Navigating HSR Filings During a Government Shutdown: What Clients Need to Know
As the federal government enters a shutdown, many clients involved in ongoing transactions are asking: What does this mean for Hart-Scott-Rodino (HSR) filings and antitrust reviews?
The good news is that HSR notifications can still be filed as normal, and the statutory 30-day waiting period will continue to run. The HSR waiting period is mandated by statute and therefore cannot be suspended administratively. The Federal Trade Commission (FTC) and Department of Justice (DOJ) are continuing to receive and process HSR filings to allow mergers to follow on the usual timelines.
Even with the significant furloughs anticipated from the shutdown and possible layoffs, we would not expect much timing disruption with respect to the large majority of HSR filings that raise little or no competitive concern and are routinely cleared at the expiration of the waiting period. However, for such nonproblematic transactions, the FTC has announced that it will suspend the granting of “early termination” during the shutdown, which as a practical matter may represent the most significant impact from the shutdown.
For transactions that may raise antitrust issues, the shutdown introduces new risks and uncertainties:
- Staffing Uncertainty at Antitrust Agencies: With furloughs in effect, it remains unclear how many staff will be available at the FTC and DOJ. Staffers who identify potential competitive concerns may suffer from fewer resources to timely evaluate such potential concerns.
- Historical Context: Past shutdowns have not typically resulted in the widespread use of Second Requests to extend waiting periods, likely due to the large percentage of transactions that raise little or no competitive concern and the short duration of most shutdowns. Still, each shutdown presents unique challenges, and clients should be prepared for delays in more complex reviews.
- FTC’s Commitment to Merger Reviews: Encouragingly, the FTC has indicated it will allocate resources to merger reviews that are subject to a ticking statutory deadline, suggesting that the FTC may seek to tirage filing reviews based on level of concern and timing.
What Clients Should Do
Clients with pending or upcoming transactions should:
- Continue filing HSR notifications as planned.
- Be aware of the increased risk of delays for deals involving antitrust scrutiny.
- Monitor agency communications for updates on staffing and review priorities.
- Consult with counsel to assess whether a transaction may raise antitrust issues and prepare accordingly.
For further guidance or to discuss how the shutdown may affect your specific transaction, please contact your Foley & Lardner LLP representative.
