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Legal Update

FTC Increases Civil Penalty Amounts for Violations of HSR Act and Other Laws

11 July 2016
Mayer Brown Legal Update

On June 29, 2016, the US Federal Trade Commission (FTC) announced that it is significantly increasing the maximum civil penalties for a variety of laws enforced by the FTC. The FTC last adjusted these civil penalties in 2009, but the last increase (from $11,000 for most violations to $16,000) was far more modest than the current increase of up to 250 percent for some penalties, including for violations of the Hart-Scott-Rodino (HSR) Act.

These increases are being made pursuant to the Federal Civil Penalties Inflation Adjustment Improvements Act of 2015, which requires federal agencies to adjust civil penalties for inflation using a certain methodology contained in the act. The new civil penalties are effective as of August 1, 2016. The new civil penalties will apply to penalties assessed on or after August 1 and to any violation that occurred prior to August 1 but for which a penalty had not yet been assessed; penalties assessed prior to August 1 will be calculated using the old fine amount.

Below is a summary of the civil penalty adjustments to competition-related laws being made by the FTC:


Prior Penalty

New Penalty

Section 5(l) of the FTC Act, 15 U.S.C. § 45 (l) – violations of orders issued under Section 5(b) of the FTC Act



Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. § 45(m)(1)(A) – penalties for unfair or deceptive trade practices



Section 7A(g)(1) of the Clayton Act, 15 U.S.C. § 18a(g)(1) – violations of the premerger waiting requirements of the HSR Act



Section 11(l) of the Clayton Act, 15 U.S.C. § 21(l) – violations of orders issued under Section 11(b) of the Clayton Act



Section 5 of the Webb-Pomerene (Export Trade) Act, 15 U.S.C. § 65 – failure to file required statements



Section 1115(a) of the Medicare Prescription Drug Improvements and Modernization Act of 2003 (MMA), Pub. L. No. 108-173, 21 U.S.C. § 355 note – failure to comply with filing requirements



Section 814(a) of the Energy Independence and Security Act of 2007, 42 U.S.C. § 17304 – violations of prohibitions on market manipulation and provision of false information to federal agencies



The increase in the penalty for violations of the HSR premerger waiting period could have a significant impact on companies, particularly those who regularly engage in activities that may trigger HSR thresholds. There are several reasons why companies should be mindful of the more than two-fold increase in the HSR premerger waiting period penalty. First, these violations are continuing, meaning that each day is potentially a separate violation. As a result, a violation could result in massive fines if years go by before the violation is brought to light, as sometimes occurs in failure-to-file cases. For example, in 2014, Berkshire Hathaway was assessed a fine of $896,000 for failing to file an HSR for an acquisition of shares that occurred in December 2013. Berkshire Hathaway subsequently made a corrective filing in January 2014, and because that was Berkshire Hathaway’s second corrective filing in six months, the FTC assessed a penalty. Note that the FTC typically allows companies “one bite at the apple,” meaning that it will not assess a fine for the first offense so long as the failure to file was inadvertent and/or the result of simple negligence, among other factors. Companies who engage in repeated share acquisitions or divestitures should have in place a compliance program to ensure that they are making HSR filings when appropriate.

Second, companies should be aware that HSR penalties may be assessed for more than just failure to file. Companies may be fined for failing to provide all of the documents that are responsive to Items 4(c) or 4(d) or for failing to provide other information required by the HSR form. Companies also may be fined for “gun jumping,” that is, taking operational control of a target prior to the close of the waiting period. Companies who are filing HSRs should be careful to provide all documents and information required by the HSR form instructions at the time of filing and to observe any applicable waiting periods to avoid incurring any penalties.

Companies also should be aware that the FTC has been aggressively pursuing HSR violations in the last several years, resulting in fines of hundreds of thousands of dollars. Moreover, the FTC does not just go after companies; it also has assessed stiff penalties against individuals who fail to follow the HSR filing requirements. In addition to Berkshire Hathaway, the FTC has imposed HSR penalty fines on the following entities and individuals in the last several years:


Entity Penalized/Reason for Penalty

Penalty Amount


Lev Blavatnik – failure to file relating to share acquisition of TangoMe



Leucadia National Corporation – failure to report conversion of shares in Knight Capital Group



Third Point – failure to file relating to share acquisitions of Yahoo

No penalty; Third Point agreed to settlement prohibiting it from relying on investment-only exemption under certain circumstances for five years


MacAndrews & Forbes – failure to file relating to share acquisition of Scientific Games



Barry Diller – failure to file relating to share acquisition of Coca-Cola



Bilgari Holdings – failure to file relating to share acquisition of Cracker Barrel



Brian L. Roberts – failure to file relating to share acquisitions of Comcast



John C. Malone – failure to file relating to share acquisitions of Discovery Holding Company


In addition to the above, the FTC is pursuing one HSR violation in federal court. In April 2016, the DOJ (which acts on behalf of the FTC in these matters) filed a lawsuit against Value Act Partners, a private equity group, alleging that Value Act violated the HSR Act by not making filings when it acquired shares of Halliburton and Baker Hughes and that Value Act improperly relied upon the investment-only exemption to avoid a filing.

The increase in the maximum civil penalties likely will lead to the FTC continuing its aggressive push to fine companies for HSR violations. Companies should consider instituting HSR compliance programs (if they do not have one already) or revisiting existing compliance programs to ensure that they are up to date. And when filing HSRs, companies should be careful to include all appropriate documentation and information and to observe any applicable waiting periods.


  • Mark W. Ryan
    T +1 202 263 3338
  • William H. Stallings
    T +1 202 263 3807
  • Scott P. Perlman
    T +1 202 263 3201
  • Meytal McCoy
    T +1 202 263 3898

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