The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) is a federal law in the United States that requires certain large corporations and individuals to notify the Federal Trade Commission (FTC) and the Department of Justice (DOJ) before carrying out certain types of mergers, acquisitions, and other business transactions. The HSR Act is intended to give the FTC and the DOJ an opportunity to review these transactions for potential antitrust violations and take action to prevent them if necessary. The HSR Act applies to transactions that meet certain dollar thresholds and other criteria, such as the size of the companies involved and the type of industry.
Hart-Scott-Rodino Antitrust Improvements Act of 1976 History and Amendment
The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) was signed into law by President Gerald Ford on September 28, 1976. The act was named after its sponsors, Senator Philip A. Hart and Representative Peter Rodino.
The HSR Act was passed in response to concerns about the rapid consolidation of industries in the 1970s and the potential for anticompetitive effects. The act was intended to give the Federal Trade Commission (FTC) and the Department of Justice (DOJ) more information about proposed mergers and acquisitions, so they could better identify and address potential antitrust violations.
The HSR Act established the premerger notification program, which requires certain large corporations and individuals to notify the FTC and the DOJ before carrying out certain types of mergers, acquisitions, and other business transactions. The act also gave the FTC and the DOJ the authority to seek court injunctions to prevent transactions that would violate antitrust laws.
The HSR Act has been amended several times since it was first enacted. The most significant amendment was the Hart-Scott-Rodino Antitrust Improvements Act of 2002, which increased the dollar thresholds for the premerger notification program, updated the definitions of relevant markets, and added new exemptions for certain types of transactions.
The HSR Act is still currently in force and it is under the jurisdiction of the Federal Trade Commission (FTC) and the Department of Justice (DOJ).
Hart-Scott-Rodino Antitrust Improvements Act 1976 Provisions
The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) has several key provisions that govern the premerger notification program and the enforcement of antitrust laws. Some of the most important provisions include:
- Notification and Waiting Periods: The HSR Act requires certain large corporations and individuals to notify the Federal Trade Commission (FTC) and the Department of Justice (DOJ) before carrying out certain types of mergers, acquisitions, and other business transactions. The act establishes dollar thresholds for the notification requirements, which are currently set at $94 million for the size of the transaction and $18.8 million for the size of the person or company being acquired. Once notification is made, the act requires a waiting period of up to 30 days before the transaction can be completed, giving the FTC and the DOJ time to review the proposed transaction.
- Filing Fees: The HSR Act requires the parties to the transaction to pay filing fees to the FTC and the DOJ as part of the notification process. The fees are based on the size of the transaction and are intended to cover the costs of the review process.
- Review and Enforcement: The HSR Act gives the FTC and the DOJ the authority to review proposed transactions for potential antitrust violations and take action to prevent them if necessary. This includes the ability to seek court injunctions to block transactions that would violate antitrust laws.
- Exemptions: The HSR Act includes certain exemptions for certain types of transactions, such as those involving small businesses, non-profit organizations, and certain types of joint ventures.
- Penalties: The HSR Act also includes penalties for failure to comply with the notification and waiting period requirements. The penalties can include fines of up to $40,000 per day for each day of noncompliance.
- Interlocking Directorates: Prohibits any individual from serving on the board of directors of two competing corporations.
- Interlocking Officer: Prohibits any individual from serving as an officer of two competing corporations.
- Interlocking Stock Ownership: Prohibits any individual from owning stock in two competing corporations.
Hart-Scott-Rodino Antitrust Improvements Act 1976 Responsibilities and Accountabilities
The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) establishes certain responsibilities and accountabilities for various parties involved in mergers, acquisitions, and other business transactions. Some of the key responsibilities and accountabilities include:
- Notifying parties: The parties to a proposed transaction are responsible for notifying the Federal Trade Commission (FTC) and the Department of Justice (DOJ) before the transaction can be completed. They are also responsible for providing all necessary information and documents to the FTC and the DOJ as part of the notification process.
- Reviewing parties: The FTC and the DOJ are responsible for reviewing proposed transactions to ensure they comply with antitrust laws. They also have the authority to seek court injunctions to block transactions that would violate antitrust laws.
- Compliance: All parties to the transaction are responsible for ensuring compliance with the notification and waiting period requirements of the HSR Act.
- Penalties: The HSR Act also includes penalties for failure to comply with the notification and waiting period requirements. The penalties can include fines of up to $40,000 per day for each day of noncompliance.
- Interlocking Directorates: Corporations are responsible for ensuring that no individual serves on the board of directors of two competing corporations.
- Interlocking Officer: Corporations are responsible for ensuring that no individual serves as an officer of two competing corporations.
- Interlocking Stock Ownership: Corporations are responsible for ensuring that no individual owns stock in two competing corporations.
- Record Keeping: Corporations are required to maintain records of compliance with HSR act.
Hart-Scott-Rodino Antitrust Improvements Act 1976 Sanctions and Remedies
The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) provides for a range of sanctions and remedies for violations of the act. Some of the key sanctions and remedies include:
- Injunctions: The Federal Trade Commission (FTC) and the Department of Justice (DOJ) have the authority to seek court injunctions to block transactions that would violate antitrust laws. This includes transactions that have been completed without proper notification or during the waiting period.
- Civil penalties: The HSR Act includes civil penalties for failure to comply with the notification and waiting period requirements. The penalties can include fines of up to $40,000 per day for each day of noncompliance.
- Disgorgement: The courts may order the violator to give up any illegal profits obtained as a result of the violation.
- Divestitures: The courts may order the violator to divest certain assets or business operations in order to restore competition.
- Compliance monitoring: The courts may appoint a monitor to ensure compliance with the court’s order.
- Criminal penalties: In some cases, the HSR Act violations may be considered criminal offense, which can result in imprisonment.
- Consent Decrees: The FTC and the DOJ may also negotiate and enter into consent decrees with the parties involved in a transaction. A consent decree is a court-approved agreement that requires the parties to take specific actions to address antitrust concerns.
- Cease and Desist Order: FTC and DOJ may issue a cease and desist order to stop any illegal conduct that violates the antitrust laws.
It’s important to note that the sanctions and remedies will vary depending on the specific circumstances of the case. The FTC and the DOJ will take into account various factors when determining the appropriate course of action, such as the scope and impact of the violation, the parties involved, and any mitigating factors.