Like other regulatory agencies and businesses, antitrust authorities around the globe are taking steps to address the impact that the COVID-19 pandemic is having on their operations and the global economy. In particular, antitrust authorities are grappling with severe disruptions to their ability to conduct merger investigations while fulfilling their mission to appropriately vet transactions.

Prior to these disruptions, merger review frameworks in most countries have been generally stable and predictable in terms of timing and risk. In the United States, the Hart-Scott-Rodino (“HSR”) Act provides that transactions that meet specific thresholds (e.g., $94 million in transaction value), are subject to certain waiting periods before the transaction could be closed (e.g., an initial 30 day waiting period that may be (i) shorted if requested by the merging parties and there are no competitive concerns via an Early Termination (“ET”) process, or (ii) extended if there are competitive concerns via a Request for Additional Information (also known as a “Second Request” process)).

Earlier this week, the Federal Trade Commission (“FTC”) and the Department of Justice, Antitrust Division (the “DOJ”) (together the “Agencies”) implemented changes to the U.S. merger review processes, including:

• The Agencies now require that all HSR filings must be made electronically.
• ET will no longer be granted for any transactions as of March 16, 2020. See (link to K&S client alert, March 16, 2020).

For deals where a Second Request has been issued, regardless of any negotiated timing agreements that govern the obligations and timeframes for Second Request compliance and review that are already in place between the DOJ and merging parties, the DOJ has announced they are seeking an additional 30 days to review transactions (the FTC has yet to make any similar announcements).

News reports have also indicated that DOJ is requesting that Congress amend the HSR Act in the next round of pandemic legislation to add 15 calendar days to the initial waiting period for reviewing transactions during emergencies, such as disease outbreaks, natural disasters or government shutdowns, which would mean that the waiting period for all transactions would be a minimum of 45 days total.

FTC Commissioner Rohit Chopra has also raised concerns about the review process and burden placed on FTC staff and has recommended that Congress amend the Clayton and HSR Acts to “stop the clock” on all transactions, stating, “Corporations shouldn’t be able to slip big mergers through during national emergencies. Congress should stop the shot clock so public servants have enough time to investigate and sue to block bad deals.” At this time, no other FTC or DOJ antitrust officials have suggested that Congress take such actions.

The Agencies continue to work diligently to review and clear HSR reportable transactions. DOJ and FTC staff are teleworking and continue to work as normally as they can under the circumstances, and we can expect efforts by the Agencies to do their job in a manner that ensures a diligent review in light of the challenges presented by the COVID-19 pandemic. If, for example, proposed legislation is not passed by Congress, we believe it likely that strategic transactions (i.e., those where the merging parties have competing products) will encounter requests by the Agencies to pull and refile their HSR filings to enable the Agencies to have an additional 30 days to review the transaction. Under the HSR rules, parties can pull and refile their HSR filings to extend the waiting period an additional 30 days without having to pay another filing fee.

Parties also have an interest in providing the Agencies with additional time by pulling and refiling their HSR filings. Otherwise, there is substantial risk that the deal will receive a Second Request, which could add substantially more time to its receiving HSR clearance (typically, it can take anywhere from 4-8 months, or more, for parties to respond to a Second Request).

Competition authorities outside the U.S. have also been making changes to their merger review processes. For instance, the European Commission has encouraged companies to delay merger notifications in light of COVID-19 stating that it is likely to face difficulties in collecting information from third parties, such as customers, competitors and suppliers, in the coming weeks and that all European Commission services may face limitations in terms of access to information and databases and in terms of information exchanges following the remote working measures taken as of March 16, 2020.

Governments’ responses to the COVID-19 pandemic continues to change rapidly, and antitrust enforcement is no exception.