment life cycle against Australia’s foreign investment policy settings. Foreign private equity investors should seek legal advice for each and every investment into Australia to avoid breaching the foreign investment rules.
Other FIRB Updates for Foreign Private Equity Funds and Foreign Investors–Timelines, Lodgement, Tax Conditions and Fees
FIRB has made welcome headway in shortening its response times for straightforward decisions over the last year. Treasury’s new Portal is now live for compliance reporting. The final stage of the Portal is expected to launch by the end of May 2025, after which the entire FIRB application process (including communications with Treasury) will be facilitated electronically through the Portal.
On 14 March 2025, Treasury released updated Guidance Note 12–Tax Conditions. These changes reflect the tax risks and tax conditions that the ATO has been focused on and has imposed when reviewing recent foreign investment applications. Of note:
Interestingly, the guidance note no longer sets out “standard tax conditions” but does include more examples of tax conditions that may be imposed by the ATO and Treasury on a case-by-case basis.
Also included is an updated tax checklist which applicants are usually requested to answer post-lodgement of a FIRB application. However, the ATO now expects that information to be included in the FIRB application itself (rather than submitted during the FIRB review process or, sometimes, within three months of completion if relevant tax information is not available). If that tax information is not included in the initial application, the applicant must disclose why and when the information will be submitted. As noted above, these recent updates to FIRB’s tax guidance and the new Portal are likely to require front-loading of the provision of tax information by applicants.
Treasury has also updated Guidance Note 10–Feesto introduce a refund/credit scheme for filing fees in an unsuccessful competitive bid. This is a positive development; however, care needs to be taken to ensure that relevant eligibility criteria are met by unsuccessful bidders and credits or refunds can be applied in practice. Unsuccessful bidders can elect to take a refund equal to the lesser of 75% of the fee paid or the amount of the fee minus the minimum fee amount, currently AU$4,300 (which must be requested within six months of the unsuccessful bid) or a 100% credit for a subsequent FIRB application made within 24 months of the failed bid. Decisions regarding fee refunds or credits will still be made on a case-by-case basis following application and justification of the refund/credit request by applicants. It will be interesting to see if the new merger regime takes a similar approach to fees for unsuccessful competitive bids.
Overall, these changes are welcome and should assist to further support a shortening of average FIRB approval times but will require more upfront planning and disclosure by foreign applicants.
Is Bullock v. Rivian the Nail in the Coffin for California State 1933 Act Claims?
Last month in Bullock v. Rivian Automotive, California’s Fourth District Court of Appeal became the latest to enforce a federal forum provision (FFP) embedded in a Delaware corporation’s charter and affirmed dismissal of a putative class action brought under the Securities Act of 1933 (1933 Act) in California state court. The court’s reasoning tracks closely with an earlier California appellate decision in Wong v. Restoration Robotics [Cal.App.5th 48 (2022)], and together these cases cement that Delaware corporations that adopt well-drafted federal forum provisions can meaningfully reduce the risk and cost of 1933 Act litigation by keeping those claims in federal court.
Plaintiffs are taking notice, too. Even before Bullock, there had been a sharp decline in state court 1933 Act filings. According to Cornerstone Research’s 2024 Securities Class Action Filings Year in Review, the number of state 1933 Act filings dropped to just five in 2024 (three in California, two in New York), which represents a more than 90% falloff from their recent peak in 2019. This stark decline signals that plaintiffs are finding state court a shrinking battlefield for 1933 Act claims, in large part because of FFP enforcement.
This moment offers an opportunity — especially for companies incorporated in Delaware and that have connections to California — to manage litigation risks with regard to future securities offerings. And for companies considering an IPO, merger, or spinoff sometime in the future, there may be no better time to build in protections that help ensure future 1933 Act claims are litigated in federal court.
Background: FFPs and the Dual Forum Problem
The 1933 Act provides a private right of action for investors alleging material misstatements or omissions in a registration statement. Thanks to the 2018 landmark Supreme Court decision in Cyan v. Beaver County Employees Retirement Fund [583 U.S. 416 (2018)], plaintiffs are free to bring these claims in either state or federal court — and defendants cannot remove them to federal court. The result: companies began to regularly find themselves defending the same offering in parallel proceedings — one in federal court, and one or more in state court — involving overlapping class periods and claims. That means litigation costs for 1933 Act claims rose significantly, and so did the proliferation of those types of filings by the plaintiff’s bar. The year after Cyan, 52 1933 Act cases were filed in state court—up from 35 the year prior.
In response to the increased risk brought about by Cyan, many Delaware corporations began adopting FFPs that designate the federal courts as the exclusive forum for 1933 Act claims. This practice was endorsed in Sciabacucchi v. Salzberg [227 A.3d 102 (2020)], when the Delaware Supreme Court held that such provisions are valid under Delaware law when included in a corporation’s certificate of incorporation. But enforceability in other jurisdictions — including plaintiff-friendly California — remained an open question.
Enter Wong and Bullock: California Enforces Delaware FFPs
In Wong v. Restoration Robotics, California’s First District Court of Appeal became the first to enforce a Delaware FFP over constitutional and statutory objections. The plaintiff had filed suit in California state court under the 1933 Act after the company’s IPO. The defendant, a Delaware corporation, successfully moved to dismiss in the trial court based on the FFP in its charter. On appeal, the plaintiff argued that the FFP violated the 1933 Act’s anti-removal and anti-waiver provisions, conflicted with the Commerce and Supremacy Clauses, and was unenforceable under California contract law. The court rejected each of these arguments, holding that FFPs do not waive substantive rights under the 1933 Act but simply designate that those rights must be asserted in a federal court.
Two years later, in Bullock, the Fourth District Court of Appeal reached the same result. The FFP in Rivian’s Delaware charter was substantially similar to the one upheld in Wong, and plaintiffs — represented by the same firm as in Wong — raised many of the same arguments. The court repeatedly cited Wong in its decision and again rejected arguments under the 1933 Act, the Supremacy and Commerce clauses, and contract law.
Together, Wong and Bullock leave little doubt: validly adopted FFPs will be enforced by California courts. That makes California state court a far riskier venue for plaintiffs seeking to assert 1933 Act claims.
