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FTC, Under Pressure from “Tidal Wave” of HSR Filings, To Begin Issuing Close-At-Your-Own-Risk Letters

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 here .  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.

Copyright © 2021, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XI, Number 216
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About this Author

Leo Caseria Antitrust & Competition Attorney Sheppard Mullin Washington, DC
Partner

Leo Caseria is a partner in the Antitrust and Competition Practice Group in the Washington, D.C. and Los Angeles offices. 

Areas of Practice

Leo advises companies on antitrust issues in civil litigation, government investigations, mergers and acquisitions and proposed or contemplated business strategies. He has litigated numerous antitrust cases in federal and state courts, including cases based on alleged price-fixing, market allocation, boycott, monopolization and attempted monopolization.  He also has experience in consumer protection issues relating to...

202-747-1925
John D. Carroll Antitrust Lawyer Sheppard Mullin
Partner

John D. Carroll is a partner in the Antitrust & Competition Practice Group in the Washington, D.C. office.

Areas of Practice

John’s practice focuses on civil and criminal antitrust matters, including mergers & acquisitions, strategic counseling and compliance, and global cartel investigations, where he represents clients before the Department of Justice Antitrust Division, Federal Trade Commission, and international and state antitrust enforcement authorities.

Prior to private practice, John was in the Mergers I Division of the Federal Trade...

1.202.747.1951
Malika Levarlet, Attorney, Sheppard Mullin, Corporate Practice, mergers
Associate

Ms. Malika Levarlet is an associate in the Corporate Practice Group in the firm's Washington, D.C. office.

Areas of Practice

Ms. Levarlet's practice focuses on advising international and domestic companies in connection with mergers and acquisitions, cross-border transactions (with a focus on U.S. and European companies), joint ventures, licensing agreements, and corporate governance. She represents clients operating in a wide range of industries including technology, hospitality, fashion and apparel, healthcare, financial services, and aerospace and defense...

202-772-5331
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