Grants of early termination of HSR waiting period temporarily suspended by DOJ and FTC – merging parties should expect to wait the full 30 days until further announcement
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The Federal Trade Commission ("FTC") and Department of Justice ("DOJ") announced today that they are temporarily suspending any grants of early termination under the Hart-Scott-Rodino Act ("HSR Act").1 The HSR Act is the federal premerger notification program, which requires parties to notify the FTC and the DOJ of certain mergers and acquisitions before they occur, and observe a 30-day waiting period, during which time the agencies review the transaction for potential competitive issues.2 Parties may request that the agencies, upon completion of review and determination that no further action is required, terminate the waiting period early – this is known as "early termination."
The FTC's announcement today explains that during the transition to the Biden administration, and with unprecedented volumes of HSR filings, the FTC and DOJ are pausing – indefinitely – all grants of early termination, in order to review the processes and procedures they use to grant early termination.
On March 17, 2020, the FTC temporarily suspended early termination as the FTC transitioned to electronic filings during the COVID-19 pandemic.3 The FTC resumed early termination thirteen days later on March 30, 2020.4 As of now, the FTC's most recent traunch of early terminations was on January 15, 2021, already far longer than the temporary suspension last year.
The FTC gave no indication of when the practice will resume or any signal of whether there would be any changes to the practice to exclude certain types of transactions in the future. Merging parties need to be prepared to wait the full 30-day period even for transactions with no competitive concerns.
The two Republican FTC Commissioners dissented from today's announcement.5 Commissioners Phillips and Wilson "see no rationale sufficient to justify suspending all grants of [early termination]."6 Commissioners Phillips and Wilson state that the suspension of early termination of "competitively benign transactions" will introduce "inefficiency into market operation, harming consumers and other stakeholders involved in the transactions that would have consistently received [early termination] . . . ."7
The halt comes in an era where the antitrust agencies face unprecedented interest from Capitol Hill and the White House on merger policy, with several Presidential candidates, Senators Klobuchar and Warren, keenly critical of Trump Administration merger policy. On February 4, 2021, Senator Klobuchar announced that she will introduce the "Competition and Antitrust Law Enforcement Act," which would lead to sweeping changes relating to merger approval, and antitrust law more generally.8 For instance, key provisions would amend the Clayton Act to add a "risk-based" standard to antitrust law, shift the burden of proof that the merger would not risk a lessening of competition onto the merging parties, set out particular types of mergers that would pose a risk of "lessening competition" (including acquisitions by firms with 50% market share, "acquisitions of disruptive firms by competitors," and "mega-merger transactions valued at $5 billion or more"), and eliminate the requirement for an antitrust plaintiff or government enforcer to define a relevant market.9
1 Press Release, Federal Trade Commission, FTC, DOJ Temporarily Suspend Discretionary Practice of Early Termination (Feb. 4, 2021).
2 15 U.S.C. Section 18a(b)(1). The waiting period for a cash tender offer is reduced to 15 days. Id.
3 Press Release, Federal Trade Commission, Changes in Bureau Procedure During COVID-19 Coronavirus Pandemic (Mar. 16, 2020).
4 Press Release, Federal Trade Commission, Resuming Early Termination of HSR Reviews (Mar. 27, 2020).
5 Statement of Commissioners Noah Joshua Phillips and Christine S. Wilson Regarding the Commission’s Indefinite Suspension of Early Terminations (Feb. 4, 2021).
8 The Hill, Klobuchar to introduce omnibus antitrust bill (Feb. 4, 2021).
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