October 28, 2021
Continuing the FinTech University series, Nelson Mullins attorneys Richard Levin, Craig Nazzaro, and Kevin Tran are presenting on digital assets. The webinar will discuss digital assets including Bitcoin, Ethereum, XRP, Dogecoin, other tokens, and NFTs.Click here to learn more!
March 31, 2020
As the country grapples with the Coronavirus Disease 2019 (“COVID-19”) pandemic, the Bureau of Competition of the Federal Trade Commission (“FTC”) and the Antitrust Division of the U.S. Department of Justice (“DOJ”) (collectively, the “Agencies”) have announced efforts to encourage collaborations that address issues created by the pandemic and to allow the premerger notification program under the Hart-Scott-Rodino Act to continue in a time of social distancing, stay home orders, and strained resources. The overarching message is that antitrust enforcement is alive and well, though some changes in processes and procedures have occurred in order to adapt to rapidly-evolving circumstances.
In their March 24, 2020 joint statement , the DOJ’s Antitrust Division and the FTC’s Bureau of Competition set forth an expedited process for receiving formal guidance from the Agencies and parameters for permissible collaborations intended to address the COVID-19 pandemic.
Both Agencies have long-standing, voluntary processes for individuals and businesses formally to request the Agencies’ evaluation and guidance whether proposed conduct is permissible under the antitrust laws. These processes – the Business Review Process for the DOJ and the Advisory Opinion Process for the FTC – typically take several months from the time the Agencies receive all necessary information until they complete their analysis.
In their joint statement, the Agencies recognized that businesses and individuals seeking to address the COVID-19 pandemic cannot wait several months for the typical process and instead need much quicker turn-around. The Agencies announced their intention to “respond expeditiously to all COVID-19 related requests” and “to resolve those [requests] addressing public health and safety within seven (7) calendar days of receiving all necessary information.” (Emphasis added). The Agencies will also seek to respond to requests related to COVID-19 that do not address public health and safety quickly although no firm turn-around time was given.
The Agencies provided the following process for requesting expedited Business Review Letters and Advisory Opinions:
The Agencies’ responses to requests for expedited Business Review Letters and Advisory Opinions related to COVID-19 will be in effect for one (1) year from the date of the response. The parties may subsequently use the expedited procedures to request that the Agency reiterate that it does not intend to challenge the business conduct at issue if additional time is necessary.
Recognizing that some individuals and businesses need to act immediately and cannot afford to wait to complete even the expedited Business Review and/or Advisory Opinion process, the Agencies also set out parameters for COVID-19 related health and safety activities that would be unlikely to run afoul of the antitrust laws. They gave the following examples of activities that are, generally speaking, consistent with the antitrust laws and prior guidance from the Agencies:
The Agencies recommended that businesses and individuals interested in determining whether their potential conduct falls within these categories review the Agencies’ previous statements regarding the cooperation and collaboration between competitors. See Federal Trade Comm’n & U.S. Dep’t of Justice, Antitrust Guidelines for Collaborations Among Competitors (2000) and Statement of Antitrust Enforcement Policy in Health Care (1996).
Moreover, the Agencies stated that they will take “exigent circumstances” into account when reviewing efforts to address the COVID-19 pandemic. They recognized that certain joint efforts of limited duration may be necessary to assist patients, consumers, and communities affected by COVID-19. For example, healthcare facilities may need to work together to provides services and resources to certain communities without sufficient access to healthcare services or supplies, or businesses may need to temporarily combine their production, distribution, or service networks to further the production and distribution of COVID-19-related supplies that they had not traditionally manufactured or distributed.
At the same time, the Agencies expressed zero tolerance for individuals and businesses who try to take advantage of the circumstances created by the COVID-19 pandemic to engage in fraudulent, illegal, or otherwise anticompetitive behavior. The antitrust laws remain in full and force and effect during the pandemic. Both Agencies have civil enforcement authority and the DOJ has the authority to bring criminal charges for offenses such as price fixing, bid rigging and market allocation.
The March 24, 2020 joint statement further makes a commitment to expedite the processing of COVID-19 related notifications filed under the National Cooperative Research and Production Act of 1993 (“NCRPA”), 15 U.S.C. §§ 4301-06. These notifications, while not strictly required under the NCRPA, are recommended because they provide protection to joint ventures and standards development organizations (“SDOs”) that complete the process by limiting the damages that could be recovered from the joint ventures and SDOs. While not giving a time frame, the Agencies committed to “work to expeditiously process” the NCRPA filings.
The Agencies have also announced changes to the premerger notification program under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”). Under the HSR Act and rules, parties to certain transactions must submit a premerger notification and report form to the Agencies and wait up to thirty (30) days (or more if the Agencies request additional information) prior to closing 
In a March 13, 2020 press release, the FTC’s Premerger Notification Office (“PNO”) and the DOJ adopted a mandatory electronic filing (“e-filing”) process for the submission of the HSR premerger notification and report forms. The e-filing process using the Accellion file transfer platform has temporarily replaced the normal process of submitting HSR filings in hard copy or DVD format. While the HSR form and the related filing requirements are largely unchanged, e-filing is required until further notice. The FTC also temporarily suspended the processing of requests to grant early termination of the waiting periods under the HSR Act at that time. Early termination is the process by which a party requests the Agencies to end the waiting period before the expiration of the thirtieth day.
