ANALYSIS: New HSR Report Shows Demise of ‘Early Terminations’

The demise of the “early termination” option for mergers and acquisitions—which used to allow mergers that pose no danger to competition to close quickly—is complete, with implications for the vast majority of mergers notified to antitrust regulators in the US.

The Federal Trade Commission and the Justice Department in February 2021 temporarily suspended the early notification option for mergers that was available under the Hart-Scott-Rodino Act. Since then, it’s been difficult to know exactly how many such requests the agencies have granted.

But the agencies’ latest annual report to Congress on the premerger notification program shows that they granted only five early termination requests in fiscal year 2022.

The report’s statistical tables show the big role that early terminations played in merger review practice before the suspension: During the last decade, early terminations were consistently granted to 75-80% of those who asked for one (about 50-60% of all reviewed deals).

Once the suspension started, the drop-off was sharp: For FY 2021, which still saw four months of grants under the program, the agencies granted almost 20% of early termination requests. During fiscal 2022, the first full year without the program, they granted 0.3% of requests (five out of 1,345 requests).

More than half of all notified mergers used to get the green light to close without waiting the full, statutory 30 days after notifying the agencies. Now all of them wait 30 days.

It may sound like a small difference, but it represents a significant change in how mergers get done in the US. And additional time and costs for parties.

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