What is the Hart-Scott-Rodino Antitrust Improvement Act?
The Hart-Scott-Rodino Antitrust Improvement Act (HSR Act) of 1976 is a federal law that requires companies seeking to merge or acquire another company to first file a notice with the Federal Trade Commission (FTC) and the Department of Justice (DOJ). The goal of the HSR Act is to prevent companies from forming anti-competitive mergers or corporate acquisitions that could harm consumer welfare.
What Does the HSR Act Do?
The HSR Act requires that companies wishing to merge or acquire another company must first file a “premerger notification” with the FTC and DOJ. This notification requires companies to disclose their financial information and business operations, as well as provide a detailed description of the proposed merger or acquisition. Once the FTC and DOJ have received the company’s notification, they will review the proposed merger or acquisition and decide whether to approve or reject it. If either the FTC or DOJ believes that the proposed merger or acquisition could lead to anti-competitive behavior, they can issue a “second request” that requires the companies to provide additional information and documents.
Who Does the HSR Act Apply To?
The HSR Act applies to companies that meet certain criteria, including:
- The combined value of the assets of the merging or acquiring companies must be more than $94 million.
- At least one of the companies must have more than $15 million in total assets or annual sales.
- The combining companies must have more than $10 million in either assets or sales.
The HSR Act also applies to companies that meet certain criteria related to their size, business operations, and market share.
What are the Penalties for Violating the HSR Act?
The penalties for violating the HSR Act can be severe. Companies that fail to comply with the notification requirements or that attempt to merge or acquire another company without filing the required notice can be subject to civil penalties of up to $16,000 per day. In addition, individuals who are found to be in violation of the HSR Act can be subject to criminal penalties, including fines of up to $100,000 or one year in prison.
Conclusion
The Hart-Scott-Rodino Antitrust Improvement Act is an important law that helps to ensure that companies are not able to form anti-competitive mergers or corporate acquisitions. By requiring companies to file a premerger notification with the FTC and DOJ, the HSR Act helps to protect consumer welfare and prevent anti-competitive behavior.
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