Why Forum Matters
Litigating 1933 Act claims in federal court isn’t just a matter of preference — it can meaningfully affect outcomes. Here’s why:
Stronger procedural protections: The Private Securities Litigation Reform Act (PSLRA) applies in federal court, providing heightened pleading standards, discovery stays, and lead plaintiff procedures. While defendants frequently urge state courts to apply the PSLRA’s protections in 1933 Act cases, courts across the country have issued inconsistent and sometimes conflicting rulings on the issue.
Consistency and predictability: Federal courts have more experience applying the 1933 Act and tend to produce more uniform rulings, reducing the risk of contradictory decisions.
Cost: Avoiding parallel litigation in state and federal court reduces defense costs, settlement pressure, and the risk of inconsistent outcomes.
What Companies Should Do Now
Whether your company (or one you are advising) is public or contemplating going public, now is the time to evaluate your exposure and take steps to mitigate it. Here are concrete steps companies should consider:
1. Review your charter and bylaws
If you’re a Delaware corporation and don’t currently have an FFP in your governing documents, you’re potentially leaving yourself exposed to state court litigation risk.
2. Draft provisions that will withstand challenge
An effective FFP should:
Clearly designate federal district courts as the exclusive forum for 1933 Act claims.
Define the covered claims precisely (e.g., under the 1933 Act).
State that shareholders consent by acquiring shares.
The Rivian articles of incorporation at issue in Bullock provide a tested template:
Unless the Corporation consents in writing to the selection of an alternative forum,… the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder….
Any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article Tenth
3. Disclose clearly
Proper disclosure in offering materials and SEC filings reduces the risk of procedural challenge and helps ensure the provision is enforceable in litigation.
4. Monitor incorporation law in other jurisdictions
The Bullock decision comes amid a broader trend of companies reassessing their incorporation choices. In recent years, a growing number of businesses have explored reincorporating outside of Delaware — a phenomenon sometimes referred to as “DExit” — with Nevada and Texas emerging as popular alternatives. While Delaware’s legal framework for FFPs is well developed, and California courts have now reinforced their applicability, the law in other states remains comparatively unsettled and is likely to be tested by future plaintiffs. Companies weighing a move should closely track how courts in these states approach FFPs and related litigation risk.
Conclusion
The sharp decline in state 1933 Act filings is a testament to the success of FFPs in steering litigation into federal court — where companies benefit from clearer rules, reduced costs, and lower risk. The Bullock decision confirms that courts in California will enforce these provisions when properly adopted and disclosed.
For any company that may issue a security, especially those contemplating a large public offering, the takeaway is simple: Review your governance documents now, and make sure you’re protected before the next offering — or the next lawsuit.
Bad Formatting Dooms Proposal and GAO Bid Protest
In a cautionary decision that reinforces the importance of strict compliance with solicitation instructions, the Government Accountability Office (GAO) recently denied in part and dismissed in part a protest challenging a contractor’s elimination from a U.S. Department of Agriculture (USDA) procurement.
The recent case — FI Consulting, Inc. (FIC) — centers on a seemingly minor formatting error: the inclusion of a corporate logo with embedded text on the cover page of FIC’s quotation. While the protester argued this was a minor informality or the result of ambiguous solicitation language, the GAO disagreed, emphasizing that the USDA had clearly instructed vendors to exclude images containing text from their proposals — including logos.
The Solicitation’s Formatting Standards
Issued under Federal Acquisition Regulation (FAR) Subpart 8.4 procedures for a five-year blanket purchase agreement (BPA), the Request for Quotations (RFQ) contained strict formatting requirements, warning vendors that failure to follow instructions would be treated as a deficiency, rendering the quotation ineligible for award. Among those instructions: Images were permitted, but only if they did not include text. A Q&A exchange in the solicitation process reinforced this point, clarifying that branding elements, such as logos with text, were not allowed as images.
As stated in the RFQ instructions, the USDA’s justification for this seemingly picayune requirement was that “[t]he [vendor]’s attention to detail is important to the Government as a significant amount of work under the attached [performance work statement] will require the [vendor] to follow detailed instructions, including quality control.” The vendor’s attention to detail in preparing its quote was, thus, a proxy for the expected quality of its performance, as also stated in the RFQ: “The [vendor]’s quot[ation] represents the quality of the performance the Government can expect in the performance of work under this BPA.”
In this way, the USDA employed an approach similar to that reportedly used by the band Van Halen in the 1980s that used to demand that concert venues remove brown M&Ms as a way of telling whether those at the venue had closely read the contract, which included detailed stage set-up instructions.
Despite these warnings, FIC submitted a quotation with its logo — “FI CONSULTING” — as a picture containing text on the cover pages of all volumes. USDA deemed this a failure to follow the RFQ’s instructions and eliminated the proposal prior to full evaluation.
Protest Grounds and GAO’s Reasoning
FIC raised two primary arguments:
Latent Ambiguity – FIC contended that the formatting rules were ambiguous and that a reasonable interpretation would exempt company logos from the text-in-image prohibition.
Minor Informality – In the alternative, FIC argued that including a logo was a trivial error and should have been waived under FAR 14.405.
GAO rejected both claims.
No Ambiguity – GAO held that the RFQ was unambiguous. The instruction that “pictures may not contain text” was stated plainly and emphasized in bold. The agency’s response during the Q&A process further eliminated any uncertainty. The GAO found FIC’s interpretation unreasonable, especially in light of the numerous reminders that noncompliance would lead to elimination.
No Basis for Waiver – The GAO dismissed the second argument outright, noting that FAR 14.405 applies only to sealed bidding under FAR Part 14. Since this procurement was conducted under FAR Subpart 8.4, those procedures did not apply. Even if waiver were permissible, the GAO observed that the agency had the discretion not to waive the requirement — particularly where compliance was integral to the evaluation of vendor reliability.
Key Takeaways for Contractors
This case serves as a sobering reminder for government contractors: Pay close attention to solicitation instructions — down to the formatting requirements. FIC’s protest ultimately failed not due to its qualifications or pricing, but because of a technical violation — one that could have been avoided with a more careful reading of the solicitation.
As agencies continue to stress attention to detail in their solicitations, contractors would be well advised to treat every formatting instruction as a performance requirement. In this procurement landscape, form matters just as much as substance.
The Human Factor in M&A Transactions
When considering the most critical components of mergers and acquisitions (M&A), parties typically focus on deal structure, legal due diligence, and financial modeling. While important to getting a deal done, this focus often overlooks the importance of the human element in successful M&A.
