On Thursday, February 4, the Federal Trade Commission (“FTC”) and the Department of Justice (“DOJ”) announced the temporary suspension of all early terminations of merger reviews for transactions notified under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the ”HSR Act”). The agencies cited the transition to the new administration, a heightened number of merger filings received since the start of the fiscal year, and the ongoing COVID-19 pandemic as the reasons for the suspension.
The FTC issued a statement, with the support of DOJ, in which the FTC explained that the agencies will be reviewing the processes and procedures used to grant early terminations of merger reviews made under the HSR Act. During the review, the agencies will not grant requests for early termination of the HSR waiting period. While the statement does not provide a timeline for the temporary suspension, it notes “[w]e anticipate this temporary suspension will be brief.”
The Acting Chairwoman of the FTC explained: “The law provides 30 days for the agencies to review the competitive implications of transactions. Given the confluence of an historically unprecedented volume of filings during a leadership transition amid a pandemic, we will presume we need those 30 days to ensure we are doing right by competition and consumers.” While DOJ’s Antitrust Division noted its “support” of the decision to pause grants of early termination, two FTC Commissioners objected to the move: “At this time, we see no rationale sufficient to justify suspending all grants of ET. In 45 years of administering the HSR Act, the Agencies have done so only when a crisis made them unable to discharge their duties.”
This is the second time the agencies have suspended early terminations of merger reviews, other than during government shutdowns. In March 2020, the agencies temporarily suspended early termination grants while they implemented an electronic filing system in response to the COVID-19 emergency. The March suspension lasted approximately two weeks.
Early termination of the waiting period is requested in the majority of transactions notified under the HSR Act. The agencies typically grant requests for early termination after they have reviewed a proposed transaction and determined not to take any enforcement action during the waiting period. The announcement today came after an approximate three week period during which the agencies early terminated only one HSR premerger notification filing.
This is also the second HSR-related development from the agencies this week. On February 2, the agencies announced that due to changes in the gross national product, the HSR size-of-transaction threshold will be lowered from the current $94 million threshold to $92 million, effective March 4, 2021 (see more details on this development here).
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