- Key takeaway #1 States and their attorneys general have increasingly prioritized antitrust enforcement and policy, with several adopting or proposing new pre-transaction notice requirements and other more expansive antitrust laws.
- Key takeaway #2 Early efforts have focused primarily on the healthcare industry, but that focus is poised to expand.
- Key takeaway #3 The new state laws and proposals stand to complicate regulatory requirements for businesses contemplating mergers and acquisitions, and could expose companies to increased investigations and litigation by public and private entities.
Growing focus on antitrust enforcement at the federal level in recent years has been accompanied by a similar trend at the state level. Notably, multiple states have enacted or are considering enacting various legislative or regulatory changes that would create new regulatory requirements for businesses and make antitrust suits significantly easier for state attorneys general and private plaintiffs. These include new pre-transaction notice requirements, as well as the expansion of existing state antitrust statutes to cover more types of conduct while shifting the burden and expense of litigation from plaintiffs to defendants. In several cases, states have expressed a clear intent to increase enforcement related to the private equity and healthcare industries specifically.
While the federal Hart-Scott-Rodino Antitrust Improvements Act (“HSR Act”) has required merging parties to notify the Antitrust Division of the U.S. Department of Justice (“Antitrust Division”) and Federal Trade Commission (“FTC”) of transactions exceeding a certain value since 1976, states historically have not required such notice, except in limited circumstances. That distinction has begun to dissolve, as states such as California, Colorado, Connecticut, Hawaii, Illinois, Indiana, Massachusetts, Minnesota, Nevada, New York, New Mexico, Oregon, Rhode Island, Vermont, and Washington all have HSR-like notice regimes specifically for certain types of transactions in the healthcare industry. Several of those states and others have recently expanded, or are considering expanding, those requirements. Many states are also proposing to revise their antitrust statutes to address conduct not currently subject to those laws. We address three notable examples below.
Link to New York New York
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On January 8, 2025, New York legislators introduced a proposed amendment to New York’s Donnelly Act, which would significantly broaden the scope of the antitrust statute, first enacted in 1899. A similar bill has failed before, but if passed, it would become one of, if not the most, aggressive state antitrust laws in effect. The new bill, Senate Bill 335, would implement a comprehensive premerger notification program. Any transaction by a person doing business in New York which is reportable to federal antitrust agencies under the HSR Act would also have to be submitted for review by the state attorney general. As part of that review, the bill requires the attorney general to consider the transaction’s effect on labor markets and workers, a consideration also newly incorporated in the Antitrust Division and FTC’s recent merger guidelines.
Link to Conduct Reform Conduct Reform
In addition, the new bill would extend the reach of the Donnelly Act, which currently only reaches conduct involving two or more parties, to reach single firm conduct, similar to Section 2 of the Sherman Act. The proposed law, however, would go beyond the scope of the Sherman Act to outlaw “abuse of dominance” (a standard applied in the European Union but not, so far, in the United States), including in labor markets. The bill would also allow prevailing plaintiffs to recover expert witness fees and costs (a substantial portion of the high cost of litigating most antitrust claims), thereby encouraging private and public enforcement.
Link to Massachusetts Massachusetts
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On January 8, 2025, Massachusetts Governor Maura Healey signed a new law, House Bill 5159, titled “An Act enhancing the market review process,” which expands the state’s existing healthcare transaction notification requirements, creating new healthcare reporting requirements for private equity funds, healthcare real estate investment trusts, management services organizations, and pharmaceutical companies. Massachusetts had a preexisting requirement that parties to any healthcare transaction that causes a “material change,” such as a change in ownership, must notify the Massachusetts Health Policy Commission (HPC) at least 60 days in advance of their planned closing date. The new bill expands the definition of “material change” to now include, among others: expansions in a provider or provider organization’s capacity; transactions involving a significant equity investor which result in a change of ownership or control of a provider or carrier; significant transfers of assets, including real estate; and conversions of providers from a non-profit entity to a for-profit entity. After being provided notice, the HPC is charged with evaluating the proposed change to determine whether it is likely to impact the state’s healthcare cost growth benchmark or the competitive market. In practice, such review is usually conducted in cooperation with the Massachusetts Attorney General’s Office, which can sue to block such transactions under the federal Clayton Act.
