January 24, 2017

Antitrust: HSR Enforcement Likely to Remain Aggressive in 2017

This Cooley M&A blog addresses 2017 antitrust trends & developments. Many observers expect that the Trump Administration will not be as aggressive in opposing mergers as its predecessor – but Cooley cautions that vigorous enforcement is likely to continue when it comes to HSR violations:

For years, the FTC has focused substantial resources on civil penalty actions against individuals and companies that fail to file for acquisitions under the HSR Act. This past year was no exception: in 2016, the agencies settled three HSR enforcement actions. Penalties imposed ranged from $480,000 for an inadvertent failure to file notification, to a record-breaking $11 million for the alleged misuse of the HSR Act’s “solely for the purpose of investment” exemption.

We are likely to see increased penalties imposed on parties that fail to comply with the premerger notification requirements of the HSR Act, as this past August the maximum civil penalty for noncompliance increased steeply – from $16,000 to $40,000 per day – a 150% increase.

The potential of significantly increased penalties will likely bring parties to the negotiating table. As a spokesperson for one defendant in a recent case said in a statement released after entering into a settlement agreement with the government, the “sudden and unanticipated 150 percent increase in the potential penalties” left it “no choice but to resolve the case as quickly as possible.”

John Jenkins