Antitrust, Anti-Activism

During the previous two decades, the four of us have published many of studies on shareholder activism and mergers and acquisitions at leading academic outlets. But until this paper, Antitrust, Anti-Activism, neither we nor anyone else had uncovered the intricate interaction of antitrust regulation and shareholder activism.

There have been numerous examplesas recent as 2024 and 2025, of both regulators and activists responding to the antitrust disclosure thresholds set in the Hart-Scott-Rodino (HSR) Act, including both federal civil penalty settlements from regulators and high-profile activist decisions that were impacted by HSR thresholds. We had heard over the years from mostly anecdotal sources that these HSR thresholds have real bite, and recently we decided to study whether they do in a comprehensive empirical study. Our findings surprised us in their clarity and significance.

Our empirical strategy is based on the fact that the dollar-based HSR disclosures thresholds correspond to an increasingly smaller percentage of shares outstanding as a firm’s market capitalization increases. As a result, the HSR thresholds are lower than the percentage-based 5% Section 13(d) disclosure threshold for some mid-cap firms and much lower than 5% for large-cap firms.

This variation in disclosure requirements is an excellent empirical setting. A Schedule 13D filing often marks the beginning of a public activist engagement. But if disclosure is triggered by HSR earlier than under Section 13(d), activists could be required to reconsider their engagement strategy due to the cost of acquiring a desired level of ownership as well as managerial and/or market response prior to achieving that level.

Our findings can be put simply: HSR thresholds deter activism. By exploiting the time-varying HSR notification threshold and the resulting discontinuity among firms with similar characteristics including market capitalization, we provide causal evidence that activists are about 10% less likely to target firms when a “toehold” position would trigger HSR disclosure requirements prior to a Schedule 13D filing, compared to firms with similar characteristics just above the threshold.

In addition, contrary to some suggestions by policymakers, we find no evidence that activism increases industry concentration. Instead, concentration appears to decrease after activist intervention. Our results support policy changes to the HSR premerger notification rules, including its threshold and investment-only exception.

We also provide a summary of the simultaneous evolution of both antitrust and activism scholarship and regulation, along with comprehensive descriptions of the relevant exceptions to the HSR thresholds and the related – and ongoing – policy debate. Our new paper is available here.