Link to Conduct Reform Conduct Reform
On January 17, 2025, a Massachusetts legislator introduced a proposed amendment to the Massachusetts Antitrust Act. The new Senate bill, SD 2378, and corresponding House bill, HD 4047, are both titled “An Act relative to the protection of small businesses and workers.” The bills follow the proposed New York bill in adopting an “abuse of dominance” standard, including in labor markets, and allowing prevailing plaintiffs to recover expert witness fees and costs. Unlike the New York proposal, the Massachusetts bills do not include a premerger notification requirement.
Link to California California
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As Crowell detailed in a recent client alert, the California Law Revision Commission (“CLRC”) recently approved various recommendations from its staff that California revise its antitrust laws. The CLRC, an influential body that makes recommendations to the legislature, considered proposals that included several changes to California’s antitrust law, the Cartwright Act. The CLRC voted to draft a new law that would create California’s own merger approval and premerger notification requirements, and further directed staff to consider a new standard for evaluating harm in merger reviews that is lower than that required under federal law, in order to make California challenges easier. The CLRC justified these moves based on concerns that federal scrutiny of mergers is likely to be lax under the Trump administration and that California has its own unique interests when it comes to mergers.
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As with the New York proposal, the CLRC unanimously suggested that the Cartwright Act, which currently applies only to multi-party action, should be amended to regulate single-firm conduct. The CLRC also unanimously agreed that the amendment should not merely mirror Section 2 of the federal Sherman Act but should instead be “California specific” and adopt a more plaintiff-friendly standard for monopolization and attempted monopolization cases. The CLRC was split, however, on whether to adopt a European-like abuse of dominance standard, ultimately agreeing to empower staff to draft a proposed law that would outlaw single-firm conduct amounting to a “misuse of market power,” a more nebulous standard in conflict with federal Section 2 precedent.
Separately, on February 24, 2025, California Attorney General Rob Bonta announced his support for a bill, SB 763, that would increase Cartwright Act criminal penalties for corporations to $100 million, from today’s $1 million penalty. The bill would also impose new civil penalties of up to $1 million per violation of the Act.
Link to The Uniform Antitrust Pre-Merger Notification Act The Uniform Antitrust Pre-Merger Notification Act
The recent state merger notification and review proposals coincide with the Uniform Law Commission’s July 24, 2024 adoption of its Uniform Antitrust Pre-Merger Notification Act (“Model Act”) as model legislation for states to use to implement premerger filing regimes. The Model Act functions as a template for states to adopt as their own premerger notification legislation. The Model Act requires parallel filing of the Hart-Scott-Rodino (HSR) form in a state when either the filing person has its principal place of business in the state, or the person “directly or indirectly had annual net sales in [the] state . . . of at least 20 percent” of the threshold mandated under the HSR Act. The Model Act also provides for automatic confidential treatment of materials submitted to the state. However, unlike the HSR, the Model Act does not impose any waiting or suspension period for notified transactions. At the time of this publication, legislators in six states (California, Colorado, Hawaii, Utah, Washington, and West Virginia) plus the District of Columbia have introduced bills to enact the Model Act.
Although state attorneys general and other state regulators have long received informal notice of transactions through parties and federal law enforcement, adoption of state pre-merger notice regimes could significantly complicate regulatory compliance and clearance for mergers and other significant transactions. Crowell & Moring’s Antitrust and State Attorneys General practices routinely counsel and advocate for clients who stand to be affected by these new state requirements and proposals. Please contact any of the Crowell lawyers listed below to learn more about these developments.