For parties considering a merger or other transaction, the civil penalties for failing to comply with the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”) are about to increase significantly.
On June 29, 2016, the Federal Trade Commission announced that the maximum civil penalty for noncompliance with the premerger filing requirements of the HSR Act will increase from $16,000 per day to $40,000 per day, effective August 1, 2016. The current maximum penalty of $16,000 per day has been in place since 2009. Prior to 2009, the maximum penalty was $11,000 per day.
The increase to a maximum civil penalty of $40,000 per day is an adjustment for inflation required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (“2015 Act”), which was signed into law on November 2, 2015. The 2015 Act sets forth specific methodology that all federal agencies are required to use in order to determine new maximum civil penalty amounts. According to the Office of Management and Budget, the purpose of the increase is “to improve the effectiveness of civil monetary penalties and to maintain their deterrent effect.” See OMB Memo M-16-06 (Feb. 24, 2016).
The new maximum civil penalty for HSR violations applies to any civil penalties assessed after August 1, 2016, including penalties assessed after August 1, 2016 based on violations that occurred before August 1, 2016.
The HSR Act notification requirements apply to transactions that satisfy the specified “size of transaction” and “size of person” thresholds. Those thresholds are adjusted each year based on the change in gross national product. Going forward, as provided under the 2015 Act, the maximum civil penalty for noncompliance with the HSR Act will be adjusted for inflation every January. The first adjustment will occur in January 2017.
The full list of new maximum civil penalty amounts for both competition and consumer protection laws enforced by the FTC is available here.