While the FTC’s announcement does not provide an end date for the temporary suspension, the agency “anticipate[s] that this temporary suspension will be brief.” 1
The HSR Act applies to certain acquisitions of assets, voting securities, and controlling interests in non-corporate entities. If an acquisition satisfies the HSR threshold tests and is not exempt, the acquiring and acquired person must each submit a separate premerger notification to the FTC and DOJ and observe a waiting period before closing. The waiting period is generally 30 days (or 15 days for certain transactions), but the agencies can and often do grant early termination for certain transactions for which they have determined that an investigation of substantive antitrust issues is not required.
The current suspension comes nearly a year after the FTC temporarily suspended grants of early termination in March 2020 to facilitate the transition to an electronic filing system for the submission of premerger notification filings in response to the COVID-19 pandemic.2 The agency announced that it would resume early terminations less than two weeks later on 30 March 2020.3
Republican commissioners question the need for temporary suspension
FTC Commissioners Noah Phillips and Christine Wilson released a statement questioning the need to temporarily suspend grants of early termination, noting that “[a]bsent exigent circumstances, an indefinite suspension of the [early termination] process – with no clarity regarding when and under what circumstances it will resume—is unwarranted.4 Commissioners Phillips and Wilson stress that the agency has never before suspended early termination because of leadership transitions or increased merger filings, and cites the success the agency staff has had working remotely during the pandemic as reasons why the temporary suspension is not warranted. Phillips and Wilson also argue that there is no reason to “avoid imposing unnecessary burdens on transactions” that raise no apparent competitive concern and would typically be granted early termination under agency rules.5
While the FTC announced that it anticipates this temporary suspension to be brief, the announcement also states that the two antitrust agencies will review the early termination processes and procedures. What this means for grants of early termination in the future remains to be seen. In the meantime, parties to transactions can continue to request early termination of the waiting period in the event that the agencies resume granting early termination prior to the waiting period expiration related to their filings.
Authored by Michele Harrington and Robert Baldwin