'Re-Animator' Or 'Dead Man Walking'? FTC Says No To Zombie Deal Reviews – Formalizes Withdrawal And Refiling Procedure

Antitrust review under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR") is a fact of life that many dealmakers would happily do without. So, when a deal dies midstream few would opt to continue with the HSR process. Still, the FTC has issued a new rule that will foreclose that possibility.

HSR review can be complicated and is made all the more so by unwritten or "informal" practices which are known mostly by practitioners who are "down in the weeds" of agency practice. One such informal rule is the "pull and refile" practice, whereby an HSR submission can be withdrawn at the end of the statutory waiting period (usually 30 days) and refilled within two days without having to pay a new filing fee, which can be as high as $280,000. "Pulling and refiling" has been informally available for decades, and is typically used in transactions that do not have significant antitrust issues but require more than the statutory 30-day review period to give the agency what they need to close.

Under the strict letter of the statute and rules, the reviewing agency must close its investigation after the initial waiting period or issue a Second Request. Thus, in transactions where the parties are working actively with agency staff during the initial waiting period to satisfy substantive concerns, the approaching end of the initial HSR waiting period can force the issuance of a Second Request if the agency is not otherwise prepared to close the investigation. The pull and refiling procedure thus begins a new HSR waiting period and allows the investigating agency additional time to analyze the transaction. A more draconian "Second Request" investigation, which can last four to six months or sometimes more, is therefore avoided.

On June 28, 2013, the FTC issued a new rule that will become effective in early August and codifies existing procedure, with one important addition. Consistent with current practice, parties may withdraw their premerger notification filing by notifying the FTC and the Antitrust Division in writing. If the parties wish to pursue the acquisition, new notifications and a new filing fee will be required unless the filing occurs within 2 business days of the withdrawal. A new waiting period also must be observed prior to consummation of the acquisition. The procedure may be used only one time, and only under the following circumstances: (i) the proposed acquisition does not change in any material way; (ii) the resubmitted...