U.S. Antitrust Agencies Issue Guidance on Merger Review During Coronavirus Crisis
The Federal Trade Commission ("FTC") and Department of Justice Antitrust Division ("DOJ") continue to operate, but merging parties should expect lengthier reviews.
The FTC and DOJ have adopted new procedures in response to the novel coronavirus (COVID-19) pandemic. The changes are intended to help the agencies stay open during the crisis, but merging parties should expect lengthier antitrust reviews until normal operations resume.
All merger filings with the FTC and DOJ must be submitted via the FTC's electronic filing system. During this period, the agencies will not grant early termination of the Hart-Scott-Rodino ("HSR") Act waiting period, 30 days for most transactions. Ordinarily, merging parties can receive early termination of the waiting period if the agencies agree that no further inquiry is warranted, typically one or two weeks after filing. For now, all U.S. merger reviews will take at least 30 days (except for cash tender offers and acquisitions subject to Section 363(b) of the bankruptcy code, for which the statutory waiting period is 15 days).
Deals subject to preliminary or in-depth antitrust reviews are also likely to be affected. Leadership at the FTC and DOJ have instructed the staff to telework. Absent extraordinary circumstances, meetings with staff or leadership will be handled by telephone or videoconference, and in-person depositions are likely to be rescheduled for videoconference. The agencies have emphasized they remain "open for business," ready to protect consumers. In other words, anticompetitive transactions or conduct are not likely to receive a free pass.
Parties with deals under review should expect requests for additional time. DOJ will request an additional 30 days to complete its review of transactions once parties have complied with its document requests. The FTC is likely to do the same, warning that it is ready to "take affirmative action to protect consumers when necessary, including when an unmodified time period does not allow us to address competitive concerns."
In light of these developments, merging parties should consider taking the following steps.
- Build in extra time for HSR filings. The e-filing system is new and untested at the anticipated filing volume.
- Expect antitrust reviews to take more time whether or not the deal raises competition issues.
- Consider the impact of lengthier antitrust reviews on deal timing and termination clauses in transaction agreements. Personnel issues, market turbulence, telework, and other challenges may slow the company's ability to respond to agency requests. The agencies will have the same challenges and will expect more time to deal with the fallout.
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