The government shutdown is likely to delay FTC merger reviews, but the Department of Justice’s (“DOJ”) Second Request investigations will likely proceed as they normally do albeit with less staff. Although the FTC’s Premerger Notification Office (PNO) and the DOJ’s Premerger Office remain open during regular hours to receive HSR filings, the FTC PNO will be operating with a limited staff and is unavailable to provide guidance about the administration of the HSR Act. All merging parties have to wait the full initial waiting period before obtaining antitrust clearance, because the PNO is not granting early termination of waiting periods during the shutdown.
The staff attorneys who run investigations and negotiations at the Commission are out of the office, which means that parties are simply waiting while everything is on hold. HSR waiting periods will continue to run during a government shutdown. DOJ and FTC staff will continue to review premerger filings and conduct investigations to determine whether to challenge reported transactions under the antitrust laws. Second Requests will continue to be issued and, if engaged in merger litigation, FTC and DOJ attorneys will notify opposing parties and the courts of the government shutdown and attempt to negotiate timing extensions and suspensions. If such relief is not available, they will continue to litigate the matter.
The DOJ and the FTC both issued contingency plans indicating that certain employees connected to antitrust enforcement within the Antitrust Division of the DOJ and the Bureau of Competition at the FTC will be excepted from the furlough and will continue to conduct antitrust enforcement activities.
While difficult to predict, there may be delays in review of certain strategic transactions (including increased risk of a “pull and refile” scenario, or a higher likelihood of a Second Request being issued). Transactions with substantive antitrust issues will likely still receive scrutiny by the agencies, and the shutdown is unlikely to decrease the likelihood of a Second Request or challenge if the agencies believe circumstances warrant such action. If anything, some parties who file during the shutdown may be more likely to get a Second Request than they would have been if there was no government shutdown because they will not have the full 30 days to provide information to address an agency’s initial questions.
In the current DOJ Contingency Plan, of the 655 Antitrust Division employees, a total of 264 (40%) are excepted from furlough in the case of a government shutdown. In the current FTC Contingency Plan, of the 306 total Bureau of Competition employees, a total of 132 (43%) are excepted from the furlough. Moreover, within the Bureau of Economics, of the 105 employees, 10 (9%) are excepted from the furlough.
The FTC is suspending all Second Request and non-merger investigations currently underway during the shutdown. According to the DOJ contingency plan, the DOJ will operate with limited staffing to those employees necessary to launch or continue merger investigations or litigation where it cannot obtain a continuance or extension of a statutory deadline.
At the FTC, Second Requests will be issued and, once issued, the staff will go back to being furloughed. The five Commissioners are still working. There is not much merging parties can do to speed up the process so the FTC investigations will be delayed. The DOJ is operating at more strength and the front office is still at work. Both agencies, however, will try to work to achieve certain transaction deadlines.