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09 April 2020
As the United States reacts and adjusts to the developing COVID-19 situation, the two federal antitrust agencies – the Federal Trade Commission (FTC) and the Department of Justice (DOJ) Antitrust Division – have revised certain rules and procedures relating to their civil merger investigation processes to address these new challenges.
The FTC and DOJ have shifted most personnel to remote working arrangements, but agency staff have demonstrated a willingness to be reasonable and accommodating as both the agencies and merging parties navigate the developing effects of COVID-19.
The agencies are in the process of testing the full capacity of their remote working systems. In the event that agency IT systems are unable to support remote access volumes, agency staff may be forced to triage workload to accommodate system limitations. The FTC has indicated that it will modify timing agreements where "an unmodified time period does not allow [the FTC] to address competitive concerns".(1) Similarly, the DOJ has indicated a willingness to "revisit its timing agreements with merging parties in light of further developments".(2)
A wholesale change in the HSR filing procedure is now in effect. As of 17 March 2020, the FTC and DOJ will accept only HSR filings electronically. No hard copy (eg, paper or DVD) filings are being accepted at this time.
The agencies initially indicated that they would not grant early termination of the HSR waiting period while this e-filing procedure is in place. However, the FTC, which administers the pre-merger notification programme, announced that the Pre-merger Notification Office will resume granting early termination of HSR on 30 March 2020 in situations in which both agencies have determined that no enforcement action will be taken during the waiting period. However, Director of the FTC Bureau of Competition Ian Conner cautioned that:
[e]arly termination will, for the duration of the COVID-19 pandemic crisis, be available on a more limited basis than has historically been the case. Specifically, it will be granted in fewer cases, and more slowly, than under normal circumstances.(3)
At this time, parties should not reach out to request early termination, and early termination will be granted only as time and resources allow.
Practitioners have observed that new submissions may face the increased likelihood of a second request as agency staff adapt to remote working conditions.
Filings received after 5:00pm EST will be treated as if they were submitted the following business day, an important consideration if a transaction is intended to close soon after the HSR waiting period expires.
Both the FTC and DOJ seem dedicated to their missions and are moving forward with ongoing investigations. Staff attorneys have indicated that investigations will carry on in a "business as (almost) usual" fashion, the remote working arrangements being the obvious difference.
The agencies will conduct all meetings by phone or video conference where possible, absent extenuating circumstances. The agencies are reviewing their investigations and litigations to consider modifying statutory or agreed-to timing. Practitioners are encouraged to be proactive in initiating discussions on these issues and flexible in approach.
For mergers currently pending in front of the DOJ or that may be proposed, the DOJ Antitrust Division is requesting an additional 30 days in timing agreements from merging parties to complete review after the parties have complied with document requests. Arguably, this extra timing will primarily affect deals in which second requests are issued.
Deal timing may also be affected by potential legislation. Specific provisions affecting the HSR review process are unknown at this time.
As with transactions involving investigations still in progress, transactions with investigations nearing completion should move forward in a "business as (almost) usual" fashion. However, parties must be proactive in reaching out to agency staff and planning for next steps. While the agencies have demonstrated their ability to adapt to fluid situations, COVID-19 continues to present unprecedented challenges that will require cooperation from all parties involved in the transaction.
For further information on this topic please contact Amanda Wait at Norton Rose Fulbright's Washington DC office by telephone (+1 202 662 0200) or email (email@example.com). Alternatively, please contact Abraham Chang at Norton Rose Fulbright's Houston Office by telephone (+1 713 651 5151) or email (firstname.lastname@example.org). The Norton Rose Fulbright website can be accessed at www.nortonrosefulbright.com.
(1) Ian Conner, Director, Bureau of Competition, "Changes in Bureau procedure during COVID-19 coronavirus pandemic" (16 March 2020). Available here.
(2) Department of Justice, Office of Public Affairs, "Justice Department Announces Antitrust Civil Process Changes for Pendency of COVID-19 Event" (17 March 2020). Available here.
(3) Ian Conner, Director, Bureau of Competition, "Resuming early termination of HSR reviews" (27 March 2020). Available here.
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