The Federal Trade Commission (“FTC”) announced on February 4, 2021, that it is temporarily suspending the discretionary practice of granting “early termination” of the Hart-Scott-Rodino (“HSR”) Act waiting period, with support from the Antitrust Division of the U.S. Department of Justice (“DOJ”). The Agencies cited “the unprecedented volume of HSR filings” and “challenging transition period” as the reasons for suspending grants of early termination.
The HSR Act requires parties to certain mergers and acquisitions to notify the FTC and DOJ and observe a waiting period (usually 30 days) prior to consummating a reportable transaction. Filing parties are permitted to request early termination (“ET”) of the 30-day statutory waiting period. If either the buyer or the seller requests ET, the FTC and DOJ may, at their joint discretion, terminate this waiting period early. Requesting early termination does not guarantee that the request will be granted.
Commissioners Noah Phillips and Christine Wilson strongly criticized the policy, stating that they “see no rationale sufficient to justify suspending all grants of ET.” In the statement released with the announcement, Commissioners Phillips and Wilson also noted that “the Agencies have never suspended early termination because of leadership transitions or increased merger filings.”
The FTC’s announcement does not provide guidance on when ET grants might resume; rather it states that the Agencies anticipate that the suspension period will be “brief.” However, only one transaction has received early termination since January 15, 2021. This represents a longer ET hiatus than was put in place at the outset of the pandemic, when the agencies were transitioning to remote work and a revised electronic filing system.
How Covington Can Help
Our antitrust and mergers and acquisitions practice groups include attorneys, including several who served at the FTC or the DOJ, with decades of experience in advising on how HSR rules can affect transaction timing and deal risk. Our team can provide detailed and practical insight into how changing policies at the FTC and DOJ might apply to various types of transactions. If you have any questions concerning the material discussed in this client alert, please contact the authors.