The COVID-19 outbreak has led to some significant temporary changes with respect to Hart-Scott-Rodino Act (HSR) notification and review processes at both the Federal Trade Commission (FTC) and Antitrust Division of the Department of Justice (DOJ), as each agency tries to maintain necessary operations with personnel working remotely and human and IT resources thus strained. The key changes observed thus far are as follows:
- Suspension of early terminations. Pending further notice, early termination of the HSR waiting period will not be granted in any reported transaction. This will be true even if a transaction was reported on or before March 13, which was the last business day before new, temporary procedures took effect.
- Extension of timing agreements. The DOJ has announced that, where parties to investigated transactions have submitted their documents in response to so-called “second requests,” the agency is asking parties to allow it an extra 30 days under “timing agreements” that already give the agency more than the statutory 30 days to decide whether to challenge a transaction. For its part, the FTC has more broadly but similarly stated that it is “conducting a matter-by-matter review … to consider appropriate modifications of statutory or agreed-to timing” in HSR merger reviews.
- Requests to pull and refile. In light of the agencies’ public statements, we anticipate that there might be some increase in the frequency with which the FTC and DOJ suggest that buyers voluntarily pull and refile their HSR notifications in order to give agency staff an additional 30 days to determine whether second requests are warranted.
- Temporary HSR e-filing procedures. The FTC and DOJ have adopted temporary e-filing procedures for HSR notifications. Previously, neither agency had such a procedure, so there will be a break-in period in which problems can reasonably be expected. Accordingly, it will be helpful to allow some additional time, when possible, for filings to be prepared, submitted and accepted.
- Meetings and presentations by phone or video. Both the FTC and DOJ have advised that, with few if any exceptions, presentations to, and meetings with, agency personnel regarding proposed transactions will be conducted by phone or video link rather than in person. The challenges of communicating by these means will heighten the importance of thorough preparation and, in some cases, the utility of “white paper” submissions.
Processes and timelines for other federal and state regulatory reviews of mergers and acquisitions in the U.S. also are certain to be affected by the current situation.
In Europe, the COVID-19 outbreak has similarly had significant effects with respect to ongoing and future notification and review processes, both by the European Commission (EC) and by national merger control authorities (we set out selected examples below). Efforts to maintain business continuity are being pursued across authorities, but most have warned that reviews may encounter delays.
As to European Commission reviews:
- Request to delay notifications. The EC has encouraged companies to delay their originally planned merger notifications “until further notice, where possible.” Nonetheless, the EC is likely to receive numerous notifications for authorization of state aid to alleviate the impact of COVID-19 on member state economies.
- Digital submissions. The EC is temporarily accepting, and actually encouraging, submissions in digital format (by email or file-sharing), with delivery of hard-copy originals being arranged at a later time (hard-copy deliveries to the EC by hand remain possible for now).
- Delays to notifications and reviews. The EC has not expressly stated that notifications and/or reviews will face delays, but it has noted that its services are likely to face difficulties in collecting information from third parties and limitations in accessing databases due to remote working measures. Given these statements, and the request to delay notifications where possible, we expect the pace of prenotification discussions to be affected as well.
- Remote meetings. Meetings with the EC are being conducted remotely, e.g., via teleconference. The EC has not addressed how it intends to deal with oral hearings (which are accorded to defendants by right).
- Suspensions. The EC can declare notifications incomplete and issue information requests to suspend review timelines. For example, the EC has recently suspended several Phase 2 reviews (i.e., M.9162 Fincantieri/Chantiers de l’Atlantique, from March 13; M.9569 Essilorluxotica/Grandvision, from March 2; and M.9097 Boeing/Embraer, from February 24).
As to Bundeswettbewerbsbehoerde (BWB) reviews in Austria:
- Delays to notifications. The BWB offices are closed (post room and phone lines are not staffed at all times), and the BWB is not accepting notifications while it is working on a way to accept “urgent” notifications in digital format (see below).
- Digital submissions. The BWB is working on a pilot program to allow parties to submit merger notifications in digital format. The BWB is asking parties to give it prior notice before submitting an “urgent” notification in this way.
- Remote meetings. The BWB is encouraging remote contacts, notably by email (in order to limit telephone contacts to emergencies). In-person meetings are not possible.
- Delays to reviews. The BWB has not addressed whether reviews will face delays. Given the delay to notifications, however, review timelines will be affected.
As to Autorité belge de la Concurrence (ABdC) reviews in Belgium:
- Request to delay notifications. The ABdC has encouraged companies to delay any originally planned merger notification “that is not urgent.”
- Delays to notifications and reviews. The ABdC has expressly warned that remote working measures may have an impact on reviews, notably in light of difficulties in collecting information from third parties.
- Remote meetings. With the ABdlc offices closed and staff working remotely, meetings with the ABdC are being conducted remotely, e.g., via teleconference.
