Early Termination of Merger Reviews "Temporarily" Suspended

The Federal Trade Commission (FTC) and Department of Justice (DOJ) announced today that the agencies will stop granting “early termination” (ET) requests in premerger reviews so they can review the procedures for granting ET. The agencies describe this move as a “temporary suspension,” but did not provide any description of the procedures under review or a timeline for resumption of the normal process.

When the parties to a transaction file a Hart-Scott-Rodino (HSR) Act premerger notification form with the FTC and DOJ, they may request that the review be completed before the end of the 30-day waiting period. If a transaction receives ET, the deal may close at any time after that ET notice is received. Grants of ET are entirely discretionary and not guaranteed, but they are routine in transactions (such as private equity investments) that obviously raise no competitive issues.

The FTC cited the transition to a new administration, as well as the record number of HSR filings received at the close of the 2020 calendar year, as reasons for the suspension of ET. In a dissenting statement from two FTC commissioners, the reasoning is further described as “a desire to avoid inadvertently allowing potentially anticompetitive transactions to evade scrutiny during a period of political transition, a heightened number of HSR filings, and the ongoing COVID-19 emergency.” The dissent describes this motivation as “unpersuasive” and argues that transactions with no apparent competitive concern will be delayed, and businesses and consumers will be harmed.

The agencies last issued a temporary suspension of ETs at the start of the COVID-19 pandemic in March 2020, which lasted two weeks (March 16 to March 30, 2020). There has been no indication of when the current suspension will end.

Click here to read the FTC’s press release. Click here to read the dissenting statement by Commissioners Noah Joshua Phillips and Christine S. Wilson.