Speeding Up and Slowing Down Antitrust Reviews – How the Federal Antitrust Agencies Are Responding to the COVID-19 Crisis
Make no mistake, the antitrust laws remain in full effect. The leadership of the Antitrust Division of the Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) have made clear that these enforcers “stand ready to pursue civil violations of the antitrust laws, which include agreements between individuals and business to restrain competition through increased prices, lower wages, decreased output, or reduced quality as well as efforts by monopolists to use their market power to engage in exclusionary conduct.” The DOJ also promised to vigorously monitor and prosecute any criminal violations of the antitrust laws, “which typically involve agreements or conspiracies between individuals or businesses to fix prices or wages, rig bids, or allocate markets.” In fact, the DOJ has drafted proposed legislation to allow more time for its criminal cases by tolling the statute of limitations for criminal antitrust violations for no less than 180 days and until 60 days after termination of the national emergency declared by the President on March 13, 2020.
That said, the agencies recognize the exigencies of the COVID-19 public health emergency warrant extraordinary consideration for companies that desire to work together to address current shortages and protect Americans’ health and safety. This week the Agencies jointly announced that both “will aim to respond expeditiously to all COVID-19-related requests, and to resolve those addressing public health and safety within seven (7) calendar days of receiving all necessary information.” The modified procedures for requesting expedited review are available to all sectors of the economy, but will apply solely for coronavirus-related public health efforts. The agencies’ press releases specify that health care facilities may need to work together in providing resources and services to assist patients, consumers, and communities affected by the pandemic and its aftermath, while other companies may need to temporarily combine production, distribution, or service networks to facilitate production and distribution of COVID-19-related supplies.
The expedited procedures relate to the FTC’s Advisory Opinion and the DOJ’s Business Review procedures. Both agencies have a formal review process—the DOJ may issue “Business Reviews” and the FTC “Advisory Opinions” upon request. Companies planning to engage in joint conduct may request a review by either agency, which may indicate whether or not it would seek to enjoin the proposed conduct. These reviews can take months under ordinary circumstances and may require several rounds of producing documents and information in connection with the request. FTC Advisory Opinions and DOJ Business Reviews have historically been an important source of guidance on enforcement priorities and policies at the agencies.
In addition, DOJ will expedite reviews of submissions under the National Cooperative Research and Production Act of 1993, which provides limited protections to certain joint ventures engaging in research and development or production, as well as standards development organizations.
But Merger Reviews May Take Longer
None of the recently announced expedited procedures or shortened review times would affect premerger filing obligations under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”), which requires parties to transactions meeting certain dollar thresholds to notify both the FTC and DOJ of a pending transaction and to observe a 15- or 30-day waiting period before closing the transaction. As we described in our March 23, 2020 blog article entitled, “U.S. Antitrust Agencies to Streamline Review for COVID-19 Collaborations,” the agencies initially announced that they would deny all requests for early termination of the HSR Act waiting period while the national emergency is in effect. However, as of Monday, March 30, 2020, the agencies will resume processing requests for early termination of the HSR waiting period, but with some changes in the ordinary process. Notably, the agencies will grant early termination only as time and resources allow (expect early terminations in fewer cases, and later in the waiting period than under normal circumstances). The agencies may further modify or rescind this policy at any time.
Both Republican and Democratic Commissioners have urged Congress to grant them authority to extend the statutory waiting periods during the current (and any future) national emergency to allow the agency staffs to timely process HSR Act submissions and to thoroughly assess the competitive impact of pending transactions. The DOJ submitted proposed legislation to amend the HSR Act to permit the heads of both agencies, acting together to toll the waiting period by 15 days and to renew the tolling order as many times as necessary. The proposal was not incorporated into the stimulus package passed by the Senate on March 26, 2020, but may make its way into future pandemic-related legislation.
All of this emphasizes that for merger reviews, neither the legal standards that apply to transactions nor the agencies’ investigational standards have been relaxed in light of the coronavirus pandemic. Either agency may, if the potential competitive impact of such a transaction warrants, extend the waiting period by issuing a so-called Second Request for information and documents. Responding to a Second Request is an onerous undertaking and typically takes several months.