In response to the spread of novel coronavirus (“COVID-19”), the Federal Trade Commission (the “FTC”) and the Department of Justice (the “DOJ”) have issued guidance on how COVID-19 will impact merger review and filings under the Hart-Scott Rodino (the “HSR”) Act.
On March 13, 2020, the FTC and DOJ suspended the submission of hard copy and DVD HSR filings. Effective Tuesday, March 17, 2020, the FTC’s Premerger Notification Office (the “PNO”) and the DOJ have implemented a temporary e-filing system for HSR filings. During the use of the e-filing system, the PNO and DOJ review of HSR filings will continue as normal; however, the PNO will not grant early termination of any applicable waiting period. The FTC has compiled guidance for filing parties on the PNO’s website, which is being updated periodically.
Similarly, the FTC announced changes in bureau policies and procedures that will impact the timelines and strategies transacting parties use during merger review, including the following:
- Virtually all FTC employees are now working remotely and almost all internal and external meetings will be handled by telephone or videoconference.
- The FTC is conducting a matter-by-matter review of its investigations and litigations to consider appropriate modifications of statutory or agreed-to timing.
There are a number of steps for transacting parties to take to prepare for and minimize the effect of COVID-19 on potential merger reviews. Depending on the stage of the merger, we suggest transacting parties consider some or all of the following:
- Consult with antitrust counsel early. Transacting parties should engage antitrust counsel early in the transaction process to implement strategies to mitigate the effects of potentially lengthy antitrust review. Preparing HSR filings and the accompanying documents and competitive analyses well in advance will help to streamline the review process and make interactions with the agencies more effective and efficient. Similarly, counsel should be able to help transacting parties incorporate antitrust review into their transaction plans and timelines to ensure that review doesn’t delay Closing or impact additional due diligence review or approvals that the parties need.
- Merger clearance may be more difficult, but not impossible. While the steps that the FTC and DOJ have taken may make obtaining merger clearance more difficult, there has been no indication from the FTC or DOJ that they will halt the review process. To that end, transacting parties should work with their antitrust counsel early in the process to develop strategies to work with the agencies. To aid the agencies in reviewing transactions, parties should consider preparing white papers, economic analyses, and similar guidance that may help speed the process along.
- Anticipate and plan for delays. Transacting parties should anticipate delays in the agencies’ review processes as the agencies work through the new e-filing process and complexities around telecommuting. In addition, it may take the agencies longer to work through the normal process of reaching out to market participants because many market participants may be harder to reach. Parties may consider reaching out to the agencies prior to and during the HSR review process to discuss timing. In the event of a particularly complex analysis, parties should consider alternative strategies to avoid a costly and time-consuming Second Request.
- Recognize that events are fluid and be flexible. As with nearly everything concerning COVID-19, the situation at the antitrust agencies is constantly changing. Guidance is being updated continuously and posted to the agencies’ websites. Transacting parties should be proactive in working with the antitrust agencies to accommodate new developments as they occur.