Deloitte data shows that 30% of failed M&A transactions can be attributed to cultural integration issues as the root cause. Deloitte also points to the loss of key talent, as well as a lack of engagement among employees, as factors that can cause significant issues during the integration process. Deloitte makes an important point that it might be financials that drive the initial M&A decision, but the human focus is key to lasting success.
Below, we look at what can go wrong during deal negotiations and integration and the essential role leadership can play in creating a much smoother process and setting the stage for long-term success.
The Human Factor: Key Concerns During Integration
Loss of Key Talent
Founders, senior leadership, top talent, and high-performing employees are the backbone of every company. When a transaction is looming, it can trigger anxiety that may cause the people who made the business successful to consider leaving at one of the most crucial points in the company’s life cycle. When people go, so too can institutional knowledge, customer relations, and, in some cases, the value of the acquisition.
Cultural Clashes
Every organization has its own set of values, norms, and ways of working. Each company’s culture is vital to the organization yet can be a threat to a successful transaction. If there is not thoughtful and sufficient preparation for cultural integration of employees, it can lead to confusion and resentment. Cultural conflicts can create friction that slows productivity, disrupts morale, and impacts retention.
Employee Disengagement
The integration process can be taxing on teams, stretching them thin. During this process, employees on both sides of a transaction may experience burnout or disengagement, especially if they are unsure of their roles in the “new” organization or don’t feel included in the process. Employee engagement (or disengagement) is a critical factor to the ultimate success of the new entity.
The Role of Leadership in Successful Integration
Be Strategic and Start Early
Cultural due diligence should begin early in the M&A process. This can be a more complicated, and sensitive, process than traditional financial and legal due diligence. Leadership should actively compare values, leadership styles, communication practices, and operational assumptions and decide whether they can be addressed. Cultural alignment often matters just as much as EBITDA.
Identify and Manage Critical Talent
Every business has mission-critical employees. Identifying and offering incentives to these employees can improve engagement in a transaction process and prevent an exodus of the most important talent. These types of incentives can take many forms, including retention bonuses, post-closing equity compensation, pre-negotiated employment and severance agreements, leadership opportunities, or clear paths for growth within the post-closing entity, and they can be offered to employees on both sides of the transaction. If certain employees will not be retained in the transaction, then handling their transition out of the business thoughtfully will also have a positive impact on overall morale.
Communicate Transparently and Openly
Silence creates a sense of unease, and that is especially true for employees who are experiencing uncertainty about their roles, job security, or the closing of certain locations. When rumors fly, it can lead to attrition. Confidentiality concerns often prevent wide-spread communications earlier in the transaction process, but leadership should be ready to roll out a well-crafted communications plan to the front lines as early as possible. This thoughtful and proactive approach will help to establish trust, reduce anxiety, and maintain momentum. Leadership should also continue to listen to and learn from the front lines post-closing, regularly checking in with teams to understand how the integration is really progressing.
Utilize Cultural Stewards and Integration Teams
Leadership should select individuals or teams that can be “cultural stewards” throughout the post-closing integration phase. These teams can help identify pain points and keep employees aligned on shared values and goals. They also play an important role in keeping leadership apprised of progress and issues that may need to be addressed. As legal counsel in M&A transactions, our focus is on protecting clients from legal risk, selecting the right structure, drafting airtight deal terms, and navigating antitrust concerns. But even the most sophisticated deal structure can’t salvage an acquisition that fails on the people side. The best deals don’t only align on paper, but also in purpose, leadership, and people. Effectively addressing the human side is instrumental in turning a promising acquisition into a long-term success.
Washington State Enacts Merger Review Regime
Washington is the first state to enact the Uniform Antitrust Premerger Notification Act, which requires merging parties that submit a federal filing under the Hart-Scott-Rodino (HSR) Act (15 U.S.C. Sec. 18(a)) to also submit the HSR filing to the Washington attorney general if the deal has a sufficient nexus to Washington. The requirements will go into effect on July 27, 2025, making Washington the first state to have a merger filing notification requirement applicable to parties from all industries.
In Depth
WHY IT MATTERS
Many states have merger notification requirements for certain industries. For healthcare transactions, for example, 15 states (including Washington) have either existing or pending requirements. Furthermore, state attorneys general have indicated they will continue to pursue merger enforcement, both in coordination with federal enforcers and on their own in state court. However, until Washington did so this month, no state had enacted a merger reporting policy applicable to all industries.
UNDERSTANDING THE ACT
On April 4, 2025, Washington Governor Bob Ferguson signed into law the Uniform Antitrust Premerger Notification Act (the Act). The Act is based on the model act produced by the Uniform Law Commission, an organization that drafts model laws to boost uniformity across states.
Washington continues a trend of government agencies and jurisdictions requiring notice of mergers and acquisitions. For example, in 2023, Congress added a requirement in the National Defense Authorization Act, which now requires parties to provide their HSR materials to the US Department of Defense (DoD) for any proposed merger or acquisition that will require DoD review. Furthermore, the legislatures in six other states – Colorado, Nevada, California, Utah, West Virginia, and Hawaii – and in the District of Columbia have introduced and are considering legislation consistent with the Uniform Antitrust Premerger Notification Act.
Below are the notable aspects of the Act that companies operating in or conducting transactions with business in Washington should be aware of, including:
Scope of required submission. The Act requires the merging parties to submit only their HSR filing and attachments. It does not require that the parties produce any additional documents beyond the initial filing. Further, if the transaction was not HSR-reportable, it does not require reporting under the Act.
Filing requirement and Washington nexus. A filing under the Act is only required if a federal HSR filing was made and at least one of the following requirements for Washington nexus is satisfied: (i) the person has its principal place of business in the state; (ii) the person or a person it controls directly or indirectly had annual net sales in Washington of the goods or services involved in the transaction of at least 20% of the HSR filing threshold (varies year to year, but is $126.4 million in 2025); or (iii) the person is a healthcare provider or provider organization (defined by state law) conducting business in Washington. Note, every party to a transaction may not be required to file under the Act. Only parties that meet one of the three requirements must file notice with Washington. However, this also means that merging parties that conduct any business related to the transaction in the state will need to track sales in Washington to determine whether they fall under requirement (ii).
