Resources / Glossary / Antitrust clearance

Antitrust clearance.

Aka. Merger clearance · regulatory clearance · HSR clearance · competition approval
All terms

What is antitrust clearance?

Antitrust clearance is the approval from competition regulators that a merger or acquisition may proceed without unduly harming competition. For deals above certain size thresholds, the parties must notify the relevant authorities and wait for clearance before they can legally complete the transaction.

In the United States this runs through the Hart-Scott-Rodino premerger notification process, reviewed by the Federal Trade Commission and the Department of Justice; the European Union, the United Kingdom, and dozens of other jurisdictions run parallel regimes. A large cross-border deal may need clearance from many regulators at once.

Clearance is a condition to closing, not a formality. The regulator can approve the deal, approve it subject to remedies such as divestitures or behavioral commitments, or move to block it. Until clearance is obtained, the parties must continue operating as independent competitors.

How the clearance process works

The process is staged, with most deals clearing early and only the competitively significant ones proceeding to deeper review.

  1. Notification. If the deal exceeds the size thresholds, the parties file premerger notifications and pay the applicable fees.
  2. Initial waiting period. A statutory clock runs — 30 days under HSR, for example — during which the parties cannot close. Most deals clear here.
  3. Second request / Phase 2. If the regulator has concerns, it issues a demand for extensive additional information, pausing the clock and triggering a deep, expensive review.
  4. Outcome. The regulator clears the deal, clears it with remedies (divesting overlapping assets or accepting conduct commitments), or sues to block it.

Throughout, the parties remain separate competitors. Coordinating prices, integrating operations, or exchanging competitively sensitive information before clearance is gun-jumping and is itself unlawful — which is why clean teams are used during diligence of competitor targets.

Why clearance shapes the deal, not just the timeline

Antitrust risk is priced into deals from the start. Where there is meaningful overlap, the parties negotiate which side bears the risk — through a reverse termination fee the buyer pays if the deal is blocked, and through covenants about how hard the buyer must fight or what divestitures it must accept to win clearance.

The review can also reshape the asset. A regulator may clear the deal only if the buyer divests an overlapping business, meaning the company that emerges is smaller than the one signed for. For deals in concentrated markets, the antitrust analysis is part of the underwriting from day one, not an afterthought at closing.

Frequently asked.

5 questions
01 What is an HSR filing?

The Hart-Scott-Rodino Act requires parties to a deal above certain size thresholds to file a premerger notification with the U.S. antitrust agencies and observe a waiting period — typically 30 days — before closing. It gives the FTC and DOJ a chance to review the transaction before it completes.

Most filings clear within the initial period. Only deals that raise competitive concerns proceed to a second request, the in-depth review stage. The HSR process is the U.S. gateway; comparable notification regimes exist in the EU, UK, and many other jurisdictions.

02 What is a second request?

A second request is a demand from the U.S. antitrust agency for a large volume of additional documents and data when a deal raises competitive concerns during the initial review. It pauses the closing clock and triggers a deep, document-intensive investigation that can take many months.

Receiving a second request is significant — it signals real regulatory scrutiny and adds substantial cost and delay. Many deals at this stage end in negotiated remedies, while some are abandoned or litigated.

03 What are antitrust remedies?

Remedies are the conditions a regulator may require before clearing a deal that would otherwise harm competition. The most common are structural — divesting an overlapping business so the combined firm doesn't dominate a market — but they can also be behavioral, such as commitments on pricing, access, or information sharing.

Structural remedies are generally preferred by regulators because they are clean and don't require ongoing oversight. For the parties, a required divestiture means the deal closes on a different, smaller footprint than the one originally signed.

04 What is gun-jumping?

Gun-jumping is illegally coordinating or integrating before antitrust clearance is obtained. Because the parties must remain independent competitors until the deal is cleared, they cannot jointly set prices, integrate operations, or exchange competitively sensitive information during the review period.

Violations carry real penalties and can jeopardize the deal itself. This is precisely why competitors conducting diligence use clean teams — to analyze sensitive data without that information reaching the decision-makers who set the buyer's competitive conduct.

05 Who bears the risk if a deal is blocked on antitrust grounds?

It is negotiated in the purchase agreement. A reverse termination fee — paid by the buyer to the seller if regulators block the deal — is a common way to shift some of that risk, and the agreement also specifies how hard the buyer must work to obtain clearance, including what divestitures it is obligated to accept.

These provisions matter because the seller takes its business off the market during a long review and bears real cost if the deal fails for reasons outside its control. The allocation of antitrust risk is one of the most heavily negotiated parts of a deal with competitive overlap.

Related terms

Rdiligence

Reps and warranties

The seller's contractual statements of fact about the business — the <em>promises a buyer relies on</em>, backed by indemnities if they turn out untrue.

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Cdiligence

Closing balance sheet

The balance sheet drawn up as of the closing date — the document that <em>measures the final price adjustment</em> for working capital, cash, and debt.

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Cdiligence

Confidential information memorandum

The detailed sell-side document that presents a target to qualified buyers — the <em>full pitch</em> a process is launched on, sent after an NDA.

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Ddiligence

Disclosure schedule

The seller's itemized exceptions to its representations — the document that <em>qualifies every clean rep</em> with the messy reality behind it.

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Ddiligence

Data room index

The structured list of folders and documents inside a data room — the table of contents that dictates how a buyer reads a target and what they can <em>find</em>.

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Ldiligence

Letter of intent

A mostly non-binding document setting out a buyer's proposed terms — price, structure, exclusivity — that frames the deal before <em>confirmatory</em> diligence.

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