Many have been wondering when FTC and DOJ will resume granting early termination of the HSR waiting period in deals that present no anticompetitive concerns. Early termination does not appear to be coming back anytime soon.
On August 3, 2021, the FTC announced that the “tidal wave” of HSR filings continues to strain its ability to investigate deals: “This year, the FTC has been hit by a tidal wave of merger filings that is straining the agency’s capacity to rigorously investigate deals ahead of the statutory deadlines.” See https://www.ftc.gov/news-events/blogs/competition-matters/2021/08/adjusting-merger-review-deal-surge-merger-filings?utm_source=govdelivery . The data bear this out: HSR filings have been averaging around 300 per month, which, when annualized, is almost double the number of HSR filings of the busiest of the last ten years.
The FTC also announced that when it investigates a deal, declines to issue a second request, but also feels like it did not have time to “fully investigate” the deal within the 30-day waiting period (or 60 days if there is pull-and-refile), it will issue a form letter warning the parties that the investigation remains open despite the expiration of the waiting period, and that the parties close at their own risk. It remains to be seen how frequently such letters will be issued. Such letters might be issued only sparingly as an alternative to a second request in certain deals, or, might become a standard letter issued anytime a second request is not issued following an initial substantive antitrust inquiry. Of course, as always, the antitrust agencies retain the ability to investigate any deal at any time. However, this announcement suggests that post-closing antitrust investigations, typically a rare event, might become more frequent in the future.
In light of this new form letter, parties should pay close attention to closing conditions. For example, closing conditions triggered by expiration of the HSR waiting period would be satisfied even if the form letter is issued. Conversely, closing conditions requiring that there be no open government investigations would not be satisfied if the form letter is issued. In addition, provisions providing that buyers are not obligated to make divestitures or agree to conduct restrictions may offer less protection to buyers if the FTC’s announcement means that such events are more likely to occur post-closing.