No waiting period or filing fee. The Act only requires notice. There is no waiting period and there is no filing fee. Filing parties, therefore, are not obligated to wait for any approval or decision to close the transaction after notifying the Washington attorney general.
Penalties for noncompliance. Violations of the Act can carry a civil penalty, enforced by the Washington attorney general, of up to $10,000 per day of noncompliance. However, beyond enforcement of the Act itself, the Act contains no additional substantive enforcement powers for the Washington attorney general.
Confidentiality and information sharing. The Act contains privacy provisions for parties submitting the HSR form and attachments pursuant to the Act, including preventing the Washington attorney general from disclosing any submissions and the fact that the form was filed or provided under the Act. The Act also exempts the submissions from public review under Washington’s Public Records Act (Chapter 42.56 RCW). However, the Act permits the Washington attorney general to share this information with the Federal Trade Commission, the US Department of Justice, and the attorney general of another state that enacts the Uniform Antitrust Premerger Notification Act, or a substantively equivalent act, so long as their confidentiality provisions are at least as protective as the Act.
Washington State Enacts Broad Antitrust Premerger Notification Law
On 4 April 2025, Washington became the first state to enact a broad, industry-agnostic merger control regime. Under the new law, parties submitting premerger notification filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR) must simultaneously submit their HSR filings to the Washington attorney general (AG) if they meet certain local nexus requirements or are a healthcare provider or provider organization. The law will take effect on 27 July 2025.
While many states (including Washington) have recently established notification requirements for healthcare transactions, the new Washington law is unique in its broad application to deals in any sector. Together with the new HSR rules, which took effect in February 2025, the law could increase regulatory costs and antitrust scrutiny for reportable transactions, particularly for companies with a significant presence in the state. More broadly, the legislation continues a trend of heightened state-level merger review, and underscores that states remain an important factor in the US antitrust enforcement landscape.
Washington Premerger Notification Law
On 4 April 2025, Washington Governor Bob Ferguson signed into law the Uniform Antitrust Premerger Notification Act (the Act). The Act will take effect on 27 July 2025 and apply to any HSR filings made on or after that date.
Thresholds
The Act requires any “person”1 submitting an HSR filing to contemporaneously file an electronic copy of the HSR form with the Washington AG if any of the following applies:
The person’s principal place of business is in Washington.
The person, or any entity it directly or indirectly controls, had annual net sales in Washington of goods or services involved in the transaction of at least 20% of the HSR filing threshold (under the current threshold of US$126.4 million, this would mean local annual net sales of at least US$25.28 million).
The person is a healthcare provider or provider organization (as defined in RCW 19.390.020) conducting business in Washington.
Documents
If the “principal place of business” threshold is met, or if the AG otherwise requests, then the filing party must also submit documentary attachments to the HSR form, including the transaction agreement and any other agreements between the parties, audited financials for the most recent year, and documents analyzing the transaction with respect to various competition issues.
Confidentiality
Under the Act, filings and related materials are confidential and exempt from public disclosure, other than in connection with certain administrative or judicial proceedings, subject to protective order. The AG may also disclose information to the Federal Trade Commission, US Department of Justice, or the AGs of other states that have adopted similar reciprocal legislation.
Penalties
Failure to submit filings required by the Act can trigger civil penalties of up to US$10,000 for each day of noncompliance.
Interplay With Washington Healthcare Notification Law
Like many states, Washington already has a premerger notification requirement on the books applicable to certain healthcare transactions. Under this law, both parties to “material change transactions” (mergers, acquisitions, or contracting affiliations) between two or more in-state hospitals, hospital systems, providers, or provider organizations must submit a written notice (Notice of Material Change) to the AG at least 60 days prior to closing.2 This requirement applies to transactions involving an in-state and out-of-state entity where the latter generates US$10 million or more in healthcare services revenues from patients residing in Washington. The law also states that any provider or provider organization that conducts business in Washington and files an HSR form must provide a copy of the filing to the AG’s office in lieu of a Notice of Material Change.
The Act has a much broader scope, capturing HSR-reportable transactions in any industry, not just healthcare. HSR filings submitted under the Act by providers and provider organizations will be sufficient to satisfy the requirements under the healthcare transactions notification law, which will remain on the books. Note, however, that the definitions for “provider” and “provider organizations” do not specifically include hospitals or hospital systems. Therefore, absent additional guidance from the AG, hospitals and hospital systems that meet the thresholds under the Act may need to submit a copy of the HSR form and a Notice of Material Change.
What Happens Next? Premerger Notification in Other States
The Act is based on model legislation from the Uniform Law Commission, which adopted the Uniform Antitrust Pre-Merger Notification Act in July 2024. Similar bills have been introduced in Colorado, Hawaii, Nevada, Utah, West Virginia, and the District of Columbia. One of the goals of the model legislation is to “facilitate early information sharing and coordination among state AGs and the federal antitrust agencies” and encourage reciprocal adoption by states. As state AGs assume an increasingly significant role in US antitrust enforcement—including in the M&A context—the new Washington law could signal the beginning of a trend of heightened, industry-agnostic, state-level merger control.
What Should I Do Now?
In light of the new requirements under the Act, dealmakers should consider the following:
Evaluating state-level merger control filings alongside HSR, global merger control, and foreign direct investment filing requirements as part of standard transaction diligence, as well as building these filing considerations into deal negotiations and documents, as appropriate.
If an HSR filing is required, assessing potential filings under the Act, particularly where companies have a significant nexus to the state of Washington (in terms of principal location or local revenues).
Closely monitoring developments in other states, including new regimes coming online or proposed amendments broadening the scope of existing requirements, and preparing for reciprocal sharing of filings between states with similar legislation.
Assessing the impact of filings that may be required under the Act with respect to budget, timing, and the potential for increased visibility into business operations by regulators.
Assessing potential competitive impacts on local markets when evaluating transactions and how these effects are discussed in ordinary-course documents.
Footnotes
1 Under the Act, “person” means an individual; estate; business or nonprofit entity; government or governmental subdivision, agency, or instrumentality; or other legal entity. “Person” has a different definition under the rules implementing the HSR Act.
2 “In-state” entities are those that are licensed or operating in the state of Washington.
