The U.S. government partially shut down on December 22 after lawmakers failed to agree on appropriations to fund certain federal operations. The shutdown impacts hundreds of thousands of government employees, nine federal departments, and several agencies, including the Department of Justice (DOJ) and Federal Trade Commission (FTC), which are jointly responsible for antitrust enforcement.
The DOJ and FTC both have contingency plans in place to govern operations in the event of a lapse in appropriations. Under these plans, in accordance with federal law, employees will be furloughed during the shutdown with limited exceptions, including for employees performing work considered essential to protect safety or property. The DOJ projects that roughly 40% of Antitrust Division personnel (264 employees) will be excepted from furlough, while the FTC estimates that 43% of employees in the Bureau of Competition (132 employees) will continue to work. Because the shutdown began on a weekend followed by federal holidays on December 24 and 25, the agencies will begin an orderly wind-down of operations on December 26.
- Merger Review: The Premerger Notification Office (PNO) operated by the FTC will remain open to accept and process new HSR filings. However, the PNO will be functioning with limited staff and may not respond to inquiries regarding the HSR Rules. Waiting periods under the HSR Act will continue to run during the shutdown, and the DOJ and FTC will each continue to review HSR filings and investigate transactions. Due to staffing constraints, the agencies may require more time than usual to conduct their review, including for routine transactions that would otherwise be good candidates for early termination. If extra time is needed, agency staff may encourage parties to “pull and refile,” allowing the acquirer to withdraw and resubmit its HSR filing towards the end of the initial waiting period, restarting the 30-day clock. Alternatively, especially for transactions that are more complicated or present competition concerns, the DOJ or FTC may issue requests for additional information and documentary material (Second Requests), extending the initial 30-day waiting period.
- Litigation: With respect to civil litigation (in the merger context or otherwise), the agencies will notify opposing parties and courts of the shutdown and request suspensions of dates for trials, hearings and filings, or seek similar relief in order to preserve the government’s claims. The agencies will continue to litigate where such relief cannot be obtained, or as otherwise necessary to protect the government’s litigation interest. Criminal litigation brought by the DOJ will continue without interruption. Federal courts remain open and have sufficient funds from fees and appropriations to function for approximately three weeks (through about January 11, 2019).
Companies planning transactions and parties with matters before the federal antitrust authorities should consult antitrust counsel to understand how they may be impacted by these developments and strategize accordingly. They should also be mindful that this shutdown is the third to occur in the last two years. Even if the U.S. Congress passes a continuing resolution in the short term in order to reopen the government, another impasse and its attendant antitrust implications may loom in the near future.