The U.S. Federal Trade Commission (FTC) has issued final rules on withdrawing and refiling a pre-merger notification filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (HSR Act). The new rules go into effect on August 9, 2013. The amendments formalize a longstanding informal procedure of the FTC and U.S. Department of Justice (the Agencies) permitting parties to voluntarily withdraw an HSR notification and report form to terminate a pending formal request for additional information and documentary material (a Second Request) or to facilitate resolution of antitrust concerns without the need for a Second Request.
Voluntary Withdrawal of an HSR Filing
Following an HSR filing with the Agencies, the initial waiting period before consummating a transaction is 30 days or 15 days in the case of a cash tender offer.1 The amendment allows either party to the transaction (other than the acquired party in certain transactions, e.g., tender offers) to voluntarily withdraw the initial filing and an acquiring party to refile it within two business days to restart the waiting period without incurring additional filing fees. This strategy is useful when the Agencies indicate concerns about the competitive effects of a transaction that can be resolved within an additional 30-day waiting period. The procedure therefore avoids a time-consuming and costly Second Request.
Automatic Withdrawal of an HSR Filing
During the time that an HSR filing is pending (i.e., prior to early termination or expiration of the waiting period), the new rules permit the Agencies to automatically deem a report to be withdrawn if a filing is made with the Securities and Exchange Commission announcing the expiration, termination or withdrawal of a tender offer or the termination of an agreement or letter of intent. This rule is intended to prevent the Agencies from investigating hypothetical transactions that are no longer likely to go forward. It will not affect non-publicly traded companies.
Free One-Time Refiling
The new rules waive the filing fee for an acquiring party’s refiling of a voluntarily or automatically withdrawn filing, assuming (1) the proposed acquisition does not change in any material way, (2) the filer provides updated Item 4 information, (3) the filer recertifies the accuracy of the filing, and (4) the resubmission takes place prior to the close of the second business day after withdrawal. Refilings later than two business days will incur additional filing fees.
The Agencies have brought several enforcement actions recently regarding the failure to file a required report under the HSR Act. The failure to file a report remains subject to a penalty of up to $16,000 per day for each day of non-compliance. Please contact us to analyze the relevant HSR issues in connection with your proposed transaction.
1 The requirements of the HSR Act are considered satisfied once the applicable waiting period expires. However, the Agencies have the power to seek to enjoin or unwind a transaction at any time, whether or not reported, if they have substantive antitrust concerns.
To discuss these issues, please contact the author(s).
This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.
For permission to republish this or any other publication, contact Janelle Weed.
© 2019 by Torys LLP.
All rights reserved.