Federal Circuit Upholds Major Trade Secrets and Contract Damages Award in Dispute Stemming from Failed Merger Talks
The recent Federal Circuit decision in AMS-OSRAM USA Inc. v. Renesas Electronics America, Inc. offers valuable lessons related to failed merger attempts, specifically the vast exposure that can result from a party breaching its confidentiality obligations. This protracted case—lasting more than 15 years and involving multiple trials and appeals—also highlights important principles about trade secret and contract remedies for the unauthorized use of proprietary technology.
After multiple trials and appeals, the Federal Circuit substantially affirmed an Eastern District of Texas judgment against the defendant, fka “Intersil,” for misappropriation the trade secrets of the plaintiff, fka “TAOS.” The dispute arose out of failed merger talks between the parties in 2004. The merger discussions were covered by a confidentiality agreement signed in June of 2004, and that agreement expired in June 2007. During the merger discussions, TAOS gave Intersil confidential business information regarding its ambient light sensor technology (the “CBI”). Shortly after the discussions ended in August of 2004, TOAS launched a product embodying the CBI and, contrary to the confidentiality agreement, Intersil began using the CBI to develop competing products, denoted “Primary Products” and “Derivative Products.” Intersil later sold sensor chips to Apple based on the CBI, after being approved as a vendor for specific products between September 2006 and March 2008. TAOS sued Intersil in November 2008 for patent infringement (a claim later dropped), for trade secret misappropriation, and for breach of the confidentiality agreement.
In the first trial in 2015, the jury found Intersil liable for misappropriation of trade secrets under Texas law and breach of the confidentiality agreement under California law, the choice of law in the agreement. The jury awarded disgorgement of TAOS profits of $48M and exemplary damages of $10M for the misappropriation, and a reasonable royalty of $12M for the breach. On appeal, the Federal Circuit in 2018 affirmed the bases of both liability and exemplary damages for misappropriation, but it remanded the case to the district court to determine the amount of damages. The Federal Circuit held, in part, that disgorgement is an equitable remedy for the district judge to decide, and that certain facts needed to be found, notably “the length of any head start period” Intersil gained by its misappropriation.
In the second remand trial in 2021, the jury provided an advisory verdict on disgorgement of profits of $8.5M for the Primary Products, finding the trade secret was not properly accessible to Intersil until January 2006, and that the head-start period was 26 months. In addition, the jury awarded exemplary damages of $64M and reasonable royalty damages of $6.7M for breach of the confidentiality agreement with respect to the Derivative Products. Post trial, in its findings of facts and conclusions of law, the district court agreed with the jury that the proper disgorgement award was $8.5M for the Primary Product but found that Texas law capped exemplary damages at twice the disgorgement sum, or $17.0M. The final judgment reflected this $25.5M trade secret award and $7.3M in reasonable royalty damages, along with $15M in prejudgment interest award and $3.9M in attorneys’ fees from work on the contract claim.
On the second appeal, the Federal Circuit substantially affirmed the monetary awards, except the prejudgment interest calculation. The court reversed the finding that the trade secret was not properly accessible until January 2006. It held that the lower court was wrong in concluding that proper accessibility should be based on when Intersil reverse-engineered TAOS’s trade secrets. Instead, the court concluded under Texas law that proper accessibility is based on when Intersil could have reverse-engineered the trade secrets, which was in February 2005, shortly after TAOS released its product embodying the trade secret. It observed that the lower court must “ensure that a trade secret remedy is tailored to preventing or negating the unfair advantage derived from improper acquisition.” Still, the court upheld the disgorgement award. First, it affirmed the 26-month head-start period finding, though measured from February 2005 (instead of January 2006) to April 2007. Second, it agreed that sales of the Primary Products after April 2007 were recoverable because Apple had approved the designs in September 2006, within the head-start period, and that the sales followed directly from the approval. Third, the court agreed that the entirety of the Primary Products profits were attributable to the misappropriation occurring during the head-start period.
The Federal Circuit also affirmed the reasonable royalty damages award. It first rejected Intersil’s argument that the award resulted in an impermissible double recovery, holding that the disgorgement remedy related solely to the Primary Products sales and the reasonable royalty remedy related solely to the Derivative Products sales. The court held that TAOS had a reasonable expectation of compensation in the form of a reasonable royalty for breach, and it rejected Intersil’s argument that the royalty award was unjustified because it was undisputed that the Derivative Products did not actually embody the trade secrets. It held that it was sufficient that there was substantial evidence that Intersil used TAOS’s confidential information to develop the Derivative Products. “Under California law, a plaintiff may recover for the defendant’s breach of a confidentiality agreement not only if the defendant wholly incorporated the plaintiff’s contractually protected information into its own products but also if the defendant used the plaintiff’s confidential information in the development or implementation of its own products.”
Notable takeaways from AMS-OSRAM USA are as follows. First, in drafting agreements covering proposed mergers or other types of business transactions involving a sharing of technical information, consider negotiating terms designed to limit exposure in the event of a breach, including short confidentiality periods, limitations on liability, choice of law, and forum selection. Business lawyers may want to consult their brethren IP litigators in considering hypothetical scenarios and would be wise to avoid so-called “standard agreements.” Second, in evaluating risk, legal advisors should consider that a bona fide claim of breach of a confidentiality agreement protecting technology is likely to be accompanied by a trade secret misappropriation claim, thus significantly increasing the risk of exposure because of the enhanced remedies available for misappropriation. Moreover, it is the author’s belief that juries persuaded that a breach has occurred are likely to also include that misappropriation has occurred, particularly when the breach is egregious and economic harm or unjust enrichment can be traced to the breach.
New Executive Order Reinforces Federal Preference for Procurement of Commercial Products and Services
The federal government has long maintained a preference for selecting commercial products and services in the federal procurement space. This preference has been the case since at least the time President Clinton signed the Federal Acquisition Streamlining Act of 1994 (FASA) into law, and has been reiterated by Congress since then, including in the National Defense Authorization Act for Fiscal Years 2016 and 2017, for example, and the preference is enshrined in Federal Acquisition Regulation (FAR) Part 12.
On April 16, 2025, t President Trump issued an Executive Order, Ensuring Commercial, Cost-Effective Solutions in Federal Contracts, adding to government’s efforts to prioritize commercial products and services. From now on, when agencies choose to utilize non-commercial products or services, they must document that choice and receive approval from an agency’s approval authority (which is defined as the senior procurement executive).
