On February 4, 2021, the Federal Trade Commission (FTC) and Department of Justice (DOJ) announced suspension of early termination grants under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). These grants are a discretionary practice that allows parties to consummate a merger or acquisition that is subject to HSR reporting before the usual 30 days expires. The agencies did not state the length of the suspension, but they “anticipate that this temporary suspension will be brief,” attributing the need to implement the suspension on account of an increased number of filings in the fiscal year and the transition to a new presidential administration during a pandemic. During the suspension, the agencies will review the procedure and process used to grant early terminations.
The goal of the HSR Act is to prevent anticompetitive mergers or acquisitions. Under the Act, if certain thresholds are met, companies are required to submit a notification of proposed mergers and acquisitions to the FTC and the DOJ. After filing of the premerger notification, the FTC and DOJ have 30 days to review the transaction, with discretion to request additional information from the parties about the transaction or to terminate the review period in less than 30 days. If the agencies terminate the review period in less than 30 days, they must publish the names of the parties on the FTC’s website, Twitter page and in the Federal Registrar.
Historically, it is rare for the FTC to suspend early termination periods, with this most often occurring during government shutdowns. The most recent non-government shutdown-related suspension occurred in March 2020 in response to the COVID-19 pandemic, lasting for two weeks, while the FTC updated its electronic filing system.
Until the current suspension of early terminations is lifted, businesses should expect to wait the full 30-day review period, even if their merger poses no competitive concerns.