FTC, DOJ Temporarily Suspend Discretionary Practice of Early Termination

During the transition to the new Administration and given the unprecedented volume of HSR filings for the start of a fiscal year, the Federal Trade Commission, with support from the Antitrust Division of the U.S. Department of Justice, will be reviewing the processes and procedures used to grant early termination to filings made under the Hart-Scott-Rodino Act.

For this period, the agencies will not grant early terminations. We anticipate that this temporary suspension will be brief. The agencies implemented a similar temporary suspension of early termination grants in March 2020, following the Premerger Notification Office’s establishment of its e-filing system.

“We, as an agency and a country, are in unprecedented times, and our obligation is to be responsive to these circumstances, in this case by temporarily suspending early termination,” said Rebecca Kelly Slaughter, Acting Chairwoman of the Federal Trade Commission. “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.”

“We support the FTC’s decision to temporarily suspend early termination grants to ensure appropriate review of transactions during this challenging transition period,” said Richard A. Powers, Deputy Assistant Attorney General and Senior Supervisory Official of the Department of Justice’s Antitrust Division.

Under the HSR Premerger Notification Program, companies report some proposed mergers and acquisitions to the government before they occur, and the agencies identify and challenge those transactions that may substantially lessen competition in violation of federal law. During the preliminary review, the parties must wait 30 days (15 days in the case of a cash tender or bankruptcy transaction) before closing their deal. Based on what the agency finds, it can: 1) terminate the waiting period and allow the parties to consummate their transaction (this action often is referred to as an “early termination”); 2) let the waiting period to expire, which allows the parties to consummate the transaction; or 3) if the initial review has raised competition issues, the agency may extend the review and ask the parties to turn over more information so it can take a closer look at how the transaction will affect competition (this action often is referred to as a “second request.”)