The Executive Order provides specific timelines and requirements for procurement officials:
Within 60 days of the Executive Order, the senior procurement executive must direct their contracting officers to review all solicitations and other open procurement actions where the government was unable to identify a viable commercially available alternative, and all of these procurement actions should be consolidated into a consolidated application requesting approval to purchase noncommercial products or services.
Within 30 days of receiving the application materials, the senior procurement executive shall review the market research supporting the application and make any recommendations to advance the use of a commercial solution.
Within 120 days of the Executive Order (and annually thereafter), the senior procurement executive for each agency must provide a report to the Director of the Office of Management and Budget (OMB) detailing the agency’s compliance with its requirements to prioritize the use of commercial products and services and explaining how it is implementing the Executive Order.
Moving forward, non-commercial procurements will be subject to additional scrutiny:
When a contracting officer proposes to utilize non-commercial products or services, the contracting officer must provide detail to the senior procurement executive of the market research conducted and the justification for choosing that path. The senior procurement executive may accept or deny the contracting officer’s request.
The senior procurement executive may seek additional guidance from the Director of OMB who will notify the agency official in writing of its recommendation after conducting a review.
As a whole, this Executive Order pushes contracting agencies to conduct market research and justify the use of non-commercial products and services, consistent with FASA. Contractors selling non-commercial products and services to the federal government should take notice, especially when there is an arguably commercial alternative, even if the commercial alternative is less advantageous in price or features.
Delaware Chancery Court Puts CFIUS Mitigation in Focus for M&A
What Happened
In a recent decision, the Delaware Court of Chancery (the Court) ordered Nano Dimension Ltd. (Nano) to enter into a national security agreement in the form proposed by the Committee on Foreign Investment in the United States (CFIUS), finding that Nano materially breached the CFIUS clearance provisions of a merger agreement (Merger Agreement) entered into with Desktop Metal, Inc. (Desktop) on July 2, 2024.
The Bottom Line
The Court’s decision to require Nano to execute a national security agreement proposed by CFIUS as a condition to clear the Nano-Desktop merger sets an important precedent for understanding the meaning of regulatory approval covenants generally, and CFIUS clearance covenants specifically.
The Full Story
According to the Court’s Post-Trial Memorandum Opinion, Desktop is a Massachusetts-based company that makes industrial-use 3D printers that create specialized parts for missile defense and nuclear capabilities. Nano is an Israeli firm, and sought to acquire Desktop in a $183 million all-cash transaction. Under the CFIUS rules, this is a “covered control transaction” and would therefore be subject to CFIUS review. To achieve the regulatory certainty that CFIUS would not later seek to force Nano to dispose of Desktop, the parties agreed to seek CFIUS approval on a voluntary basis as a condition to closing the merger. Given the national security implications of Desktop’s business, the parties anticipated that CFIUS approval would be complicated and would likely require that Nano enter into a national security agreement.
Desktop and Nano included in the Merger Agreement a relatively standard “reasonable best efforts” provision with respect to resolving government objections to the transaction generally. In addition, the parties specifically agreed to take “all action necessary” to receive CFIUS approval, including “entering into a mitigation agreement” in relation to Desktop’s business (a so-called “hell-or-high-water” provision). Nano included a narrow carveout that would allow it to refuse to agree to any condition imposed by CFIUS that would “effectively prohibit or limit [Nano] from exercising control” over any portion of Desktop’s business constituting 10 percent or more of its annual revenue, with clarifications that certain common mitigation requirements (e.g., US citizen-only requirements, information restrictions, continuity-of-supply assurances for US government customers, and notification/consent requirements in the event the US business exits a business line) would not impact the carve-out. In effect, the CFIUS approval condition in the Merger Agreement preserved wide latitude for conditions imposed by CFIUS in a mitigation agreement notwithstanding the control exception negotiated by Nano.
As anticipated by Desktop and Nano in the Merger Agreement, CFIUS informed the parties that it identified national security risks arising from the transaction and proposed a mitigation agreement to address those risks. Specifically, the mitigation agreement would have imposed information restrictions preventing the integration of Nano and Desktop IT infrastructure, restricted manufacturing locations for supply to US government customers, limited remote access software for products supplied to US government customers, required a US citizen board observer and appointed a third-party monitor. According to the Court’s recitation of facts, Nano’s cooperation with CFIUS in negotiating the terms of the mitigation agreement ceased following a proxy contest that resulted in a turnover on Nano’s board to a position opposed to the merger with Desktop. Desktop subsequently sued to enforce the terms of the Merger Agreement.
The Court held that Nano breached its obligations under the “reasonable best efforts” clause, noting that this language has been interpreted to require parties to take all reasonable steps and appropriate actions, which it found Nano failed to do. The Court also noted that good faith is relevant and that a “reasonable best efforts” clause does not allow parties to use regulatory approvals as a way out of a deal. Given the facts recited by the Court that Nano sought to use the CFIUS clearance condition as a way out of the deal, it is tempting to view the precedential weight of this part of the decision narrowly. However, “reasonable best efforts” provisions relating to regulatory clearances are commonplace and the Court’s discussion of this language merits attention. This is particularly true in the CFIUS context where remedies can be less predictable than those in other regulatory contexts due to the wide range of national security risks considered by CFIUS and the relative “black box” nature of CFIUS reviews.
The Court’s holding also provides important take-aways regarding the “hell-or-high-water” provision. These provisions are used to clarify “reasonable best efforts” in specific contexts and, as the Court noted, represent hard commitments in a merger agreement with respect to regulatory approval. Moreover, these firm commitments are relatively rare in CFIUS or other regulatory contexts. In this case, Desktop and Nano correctly anticipated that CFIUS would request a mitigation agreement and sought to identify a list of mitigation measures that would be acceptable. However, in the Court’s view, these mitigation measures were separate from the parties’ effort to define control with reference to the target’s financial performance. Rather, as CFIUS’s proposed mitigation concerned information restriction, supply assurances and monitoring requirements (which were specifically excluded from consideration of the loss of control exit provision), Nano’s ability to object to these requirements was quite constrained. The Court therefore rejected Nano’s argument that CFIUS’s conditions would impact Nano’s control over more than 10 percent of Desktop’s revenue-generating business lines.
