FTC and DOJ Temporarily Suspend Early Termination Program for HSR Filings

On the heels of announcing reduced thresholds for reportable transactions under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended (HSR Act) the Federal Trade Commission (FTC) and Antitrust Division of the U.S. Department of Justice (DOJ) announced on February 4, 2021 that the agencies were temporarily suspending the “Early Termination” program.

The Early Termination program allows parties who must file a HSR notification to request early termination of the statutory waiting period of 30 days. Early Termination is reserved for those transactions that raise no competitive concerns and, if granted, allows the parties to close prior to the expiration of the 30-day waiting period.

The agencies are suspending the program while they review the processes and procedures used to grant early terminations. In the FTC’s press release, the agency cites “the transition to the new Administration and [] the unprecedented volume of HSR filings for the start of a fiscal year” as the reason to suspend the program while the processes and procedures are under review. The Early Termination program has been suspended at least twice before, in March 2020, as the agencies moved to a new e-filing system, and at the end of 2018-beginning of 2019 during a government shutdown. The press release gives no indication as to when the Early Termination program may be reinstated following this suspension, or if it will be reinstated in the same manner given that the “processes and procedures” will be reviewed.

FTC Commissioners Phillips and Wilson¹ issued a statement objecting to the temporary suspension of Early Termination. In that statement, they claim it is their “understanding is that this decision to suspend grants of ET is premised on 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. But in more than four decades of HSR Act review, the Agencies have never suspended early termination because of leadership transitions or increased merger filings.” The two Commissioners noted that the Early Termination program was not suspended after 9/11, during the 2008 financial crisis, or even when filings rose to 451 in a single month. They disagree that there is any risk that a transaction that raises competitive concerns would sneak through during this time of transition, increased filings and a global pandemic.

At this time, until the Early Termination program is reinstated, parties to a reportable transaction must plan to wait the entirety of the 30-day statutory period prior to closing their transaction.