On March 18, 2020, Rohit Chopra, one of five Commissioners of the U.S. Federal Trade Commission (FTC), suggested that the U.S. Congress should enact new legislation or amend current laws, such as the Hart-Scott-Rodino Act (“HSR Act”), to pause the statutory waiting period for government review of mergers and acquisitions during national emergencies, such as the COVID-19 pandemic.
Under the HSR Act, parties to certain mergers and acquisitions must provide the FTC and U.S. Department of Justice (DOJ) with notice and information about their proposed transactions. Thereafter, the parties to a proposed transaction must wait, generally, for an initial period of 30 days, to allow government review before closing. The purpose of the statutory waiting period is to give the government time to assess whether, in its view, the proposed transaction poses any anticompetitive issues.
As disruptions caused by the COVID-19 pandemic continue, Commissioner Chopra recently tweeted, “During a national emergency, corporations shouldn’t be able to dictate how government is using limited resources. Under the current law, companies must give notice before closing a big merger. If government doesn’t act within a certain number of days, the merger goes through.” Commissioner Chopra elaborated in a second tweet by stating, “Corporations shouldn’t be able to slip big mergers through during national emergencies. Congress should stop the shot clock so public servants have enough time to investigate and sue to block bad deals.”
A reactionary change such as that suggested by Chopra would likely result in even more disruptions to businesses who are already grappling with stalled deals during this national emergency. Although the FTC stated earlier this week that review of HSR filings “will continue as normal,” it acknowledged that it “will not be granting” early termination of the HSR waiting period, and it is “reallocating resources” to try to maintain “continuity of core operations” as the COVID-19 pandemic continues.
Due to rapidly changing responses by the government to the COVID-19 pandemic, businesses that are parties to HSR-reportable mergers and acquisitions should consult with their antitrust counsel to remain up-to-date on the new developments and identify appropriate strategies to comply with the HSR Act.
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