The Court’s remedy of specific performance also merits consideration. The Merger Agreement stipulated to specific performance in the event of a breach. The Court’s recitation of facts explains that, in order to achieve greater deal certainty, Desktop proposed that CFUS clearance be subject to either a reverse termination fee or the “hell-or-high-water” provision backed by specific performance and that Nano opted for the latter. Transaction parties should note that generally, if a buyer needs greater flexibility to consider potential CFIUS mitigation given the unpredictability, a reverse termination fee can be used to purchase more discretion in deciding whether CFIUS’s proposed mitigation sufficiently erodes the value of the deal, provided that the parties carefully define the specific parameters of acceptable mitigation. Note, however, that the Court’s opinion with respect to the “reasonable best efforts” clause suggests that this does not simply allow a buyer to use mitigation as a pretext to refuse to go forward with the deal and transaction parties should carefully consider the degree of flexibility provided by regulatory approval conditions.
This case is a clear reminder that transaction parties should carefully consider the scope of regulatory approval conditions in negotiating merger agreements. No transaction party can predict exactly what mitigation measures CFIUS might require or even what national security risks it might identify, and parties will need to understand all possible mitigation remedies in order to successfully draft a CFIUS approval condition that effectively balances deal certainty with the flexibility necessary to turn down unacceptable mitigation requirements. To illustrate this uncertainty, the National Security Memorandum on America First Investment Policy issued by the President in February 2025 indicates some of the conditions required by CFIUS in its proposed mitigation agreement in this case (for example, indefinite monitoring conditions) may not have been required if the present administration negotiated the mitigation agreement continued. Transaction parties should consider emerging CFIUS trends and policy developments as relevant to the scope of a “reasonable best efforts” clause.
Government Contractors Need to Be Prepared for Significant Reforms to the Federal Acquisition Regulation and Associated Agency Acquisition Supplemental Regulations
On April 15, 2025, President Trump issued Executive Order 14275, Restoring Common Sense to Federal Procurement (EO 14275). EO 14275’s purpose is to reform the Federal Acquisition Regulation (FAR) and associated agency acquisition supplements, such as the Defense Federal Acquisition Regulation Supplement (DFARS), to contain only provisions required by statute or essential to sound procurement. EO 14275 includes several significant provisions and deadlines that government contractors need to be prepared to address. Many of those are highlighted in this alert.
1. Why was EO 14275 Issued?
On January 31, 2025, President Trump issued Executive Order 14192, Unleashing Prosperity Through Deregulation (EO 14192), which expressed concern about the “the ever-expanding morass of complicated Federal regulation”, which “imposes massive costs on the lives of millions of Americans, creates a substantial restraint on our economic growth and ability to build and innovate, and hampers our global competitiveness.” To alleviate unnecessary regulatory burdens, EO 14192 established “that for each new regulation issued, at least 10 prior regulations be identified for elimination . . . to ensure that the cost of planned regulations is responsibly managed and controlled through a rigorous regulatory budgeting process.” EO 14192 applies to any regulation issued by any agency in the entire Federal Government.
Building on the concerns expressed in EO 14192, the recently issued EO 14275 related to government procurement further identified regulatory burdens causing inefficiencies in the government contracting process. For example, EO 14275 referenced a 2024 report written by Senator Roger Wicker, entitled “Restoring Freedom’s Forge – American Innovation Unleashed,” which advocated for various reforms to be made to Department of Defense procurements. EO 14275 also referenced the Section 809 Panel’s 2019 report on streamlining and codifying acquisition regulations, which recommends various acquisition reforms to leverage the dynamic marketplace, allocate resources effectively, enable the workforce, and to simplify acquisition.
Based on the information contained in these referenced reports and the Trump Administration’s goal of reducing regulations overall, EO 14275 establishes that it is the policy of the United States for the FAR to contain “only provisions required by statute or essential to sound procurement, and any FAR provisions that do not advance these objectives should be removed.”
2. Who will have responsibility for identifying which FAR provisions are required by statute or are “essential to sound procurement”?
The FAR is a single Government-wide procurement regulation, which is maintained by the FAR Council. The FAR Council was established by Congress “to assist in the direction and coordination of Government-wide procurement policy and Government-wide procurement regulatory activities in the Federal Government.” 41 U.S.C. § 1302(a). The FAR Council consists of the Administrator for Federal Procurement Policy, the Secretary of Defense, the Administrator of NASA, and the Administrator of General Services. Id. § 1302(a). A key mandate of the FAR Council is to “issue and maintain . . . a single Government-wide procurement regulation, to be known as the [FAR].” 41 U.S.C.A. § 1303.
Pursuant to EO 14275, the Administrator of the Office of Federal Procurement Policy (the Administrator), who also serves on the FAR Council, is required to coordinate with the members of the FAR Council, the heads of agencies, and appropriate senior acquisition and procurement officials from agencies to ensure that the FAR “contains only provisions that are required by statute or that are otherwise necessary to support simplicity and usability, strengthen the efficacy of the procurement system, or protect economic or national security interests.”
Additionally, in order to review agency supplements to the FAR, each agency “shall designate a senior acquisition or procurement official to work with the Administrator and the FAR Council to ensure agency alignment with FAR reform and to provide recommendations regarding any agency-specific supplemental regulations to the FAR.”
3. What are the timelines associated with these significant FAR reforms?
The FAR must be amended pursuant to EO 14275 by October 13, 2025, which is within 180 days of April 15, 2025 (the date that EO 14275 was issued).
To assist with the enactment of these reforms, the Director of the Office of Management and Budget (OMB), in consultation with the Administrator, “shall issue a memorandum to the agencies that provides guidance regarding the implementation of [EO 14275].” EO 14275 requires that this memorandum be issued by May 5, 2025, which is 20 days after the order was issued. The memorandum is required to “ensure consistency and alignment of policy objectives and implementation regarding changes to the FAR and agencies’ supplemental regulations to the FAR.” Contractors should watch closely for the issuance of this memorandum that will provide greater clarity on the Trump Administration’s expectations for government procurement.
4. What types of FAR reforms should government contractors expect?
EO 14275 references that “the FAR has swelled to more than 2,000 pages of regulations, evolving into an excessive and overcomplicated regulatory framework and resulting in an onerous bureaucracy.” Accordingly, a major focus of the coming reforms will be to reduce the size and scope of the FAR and associated agency supplements.
