An early termination fee (ETF) is a charge levied when a party wants to break the term of an agreement or long-term contract.
Consumer interest groups have criticized such fees as being anti-competitive because they prevent users from migrating to superior services.
The two companies charged this both in violation of county law and in breach of contract.
In mergers and acquisitions termination fees are often levied in the event that one party fails to consummate a merger—for instance, because it was unsuccessful in getting shareholder approval or because it agreed to a competing offer.
Shareholders in companies being purchased sometimes believe that termination fees are too high, and instead of representing the costs that the purchasing party would suffer should the deal fall through, instead act as a way of forcing shareholders and directors to accede to the deal.