February 5, 2021

Antitrust: Agencies Suspend HSR Early Terminations Pending Process Review

Yesterday, the FTC & DOJ announced that the agencies “will be reviewing the processes and procedures used to grant early termination to filings made under the Hart-Scott-Rodino Act.”  While it’s unknown what the long term results of that review may be, one immediate result is that the agencies will not grant early terminations for an unspecified period. Here’s an excerpt from the FTC’s announcement:

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.

Not everyone was on board with this decision.  The two Republican FTC commissioners issued a statement objecting to the decision to suspend early termination grants, contending that “absent exigent circumstances, an indefinite suspension of the ET process—with no clarity regarding when and under what circumstances it will resume—is unwarranted.”

The announcement coincides with Sen. Amy Klobuchar’s (D – MN) introduction of sweeping antitrust reform legislation. Among other things, the legislation – which may garner some bipartisan support – would make it more difficult for big deals (particularly tech deals) to obtain antitrust clearance. This excerpt from a recent article in “The Hill” explains:

The first proposal of the lengthy legislation is focused on making anticompetitive mergers more difficult by amending the Clayton Act. It would add a risk-based standard to the foundational antitrust law and clarify that mergers that create a monopsony violate it.  The bill introduced by Klobuchar, the top Democrat on the Senate Judiciary subcommittee on antitrust, would also seek to shift the burden to parties seeking a merger to prove that they would not create a risk of lessening competition.

The legislation lists out several categories of mergers that would pose such a risk, including acquisitions by a dominant firm with 50 percent market share, acquisitions of disruptive firms by competitors and mega-merger transactions valued at $5 billion or more.

The timing of the FTC & DOJ’s announcement and the introduction of Sen. Klobuchar’s legislation appears to be coincidental, but both actions send the message that a lot of things that have long been taken for granted when it comes to M&A antitrust review are now being looked at with a fresh set of eyes.

John Jenkins