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Certain mergers and acquisitions may cause a monopoly. The Hart Scott Rodino Act allows the federal government to review the merger or acquisition to ensure it does not create a monopoly. When companies merge or when one company acquires another, if certain tests are met, the companies must file pre-merger documents under the Hart Scott Rodino Act.
One of the tests is the commerce test. This qualification is met if either of the parties to the merger or acquisition is involved with commerce. Another test is the size of the person test. If one of the parties to the merger or acquisition has assets or annual net sales of over $100 million dollars, and another party to the merger has assets or net sales over $10 million dollars, the merger or acquisition meets the requirements of the test. If the actual transaction results in either $15 million dollars or more of assets or voting securities being acquired, or 15 percent or more of the voting securities of another company being acquired because of the merger or acquisition, the test is met and the parties must file pre-merger documents.