Phillips, Wilson Push Back on Slaughter’s Early Termination Suspension

“Symbolic or not, the FTC’s decision indefinitely to suspend grants of early termination will have a real-world impact,” Phillips said in a statement. “Timing is a crucial factor in M&A, including for the small businesses involved in many of the deals that, normally, receive ET. By definition, the deals in question do not raise competition problems. We do not know the full impact of the decision, but the point is the policy justification offered for it does not suffice.”

Wilson is “concerned about this and any other steps by the FTC that erect roadblocks to competitively benign mergers, particularly during a struggling economy,” emailed her aide. In a series of tweets, Wilson noted an exception to the suspension: Thermo Fisher's acquisition of Mesa Biotech, a COVID-19 test maker. The acquisition is projected to result in faster and cheaper distribution of Mesa's COVID-19 testing technology on a much larger scale, the aide wrote: “We would not want to see such future transactions delayed unnecessarily, but a blanket suspension of early terminations does so.”

Slaughter’s office declined comment. The office for Commissioner Rohit Chopra didn’t comment. Slaughter had defended the decision, saying: “Given the confluence of an historically unprecedented volume of filings during a leadership transition amid a pandemic, we will presume we need those 30 days to ensure we are doing right by competition and consumers.”

An academic and a consumer advocate told us the concerns raised by Phillips and Wilson are unwarranted, given the small impact from suspending ETs. The symbolic gesture is meant to show the agency is going to be tougher on deals, and this could be the first in a series of procedural changes to reflect Slaughter’s view, antitrust attorneys told us.

Experts' Interpretations

“This is more of a pronouncement that they’re going to be more aggressive on antitrust than really any meaningful change,” said Quinn Emanuel's Ethan Glass. “It’s probably the first of many procedural changes that you’ll see from the agencies to be more aggressive on mergers. ... it really doesn’t affect that many people.”

This temporary decision won’t have a significant impact, said Cornell University Law School professor George Hay: “You have all new teams for both DOJ and FTC with many positions still unfilled. So it means a few mergers will have to wait an extra week or maybe two for formal clearance for a brief time.”

Phillips and Wilson's concerns are “ridiculous,” said Public Citizen Competition Policy Advocate Alex Harman: “When corporate concentration in America is at crisis levels, the FTC requiring companies attempting to further consolidate to wait a few additional days before completing their mergers is totally reasonable.” It highlights “how little time the FTC has to evaluate proposed harmful mergers even when they are at full capacity and not in the middle of a pandemic,” he added.

“If you thought most mergers are good or at least competitively benign, you’d like to get most of them through sooner rather than later, 20-ish days rather than 30,” said Bona Law’s Steve Cernak. “It’s a symbol that she thinks that most mergers are bad” or that the FTC and DOJ “need to take a much closer look at many more of them than they have.” Slaughter is “really the one who’s in charge of this process,” he added. “This was a relatively easy one” without a rulemaking, and “she’s probably going to bring a basket of changes that will show a higher enforcement priority, a closer look at mergers.”

“I don’t think it’s that much of a burden” to wait an extra week or two, but “you could argue it either way,” said Bloom Strategic Counsel’s Seth Bloom. “If there’s a merger that clearly has no competitive effect, why should they wait at all?”

“You don’t need to do this moratorium to take a closer look,” Cernak said, noting the FTC is under no obligation to grant ETs. Most HSR attorneys will advise companies not to count on getting ET, he said: “If it comes, great, but if it doesn’t, you better count on having 30 days.”

Phillips and Wilson's statement seems “well grounded,” said Hunton Andrews’ Kevin Hahm: “It is likely to result in transactions posing little to no competitive issues getting cleared in 30 days rather than a shorter period.”

“So they have to wait the full 30 days instead of being notified a week or two earlier (and it’s only a temporary step anyway),” said Hay. “Now whether the agencies really needed to do this is another matter. But as I said, given it’s two brand new teams with many positions unfilled, what’s the big deal about letting them get organized?” Mistakenly giving early clearance, and having to go back months or years later to undo the mistake, is “worse than holding up a few transactions for a week or two,” he added.