Washington State’s Groundbreaking Merger Notification Law
Washington has become the first state in the nation to implement comprehensive merger notification requirements that parallel federal antitrust filings. The legislation, which took effect in July, mandates that companies submitting federal Hart-Scott-Rodino (HSR) pre-merger notifications must simultaneously file electronic copies with the Washington Attorney General’s Office if they meet specific state nexus criteria.
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This pioneering approach to state-level antitrust enforcement represents a significant shift in how mergers and acquisitions will be monitored across industries. While some states previously maintained similar requirements for specific sectors like healthcare, Washington’s law applies universally—including to the technology industry that plays such a crucial role in the state’s economy.
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Expanded State Oversight Powers
According to Vishal Mehta, an antitrust attorney at K&L Gates, this legislation continues a trend of states assuming more active roles in merger oversight. “The main purpose is so state enforcers can have a seat at the table earlier in the process, particularly with respect to transactions that have some sort of local nexus,” Mehta explained.
The law could particularly impact Seattle’s vibrant startup ecosystem and acquiring companies. While attorneys don’t anticipate it will deter acquisitions outright, it may slightly extend transaction timelines and provide state regulators with greater leverage to review deals that could affect local competition. As with other industry developments, businesses must adapt to evolving regulatory landscapes.
Specific Compliance Requirements
Companies must notify the Washington Attorney General if they meet any of three criteria:
- Their principal place of business is located in Washington state
- They derive at least 20% of the federal HSR threshold (approximately $25 million) in Washington sales for the relevant goods or services
- They are healthcare providers conducting business within the state
Jessica Pearlman, a corporate attorney with K&L Gates, noted that for most acquirers, “the business case for a deal is still going to exist,” but acknowledged it represents an additional compliance step. The filing must coincide with federal HSR submissions, carries no fee, but imposes potential penalties of up to $10,000 per day for non-compliance.
Broader Regulatory Context and Implications
Washington’s legislation mirrors Colorado’s recently enacted law and is based on the Uniform Antitrust Premerger Notification Act developed by the Uniform Law Commission. This model legislation explicitly encourages information-sharing among states adopting similar rules, potentially creating a patchwork of state-level merger review requirements across the country.
The move toward earlier state oversight follows several high-profile antitrust battles in recent years. Washington joined other states in challenging the Sprint-T-Mobile merger in 2019 and more recently successfully opposed the proposed Kroger-Albertsons merger. These cases demonstrate the state’s increasingly assertive approach to antitrust enforcement, particularly regarding transactions with potential local impact.
Practical Considerations for Businesses
Mehta advises companies to carefully evaluate how their transactions might affect local competition, especially when both parties maintain significant Washington presence. The requirement itself is straightforward, but questions remain about implementation as more states consider similar legislation.
Particular uncertainties surround data-sharing protocols and confidentiality safeguards between state agencies. Additionally, it remains unclear whether state enforcers will focus on specific sectors such as technology or private equity, or whether enforcement priorities will vary based on individual states’ political and economic objectives. These regulatory changes coincide with other market trends affecting business operations.
Broader Compliance Landscape
The merger notification requirement adds to a growing list of compliance obligations for Washington businesses. State lawmakers have recently passed additional measures including expansion of sales tax to digital services and increases to the business & occupation (B&O) tax. This regulatory environment reflects how Washington state implements groundbreaking merger oversight as part of a broader trend toward increased business regulation.
As companies navigate this new compliance landscape, they should consider how similar requirements might emerge in other states. The information-sharing provisions in the model legislation suggest that coordinated state enforcement may become more common, potentially creating additional complexity for multi-state transactions. This development occurs alongside other recent technology challenges that businesses must manage.
Looking Ahead
The Washington law represents a significant development in state antitrust enforcement that could inspire similar legislation elsewhere. Businesses engaged in M&A activity should monitor how the Attorney General’s office implements the new requirements and whether enforcement patterns emerge regarding particular industries or transaction types.
As the regulatory landscape evolves, companies would be wise to build state-level merger review considerations into their transaction planning processes from the outset. This forward-looking approach will become increasingly important as related innovations in regulatory oversight continue to develop across jurisdictions. The expansion of state authority in merger review coincides with other industry developments that are transforming business operations.
While the immediate compliance burden may be manageable, the long-term implications for merger strategy and timing warrant careful attention from legal and business teams alike. Companies should stay informed about these regulatory changes just as they monitor other market trends that could affect their operations.
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