The Section 809 Panel’s 2019 report on streamlining and codifying acquisition regulations serves as a likely predictor of several potential reforms that will receive close attention. The report includes several specific recommendations related to reforms that should be made to the FAR that will likely be closely reviewed by the Administrator and FAR Council when reforming the FAR.
While EO 14275 eliminates several regulations, it will be interesting to watch how its provisions also align with new regulations imposed by other executive orders impacting government procurement. For example, as we wrote about in a prior alert, Executive Order 14222 requires the creation of a new public database that must record every government payment issued by an agency under a government contract, along with a written justification for the payment, regardless of the size or type of the payment. These written justifications add an extra task for contracting officials and contractors, which may be inconsistent with the Administration’s goals to streamline acquisitions.
The devil will be in the details for how the FAR is amended, but contractors should be aware that the primary regulatory scheme that governs their businesses is about to change significantly.
CONCLUSION
Government contractors should closely review EO 14275 and should further pay attention to the additional memorandums and directives that will be issued as a result of that order.
Preparing for a “Common-Sense” FAR: What Federal Contractors Need to Know About the Trump Administration’s Plans to Streamline the Federal Acquisition Regulation
In a new Executive Order issued on April 15, 2025 titled, “Restoring Common Sense to Federal Procurement,” President Trump has directed his Administration to make major revisions to the Federal Acquisition Regulation (FAR)—the voluminous set of rules governing the U.S. Government’s acquisition of products and services—with the stated purpose of making the federal procurement process more “agile, effective, and efficient.” As with many recent executive actions, the instructions to government officials are to undertake dramatic reforms at a breakneck pace, with a significant impact on the rules of the road for companies doing business or seeking to do business with the federal government. In this alert, Foley’s Federal Government Contracts team provides a summary of the key takeaways for government contractors from this latest Executive Order and the Trump Administration’s initiative to produce a streamlined version of the FAR.
Background:
On January 31, 2025, President Trump issued Executive Order 14192, “Unleashing Prosperity Through Deregulation,” which announced his Administration’s policy of alleviating unnecessary regulatory burdens. This recent Executive Order issued on April 15, 2025 extends the Trump Administration’s deregulatory initiative to the government contracting sector by directing the most significant overhaul of the FAR in more than four decades.
This move represents a dramatic shift in federal procurement policy—one aimed at streamlining the acquisition process, reducing regulatory burdens, and encouraging broader participation in the federal marketplace.
Key Takeaways for Contractors:
A Mandate for FAR Simplification—Fast. The Order establishes an aggressive timetable for the proposed revisions to the FAR. As the Order notes, the FAR now fills more than 2,000 pages, and the Order directs the Office of Federal Procurement Policy (OFPP) Administrator, working with the FAR Council and agency heads, to amend the FAR within 180 days. The objective is to retain only provisions that are statutorilyrequired or “otherwise necessary to support simplicity and usability, strengthen the efficacy of the procurement system, or protect economic or national security interests.”
Agency FAR Supplements Are Also Under Review. Each agency must designate a senior acquisition official within 15 days of the Order to work with the OFPP Administrator and FAR Council to provide recommendations regarding their agency-specific FAR supplements and identify FAR provisions that are inconsistent with the Order’s objective to streamline the FAR by removing unnecessary regulations.
Internal Guidance Issued to Agencies. Within 20 days of the Order, the Director of the Office of Management and Budget (OMB), with the OFPP Administrator, shall issue a memorandum that provides guidance regarding implementation of these reforms and proposes new agency supplemental regulations that are aligned with the new policy objectives. That guidance from OMB may provide important signals to contractors regarding the portions of the FAR and federal procurement policy most likely to change as part of this reform effort.
Regulatory Sunset for Non-Statutory FAR Clauses. The Order directs the OFPP Administrator and FAR Council to consider amending the FAR to include a regulatory sunset mechanism that would apply to any non-statutory FAR provision retained after this reform—or added in the future. As proposed in the Order, any non-statutory FAR provision would automatically expire after four years, unless renewed by the FAR Council. This sunset mechanism, if ultimately adopted in the revised FAR, would, at a minimum, require a significant amount of periodic review by the FAR Council of existing regulations, and it could introduce uncertainty regarding the long-term status of certain FAR provisions, complicating contractor compliance planning.
Interim Guidance and Deviations Expected. To avoid delays, the FAR Council is empowered to issue deviation and interim guidance as needed during the rulemaking process, suggesting that significant FAR changes could begin impacting procurements well before final rules are issued or the government contracting community is given the opportunity to weigh in on those revisions.
Implementation Uncertainty. While the policy objective of the Order is clear—to simplify the FAR by removing “unnecessary regulations”—it remains to be seen how the FAR Council will execute that objective. The Order allows for retention of some FAR provisions that cannot be tied back to a specific statutory basis, if such provisions are determined “necessary to support simplicity and usability, strengthen the efficacy of the procurement system, or protect economic or national security interests.” Given these subjective considerations, it will bear monitoring to see how the Administrator and the FAR Council interpret those concepts in determining which FAR provisions to keep or cut.
What This Means for Federal Contractors:
This Executive Order has potentially far-reaching implications:
Reduced Complexity: Contractors may soon face fewer compliance hurdles, especially in acquisitions of commercial products or commercial services.
Opportunities for Commercial Vendors: By directing the elimination of regulatory burdens and requirements, the Order may lead to reduced barriers to entry for new commercial contractors looking to do business with the Federal Government.
Uncertainty During Transition: Contractors should prepare for a period of regulatory uncertainty, as interim guidance may vary across agencies.
Concrete Steps Contractors Can Take:
Monitor FAR-Related Rulemakings: Contractors should closely track upcoming Federal Register notices, and deviation and interim guidance for indications as to how the FAR Council is carrying out the Order’s instructions to streamline the FAR.
Engage in Public Comment Opportunities: When proposed FAR rule changes are released for public comment, consider submitting comments to influence the final rulemaking.
Be on the Lookout for Agency-Level Changes: Agency supplements to the FAR are also being reviewed. Contractors should monitor changes to agency-specific procurement regulations that may impact contracting opportunities with those agencies.
We will continue to monitor developments and provide updates as additional guidance is released and implementation proceeds.