The FTC has now resumed processing requests for early termination. By a release dated March 27, 2020, the FTC announced that due to the success of the new e-filing program, the FTC would resume processing requests for early termination, with some changes to the typical early termination process effective Monday, March 30, 2020.
Most importantly, the FTC’s release makes clear that fewer requests for early termination are likely to be granted and requests for early termination are likely to be processed at a slower than normal pace during this period. The FTC cautioned that early termination is not a right and noted: “Early termination will be granted but only as time and resources allow. Early termination will, for the duration of the COVID-19 pandemic crisis, be available on a more limited basis than has historically been the case. Specifically, it will be granted in fewer cases, and more slowly, than under normal circumstances.”
The FTC also specifically directed parties not to call the PNO or otherwise contact the Agencies to advocate for early termination for a particular transaction, as doing so would place additional stress on the PNO and the Agencies’ litigation teams.
The FTC’s March 27, 2020 release further emphasizes that the FTC’s continuing commitment to fully investigating competitive concerns and that the FTC is not relaxing its policy of scrutinizing anticompetitive transactions and practices because of the COVID-19 pandemic:
Neither the legal standards that apply to transactions nor the Bureau’s investigational standards have been relaxed in light of the coronavirus pandemic. If the Bureau’s competitive concerns cannot be eliminated or resolved during the initial waiting period, the Bureau will issue a Second Request and will continue to investigate those concerns. This practice reflects the Bureau’s broader policy that its scrutiny of anticompetitive transactions and practices will not be relaxed, notwithstanding the difficult circumstances caused by the coronavirus pandemic. Accordingly, and consistent with the Bureau’s normal practice, investigations will not be closed if doubts remain, and early termination will not be granted for any transaction for which enforcement action may be necessary.
Finally, in its release, the FTC made clear that the resumption of early termination is being implemented based upon currently-available information and could be rescinded or modified at any time.
While the e-filing process appears to be working smoothly and the resumption of early terminations is encouraging, it remains to be seen whether there will be an increase in the number of situations in which the Agencies request acquiring parties to “pull and refile” their HSR submissions in order to give the Agencies additional time to review transactions that may raise competitive concerns. In a “pull and refile,” the acquiring party withdraws its original HSR filing and re-submits its filing in order to restart the 30-day “clock” under the HSR Act. This device gives the Agencies additional time to decide whether they can clear the transaction without issuing a “second request,” i.e., an extensive subpoena requiring the parties to provide significant additional information. If parties are currently in a merger review process, the DOJ is asking for a thirty-day extension to any timing agreements. The FTC has indicated it is conducting a matter by matter review of its investigations and litigations to determine if timing adjustments are needed and encourages parties to proactively reach out to Agency staff to discuss timing.
While not directly a change in HSR guidance as a result of the COVID-19 pandemic, many businesses are contemplating a redemption program during this time of market volatility. Typically, the redemption of stock would not trigger an HSR filing obligation under the Intraperson Exemption set forth in 16 C.F.R. § 802.30. There are, however, instances where an HSR filing may be required, assuming the size of person and size of transaction thresholds are satisfied, and no other exemption applies. For example, if:
In Informal Interpretation Letter #1901001, dated January 29, 2019, the FTC indicated that in determining whether a stockholder or owner was “instrumental” the agency would look at the totality of the circumstances. This informal letter dealt with the redemption recommended by management that required the approval of the preferred holder, which resulted in the preferred holder owning 50% or more of the stock. Parties who are contemplating a redemption process should examine their transaction to confirm that such a redemption would not otherwise trigger an HSR filing.
Like many Americans, staff at the FTC and DOJ are working remotely during the pandemic. Meetings are conducted via telephone and video conference, and proceedings are being rescheduled as necessary. While the Agencies have expressed a willingness to consider exigent circumstances, the enforcement of the antitrust laws continues unabated. Conduct that was illegal before the pandemic (such as price fixing agreements between competitors) is still illegal. Nelson Mullins has an experienced group of attorneys to advise on substantive antitrust issues and HSR filings. Please do not hesitate to contact the attorneys listed on this article, or the Nelson Mullins attorneys who normally advise you for further assistance.
 For transactions closing on or after February 27, 2020, the minimum size of transaction threshold for a potential filing is $94 million. The size of transaction is determined by looking at the aggregate value of the voting securities, non-corporate interests, and assets that the acquiring person will hold in the acquired person upon closing. Depending on the size of the transaction, certain size of person thresholds may also be applicable.
 Interpretation No. 142, ABA Section of Antitrust Law, Premerger Notification Practice Manual (5th Edition 2015).
These materials have been prepared for informational purposes only and are not legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Internet subscribers and online readers should not act upon this information without seeking professional counsel.