(Bloomberg) — A new U.S. antitrust rule that requires companies to provide the government with more information about their mergers and acquisitions comes with a surprise twist: The Federal Trade Commission adopted the rule in a rare 5-0 vote.

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The agency’s two Republican commissioners, who have vocally opposed some of Chairman Lina Khan’s other major rulemaking decisions, joined three Democrats on the panel in supporting changes to the rules to comply with the Hart-Scott-Rodino Act. The talks also included the agency’s top antitrust staff and the Justice Department’s antitrust division.

The update, released on October 10, came after Republicans (Andrew Ferguson and Melissa Holyoak) won some concessions after months of intense behind-the-scenes negotiations. This resembled the bipartisan cooperation that had characterized previous commissions and occurred just before national US elections, creating a deeply polarized political atmosphere.

Ultimately, the rule was enforced “lawfully, reasonably and robustly,” Ferguson said in an interview. “While I will not include every provision in the Final Rule, overall it modernizes filing requirements to be more compatible with today’s economy while staying within the bounds of the law.”

The bipartisan turn surprised some.

The FTC and the Department of Justice jointly proposed a revision of the rules in June 2023 that was hotly contested by the industry, warning that the changes would impose significant costs on the combined companies. Both the Chamber of Commerce, the nation’s largest business lobby, and the American Investment Council, a trade association for the private equity industry, had threatened potential litigation. Both groups said they were reviewing the final rule and considering next steps.

Henry Liu, director of the FTC’s Bureau of Competition, declined to discuss details of the negotiations but said the rule was a product of “healthy dialogue among the commissioners,” including a “rigorous cost-benefit discussion about the new requirements.”

“The fact that we got a 5-0 bipartisan vote is important for the longevity and sustainability of the rule,” Liu said in an interview. “There is a better chance of support for whatever management change occurs.”

Behind the camera

In exchange for their votes and statements of support for the rule, Republicans received a promise that the FTC would more quickly restart reviews of no-fault settlements and push back on a controversial settlement with the Biden administration’s labor agencies, people with knowledge of the matter said. People who wish to remain anonymous while discussing internal negotiations in the negotiations.

The agencies initially planned to release the final rule in early April, but it was delayed after the Senate confirmed two Republican commissioners in late March.

Sources familiar said Republican commissioners began pushing for changes to HSR rules soon after joining the agency.

Negotiations became more serious in the summer, when Liu sought a concrete list of changes he would need to get votes from GOP members, the people said.

The people said that they submitted a written file stating that they wanted Holyoak and Ferguson to be removed, and that their biggest demand was the deletion of the section on labor, which is an important feature for Democrats. They have also pushed to eliminate the need to submit draft versions of organizational charts and merger documents, as well as reduce the amount of detail companies must provide about previous acquisitions, according to the sources.

Negotiations regained momentum after a federal judge in Texas ruled against the FTC’s non-compete ban in early July, sources said. Judge Ada Brown’s decision adopted many of the arguments Holyoak and Ferguson expressed in their dissenting opinions. FTC Democrats said they hoped the unanimous, bipartisan support for the merger rules would make it less likely that business groups would sue or help the agency win in court if sued.

The judge then blocked the non-compete from going into effect; The FTC objects.

Liu played a key role in brokering the compromise by meeting with each commissioner individually, sources said. Republicans also insisted on two conditions not directly related to the rule: reinstating expedited signatures for seamless mergers and withdrawing the FTC from its memorandum of understanding with the National Labor Relations Board, the people said.

When companies apply for a smooth merger for competition review, they can request that institutions grant them so-called early termination permission, rather than waiting the full 30 days for the legal period to expire. In February 2021, the Biden administration said it was suspending the process due to an unprecedented number of merger applications. Although the agencies said the suspension was temporary, the FTC and DOJ never restarted enforcement even after deal volume slowed.

Ferguson, the Republican commissioner, said the justification for pausing early terminations ended long ago.

He said the rollback “removes the politically motivated bureaucratic burden on competitive-enhancing transactions.”

Republicans also opposed the FTC’s decision to enter into an agreement with the NLRB and the Labor Department in late August, sources said. On September 27, the FTC quietly withdrew from the agreement without providing a reason. The FTC currently has separate agreements with both the NLRB and the Department of Labor.

Once the rule goes into effect, the FTC will establish parameters for when it can allow deals to close early without waiting the full 30 days. The final rule has not yet been published in the Federal Register and will go into effect 90 days from now.

Democratic commissioner Rebecca Kelly Slaughter said in a public statement on Oct. 16 that the new HSR rules were “the product of compromise” and acknowledged that Democrats had agreed to drop some features they wanted.

“The question for me at the end of the day is: Does this proposed rule, including compromises, represent a meaningful and measurable improvement?” he said. “And I think it really is. “With the unanimous support of the entire commission, we can be confident that the rule will stick.”

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