FTC Announces Substantial Increases to Penalties for HSR Violations

July 8, 2016

The Federal Trade Commission (“FTC”) recently announced significant increases to the maximum civil penalties for violations of the Hart-Scott-Rodino (“HSR”) premerger notification rules.

  • Effective August 1, 2016, the maximum civil penalty for violations of the HSR premerger filing requirements will increase from $16,000 per day to $40,000 per day. This increase is being implemented in connection with the Federal Civil Penalties Inflation Adjustment Improvements Act of 2015, which was signed last year. Going forward, the maximum civil penalties for HSR violations will be adjusted annually for inflation every January.
  • While these higher maximum civil penalties will apply to any fines that are assessed after August 1, 2016, they will also apply to HSR violations that occurred prior to such date.
  • Civil penalties are assessed and increase on a per day basis. With respect to a continuing violation of the HSR premerger filing requirements, the FTC considers each day to be a separate violation. Thus, such a continuing violation could result in maximum civil penalties of up to $1.24 million per month, or up to $14.6 million per year.
  • While this represents a substantial increase to the maximum civil penalties that can be imposed for HSR violations, the FTC does take into consideration a number of factors when determining the actual amount of civil penalties it will seek, including the degree of culpability and any history of such prior conduct.

Given that the penalties for HSR violations have become even greater, whenever possible legal counsel should be consulted in the early stages of a proposed transaction so that a full analysis can be conducted in order to determine whether an HSR filing is required.

If you have any questions concerning the foregoing, please contact your relationship attorney or Nick Katsanos in Seward & Kissel’s Business Transactions Group at 212-574-1382 or katsanos@sewkis.com.