HSR hibernation: Will the FTC PNO see its shadow during government shutdown?

It’s time for DC to find a real groundhog that can assist in determining if the government will shut down to replace the taxidermied “Potomac Phil.” But in the meantime, here I am, again, imploring the Federal Trade Commission (FTC) to continue accepting premerger notification filings under the Hart-Scott-Rodino (HSR) Act in the event that Congress fails to fund the government by the September 30 deadline. Under the HSR Act, companies must receive the blessing of the FTC and Department of Justice (DOJ) if their merger exceeds certain size thresholds, meaning a government shutdown could delay mergers. However, the agencies have some discretion in determining the extent of these effects.

Agencies were required to submit agency lapse plans to the Office of Management and Budget (OMB) by August 1 explaining how they will operate during a shutdown. But many have yet to do so, and OMB has wiped all prior guidance from its Agency Contingency Plans webpage. The FTC last updated its shutdown contingency plan in January 2024, under the leadership of Chair Lina Khan. In a significant departure from previous plans, it stipulated that “[t]he Commission’s Premerger Notification Office (PNO) will be closed during the shutdown, and the Commission will not receive, accept, or process premerger notification filings under HSR, or respond to questions or requests for information or advice from outside parties.”

Despite a three-day shutdown in January 2018 and the longest-ever shutdown from December 2018 to January 2019, both antitrust agencies continued to accept HSR filings and allowed statutory waiting periods to run. The Commission should not continue the Khan-era policy of shutting down mergers when Congress fails to fund the government. Both the FTC and DOJ may have to suspend the granting of “early termination,” where the agencies allow a transaction to close before the end of the mandatory waiting period, as they have done during past shutdowns.

Recent instructions from OMB, directing agencies to consider “Reduction in Force” notices, hopefully, won’t make things more complicated. While efforts to streamline and downsize federal agencies to remove market impediments should receive warm consideration, reductions at the PNO would run contrary to the Trump administration’s goal of a robust and efficient economy. As Assistant Attorney General Gail Slater, head of the DOJ’s Antitrust Division, recently said regarding the administration’s operation of the HSR premerger filing process, “President Trump has made clear that America is open for business, and this includes dealmaking.”

We already know that the rate of granting early termination is down from historical averages under the new HSR Form, possibly due to constrained agency resources. But the closing of the PNO would halt all HSR-covered mergers before they start. OMB’s recent memo directs agencies to consider projects that are “not consistent with the President’s priorities,” so the FTC’s PNO appears ill-suited for this directive.

Absent a prognosticating groundhog, we won’t know if the government will shut down until it shuts down. However, agencies, namely the FTC, can help ensure that a government shutdown minimizes interruptions to the free flow of capital in the American economy.