For US Merger Enforcers It's Business As (Almost) Usual

By Matthew Perlman and Bryan Koenig
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Law360 (March 23, 2020, 4:28 PM EDT) -- As the effects of COVID-19 reverberate throughout society, the U.S. merger review process, like nearly every facet of the legal system, is feeling the effects. Filings have gone online for the first time, agency staffers are mostly remote, and delays are on the horizon.

Volatility in the markets, general uncertainty and disruptions to travel and normal daily life may be chilling merger activity, but attorneys working on deals already in the works are seeing unique challenges created by the coronavirus response. Despite the hurdles, experts tell Law360 that things are chugging along and that U.S. enforcers are trying to be accommodating.

"It is business as usual can be, for now," said Amanda Wait, a partner at Norton Rose Fulbright and former Federal Trade Commission lawyer.

Andrea Agathoklis Murino, co-chair of Goodwin Procter LLP's antitrust practice, told Law360 that she is representing a third party involved in a review pending at the U.S. Justice Department, and that staff there seem to be prioritizing health and safety of personnel and the parties while still trying to get their jobs done.

"They're being very reasonable, very thoughtful, very considerate," said Murino, who served at both U.S. agencies. "It speaks very well of their priorities, and frankly the leadership. They don't have to do it this way, they could certainly take a more hard-line stance, but they aren't."

Filings Moved Online

The FTC and the DOJ launched an electronic filing system to accept merger submissions online on March 17. Merging parties have been able to submit these filings digitally since 2016, but until the coronavirus response, they had to be sent to the agencies on physical DVDs.

In announcing the new e-filing system, the FTC said that parties will now have to submit their Hart-Scott-Radino paperwork through Accellion Inc.'s file-transfer platform. A representative for the commission told Law360 "the use of Accellion is new for the Premerger Notification Office, but not for the commission."

"Accellion is used regularly by other parts of the commission, and the PNO has adopted it temporarily for HSR filings," the representative said.

The FTC said in guidance that electronic signatures will also be accepted for the duration of the emergency. Rani Habash, a partner at Dechert LLP, told Law360 that the HSR filing process has been "well behind the times" for a while, noting that even after the 2016 update, thumb drives are still not accepted.

"If nothing else, the current situation forces everyone to innovate to continue operating business as usual while minimizing physical barriers," Habash said.

Murino agreed that the e-filing and electronic signatures are good innovations and said she hopes they can be made permanent.

"I expect life will go back to some kind of normal at some point and the FTC will be able to take a look back and see how these systems work," she said.

Wait said she's already been able to submit a merger under the new system.

"There were some kinks," Wait said. "But we got on file."

Remote Negotiations

The FTC's Bureau of Competition said March 16 that virtually all of its employees are working remotely and that almost all meetings, both internal and external, are being handled via telephone or videoconference, including those with front office staff and commissioner meetings.

While Habash said most front office meetings are done in person, not all are, and that having them done remotely could provide some advantages in certain situations. The challenges of working remotely are also being faced by the business community at large.

"It's not an ideal replacement for sitting in the same room, but I do not necessarily see phone meetings as a hindrance," Habash said. "Phone meetings may actually help speed things up in certain cases because often it's more difficult to schedule in-person meetings."

The enforcers have gotten good over the years at teleworking, according to Wait. And while it's unusual for everyone involved to be working from home, even under normal circumstances long-distance communications have become common.

"It's almost always the case that someone on the call is dialing in from somewhere that's not their office," Wait said.

Delays Afoot

Normally, companies can ask that a review be ended before the statutory 30-day waiting period, but the FTC has said that early terminations will not be granted while the temporary system is in place. The commission said it will also be reviewing all pending investigations and litigations to see if timing agreements to end a review on a certain date need to be modified.

The DOJ Antitrust Division also said March 17 that it would be asking merging parties for an additional 30 days to complete its reviews on "mergers currently pending or that may be proposed."

Habash said he expects that merging companies are going to want to be accommodating during the pandemic too.

"We're all in this together, and companies will likely do what they can to accommodate any extension requests so long as they are consistent with their legal obligations," he said.

The agencies sometimes ask merging parties to pull-and-refile their submissions to provide enforcers more time to conduct their reviews. Companies generally comply in the hopes of avoiding a costly request for additional information or a lawsuit if a second request has already been made.

Experts tell Law360 that this dynamic mostly remains unchanged despite the challenges the agencies are facing. On the whole, Murino said she doesn't think a government merger challenge "is more or less likely here than it was before we were dealing with the impact" of the virus.

But, she said, the effect of a challenge on a company could be worse than usual, given the economic uncertainty that already exists.

Republican Commissioner Christine Wilson noted in a tweet March 19 that during government shutdowns enforcers have issued second requests in the past to prevent deals from closing without a full review and that similar action could be taken now.

"FTC is seeking more time to ensure full review of pending deals," Wilson said. "It will not sacrifice thoroughness of investigations that may require information from third parties focused on other priorities."

Democratic FTC Commissioner Rohit Chopra in a tweet March 18 called for changes to the merger review system, saying that the current process could allow companies "to slip big mergers through during national emergencies." There's also been reports of enforcers pushing to include a merger review extension in the next legislative package targeting the pandemic.

"Congress should stop the shot clock so public servants have enough time to investigate and sue to block bad deals," Chopra said.

Joel Mitnick, a partner at Cadwalader Wickersham & Taft LLP and a former FTC trial attorney, told Law360 in general he's advising clients that mergers will take longer to clear right now.

"The agencies maintain that they are staying focused on their core missions, including merger clearances," he said. But "we are all working with new procedures ... and new procedures generally translate into delay."

Some companies are already showing signs of the impact. Garbage removal giant Waste Management Inc. said March 18 that it cannot move as quickly as projected in taking over a solid waste disposal company for $4.9 billion due to coronavirus-related delays in antitrust reviews conducted by the DOJ.

In a regulatory filing, the Houston-based company said the planned merger with Ponte Vedra, Florida-based Advanced Disposal Services Inc., announced in April, was now not expected to close until possibly in the late second quarter.

That's pushed back from an earlier time frame of completing the deal this quarter.

--Additional reporting by Christopher Cole. Editing by Brian Baresch.

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