Key Takeaways

• Companies should anticipate waiting a full 30 days for the HSR waiting period to expire for all transactions that have recently been notified or are soon-to-be notified under the Hart-Scott-Rodino Act (“HSR Act”).
• It is not clear how long this suspension of Early Terminations will last.

• This break may foreshadow changes in the frequency or likelihood of Early Termination going forward.

The Federal Trade Commission (FTC), with the support of the Antitrust Division of the U.S. Department of Justice (DOJ), has announced that it is temporarily suspending the grant of Early Termination of the 30-day waiting period for all notified transactions under the HSR Act effective immediately. This announcement follows a recent pause in new Early Terminations being posted to the FTC website between January 16 and February 2.¹

As companies should be aware, the HSR Act is a procedural statute that requires companies to notify the FTC and DOJ of proposed acquisitions that exceed certain thresholds and to observe a 30-day waiting period before closing on those transactions unless Early Termination is granted. Historically, grants of Early Termination have been common for transactions that do not raise any competitive concerns. According to the most recent HSR Annual Report for fiscal year 2019, Early Termination was requested in approximately 74.2 percent of transactions notified, and approximately 73.5 percent of such requests were granted.²

The FTC suspended grants of Early Termination for a brief period in March 2020 while the agencies adjusted to remote work during the COVID-19 pandemic. That suspension lasted only two weeks.

It is unclear whether this new pause in Early Terminations will have a similarly short duration or may extend for a longer period. The FTC has emphasized that this is a temporary suspension linked to both the on-going transition to the Biden administration and the “unprecedented volume of HSR filings for the start of a fiscal year[.]” These statements suggest that it may be a relatively short suspension.

At the same time, the FTC has indicated that it is “reviewing the processes and procedures used to grant early termination to filings made under the Hart-Scott-Rodino Act.” It is unclear how long this review may take and whether this review may result in any lasting impact on the frequency or timing of grants of Early Termination when the practice is resumed. The suspension is also notable in light of a parallel statement released by Commissioners Phillips and Wilson objecting to the rationale provided for the suspension.³ Given that grants of Early Termination are discretionary, the agencies’ announcement of a formal suspension could foreshadow additional changes.   

FTC, DOJ Temporarily Suspend Discretionary Practice of Early Termination 

Footnotes

1) See https://www.ftc.gov/enforcement/premerger-notification-program/early-termination-notices.

2) The most recent annual report covered the period from October 1, 2018 through September 30, 2019 and is available at https://www.ftc.gov/system/files/documents/reports/federal-trade-commission-bureau-competition-department-justice-antitrust-division-hart-scott-rodino/p110014hsrannualreportfy2019_0.pdf.

3) See Statement of Commissioners Noah Joshua Phillips and Christine S. Wilson, available at https://www.ftc.gov/public-statements/2021/02/statement-commissioners-noah-joshua-phillips-christine-s-wilson-regarding.