As to Autorité de la concurrence (Adlc) reviews in France:
- Request to delay notifications. The Adlc has encouraged companies to delay their originally planned merger notifications “which are not urgent.”
- Digital submissions. In-person or postal deliveries to the Adlc offices are no longer possible (offices are closed as of March 17). The Adlc has advised that any notification or submission must be made in digital format (by email or via file-sharing).
- Delays to notifications and reviews. The Adlc has expressly advised that it will not be able to meet its usual timetables in accepting and reviewing notifications, notably in light of difficulties in collecting information from third parties.
- Remote meetings. With the Adlc offices closed and staff working remotely, meetings with the Adlc are being conducted remotely, e.g., via teleconference.
As to Bundeskartellamt (BKartA) reviews in Germany:
- Request to delay notifications. The BKartA has encouraged companies to delay any originally planned merger notification “where it can be made at a later point in time.”
- Digital submissions. The BKartA continues to accept submissions and information by email, telephone, fax and/or post. In particular, it has set up email accounts for each of its divisions to ensure responsiveness.
- Remote meetings. Meetings with the BKartA are being conducted remotely, e.g., via teleconference. In-person meetings at the BKartA offices are not possible, and the BKartA is handling negotiations on a case-by-case basis.
As to Comisión Nacional de los Mercados y la Competencia (CNMC) reviews in Spain:
- Digital submissions. The CNMC has advised that, while staff are working remotely, all notifications or submissions remain possible in digital format (by email or electronic platform). The CNMC offices’ phone lines remain open.
- Delays to notifications and reviews. The CNMC has advised that all procedural deadlines are suspended (at least until the end of March 2020), it but has not expressly stated that parties should expect delays in reviews.
As to Competition and Markets Authority (CMA) reviews in the United Kingdom:
- Delays to notification and reviews. The CMA is committed to ensuring, and has reallocated resources to ensure, that it can meet binding statutory deadlines that govern its merger reviews. At the same time, the CMA is monitoring the situation and may extend statutory timeframes where permitted and necessary.
- Remote meetings. Meetings and hearings with the CMA are being conducted remotely, e.g. via teleconference, as staff are working from home where possible and the CMA has suspended business travel.
REST OF WORLD
The COVID-19 outbreak has affected merger notifications and reviews in many other jurisdictions, albeit to varying degrees (we set out selected examples below).
As to Administrative Council for Economic Defence (CADE) reviews in Brazil:
- Reviews. CADE will not postpone its ruling sessions because of the COVID-19 situation.
- Remote Consultations. CADE is requesting that parties avoid in-person meetings, using telephone calls or videoconferences instead.
As to Competition Bureau Canada (CCB) reviews in Canada:
- Digital Submissions. Emails from the signatory will replace hard-copy letters for advance ruling certificates, no-action letters and written opinions, among others.
- Reviews. CCB has advised that it has become increasingly difficult to make market contacts in a timely manner. This may have implications for complex matters. CCB recommends that merging parties contact case management teams as early as possible and throughout the review.
- Remote Consultations. CCB has indicated that staff are working remotely where possible. Certain telephone services normally offered by CCB will be unavailable until further notice.
As to Fiscalía Nacional Económica (FNE) reviews in Chile:
- Reviews. FNE has not indicated that it will postpone reviews because of COVID-19.
- Remote Consultations. FNE has requested that parties contact it through its virtual office by email or over the telephone.
- Public Hearings. Chile’s Tribunal de Defensa de la Libre Competencia has suspended all public hearings until April 3.
As to State Administration for Market Regulation (SAMR) reviews in China:
- Digital Submissions. SAMR is asking notifying parties to submit applications or responses to information requests by email or by post instead of in person.
- Reviews. SAMR is actively reviewing, investigating and approving mergers and acquisitions and enforcing antitrust laws.
- Remote Consultations. SAMR has canceled or postponed all in-person meetings, but it is conducting business electronically and telephonically. SAMR has offered consultations through its hotlines to help companies to solve compliance issues related to merger-review notifications.
As to Competition Commission of India (CCI) reviews in India, the CCI is rescheduling hearings for after March 31 and is discouraging visits to its offices.
As to Korea Fair Trade Commission (KFTC) reviews in Korea:
- Request to delay notifications. While its staff is working remotely, the KFTC is accepting new notifications, but it has requested that parties indicate whether their notification is “time-sensitive.”
- Delays to notifications and reviews. The KFTC has not addressed whether notifications and/or reviews will face delays. Given remote working arrangements, the fact that the KFTC has canceled a number of hearings and its request to indicate “time-sensitive” notifications, it is possible that the pace of reviews may be affected.
In sum, one should not assume that traditional merger control processes and timelines standards will apply in the near term while competition authorities throughout the world grapple with the significant challenges that COVID-19 is presenting.
We will provide periodic updates as circumstances change and further information becomes available.