Hart-Scott-Rodino Act
Subscribe to Hart-Scott-Rodino Act's Posts

Notification Threshold Under the Hart-Scott-Rodino Act Increased to $94 Million

The US Federal Trade Commission today announced increased thresholds for the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and for determining whether parties trigger the prohibition against interlocking directors under Section 8 of the Clayton Act. Notification Threshold Adjustments The US Federal Trade Commission (FTC) announced revised thresholds for the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR) pre-merger notifications on January 28, 2020. These increased thresholds will become effective on February 27, 2020. These new thresholds apply to any transaction that closes on or after the effective date. The base filing threshold, which frequently determines whether a transaction requires filing of an HSR notification, will increase to $94 million. The alternative statutory size-of-transaction test, which captures all transactions valued above a certain size (even if the “size-of-person” threshold is not met), will be adjusted to $376...

Continue Reading

The Latest: Health Care Transactions Will Require Advance Notice to Washington State AG

What Happened: On May 7, 2019, Governor Jay Inslee of Washington State signed House Bill 1607 into law. The law goes into effect for transactions closing after January 1, 2020, and requires advance notice to the Washington Attorney General (AG) of certain transactions 60 days in advance of closing the transaction. The intent of the law is “to ensure that competition beneficial to consumers in health care markets across Washington remains vigorous and robust[.]” Parties must file written notice with the AG for any deal that involves two or more hospitals, hospital systems, or other provider organizations that represent seven or more health care providers in contracting with insurance companies or third-party administrators. A “provider” includes a physician, nurse, medical assistant, therapist, midwife, athletic trainer, home care aide, massage therapist, among others. The law can apply to transactions involving very small medical groups, as long as there are...

Continue Reading

New FTC Interpretation Will Require HSR Act Filing for Many Hospital Affiliation Transactions

The Premerger Notification Office (PNO) of the Federal Trade Commission (FTC) recently formalized a new position on Hart-Scott-Rodino Act (HSR Act) reporting obligations for certain not-for-profit, non-stock transactions. The change is currently in effect and applies to transactions that have not yet closed. The change in position will require reporting of many hospital transactions that have not traditionally been treated as reportable events. The biggest area of change relates to affiliation transactions where hospitals or health systems affiliate under a new parent entity. Under its previous position, the PNO focused on whether a transaction results in a change of “control” of the board of directors of one or more of the combining entities. Under its new position, the PNO will focus on beneficial ownership–whether one party receives beneficial ownership over the assets of another party as a result of the transaction. Now, a potentially reportable...

Continue Reading

Trump’s DOJ Challenges Merger Cleared during Waning Days of Obama Administration

WHAT HAPPENED On December 1, 2016 Parker-Hannifin agreed to acquire Clarcor for $4.3 billion. The merger agreement included a $200 million divestiture cap – that is, Parker-Hannifin was required, if necessary, to divest assets representing up to $200 million in net sales to obtain antitrust clearance. The initial antitrust waiting period under the Hart-Scott-Rodino Act (HSR Act) expired on January 17, 2017. Parker-Hannifin completed the acquisition on February 28, 2017. Nearly seven months later on September 26, 2017, the DOJ filed suit in US District Court for the District of Delaware seeking to require Parker-Hannifin to divest either its or Clarcor’s aviation fuel filtration assets. The DOJ did not include in its complaint an allegation or statement that the parties increased prices. The DOJ press release indicates that the parties “failed to provide significant document or data productions in response to the department’s requests.” We believe that this...

Continue Reading

THE LATEST: Washington Attorney General Seeks Disgorgement of Profits Resulting from Two Transactions between Health System and Physician Groups

On August 31, 2017, the Attorney General of Washington filed a complaint in the United States District Court for the Western District of Washington alleging that two transactions harmed competition for healthcare on the Kitsap Peninsula. WHAT HAPPENED: In July 2016, CHI Franciscan Health System (Franciscan) acquired WestSound Orthopedics (WestSound), a physician practice of seven orthopedists based in Silverdale, Washington. In September 2016, Franciscan entered into a set of agreements which allowed The Doctors Clinic (TDC), a 54 physician multispecialty practice also based in Silverdale, to use Franciscan’s reimbursement rates with payors in exchange for certain ancillary services. While the publicly stated rationale for the transactions included “enhanced patient access and efficiency,” the Attorney General’s complaint alleged that the “true motivation” for the deals was to “charge higher rates for physician services, and to collectively gain negotiating...

Continue Reading

THE LATEST: Losing Bidder for Pharmaceutical Triggers FTC Investigation, Fix, and $100 Million Fine in Non-HSR-Reportable Transaction

A private lawsuit filed by Retrophin Inc. (Retrophin), under then-CEO Martin Shkreli, likely triggered an investigation by the FTC into a consummated transaction.  Both the private lawsuit and the FTC complaint resulted in settlement.  In addition, the FTC levied a $100 million penalty. WHAT HAPPENED: In 2013, Questcor Pharmaceuticals, Inc. (Questcor) acquired the U.S. rights to Synacthen Depot (Synacthen) from Novartis (Mallinckrodt later acquired Questcor). Questcor’s $135 million deal with Novartis out-bid several companies seeking to acquire Synacthen, including biopharmaceutical company Retrophin, who bid $16 million for the Synacthen license. In 2014, Retrophin (under then-CEO Martin Shkreli) filed suit against Questcor, alleging that the purpose of the transaction between Questcor and Novartis was to eliminate competition for Achthar, Novartis’ ACTH drug used to treat infantile spasms and nephrotic syndrome, by shutting down Synacthen. Retrophin’s case...

Continue Reading

US and EU Requirements for Pre-Merger Notification of an Acquisition of a Minority Shareholding Interest

In May, the Federal Trade Commission (FTC) required Hikma Pharmaceuticals PLC to divest its 23 percent interest in Unimark Remedies, Ltd. and its US marketing rights to a generic drug under manufacture by Unimark as a condition to allowing Hikma to complete its acquisition of Roxane Laboratories. The FTC was concerned that Hikma’s continued holding of a 23 percent interest in Unimark after consummation of its proposed acquisition of Roxane would create the incentive and ability for Hikma to eliminate future competition between Roxane and Hikma/Unimark in the sale of generic flecainide tablets (a drug used to treat abnormally fast heart rhythms) in the United States. The FTC’s divestiture requirement was unusual but not unprecedented. The Horizontal Merger Guidelines identify three theories of competitive harm associated with an acquisition or holding of a small but significant minority interest in a competitor. Minority ownership, and any associated rights,...

Continue Reading

FTC’s Reporting Rule for Pharmaceutical Patent Transfers Upheld

On May 30, 2014, the U.S. District Court for the District of Columbia ruled in favor of the Federal Trade Commission (FTC) in a dispute with the Pharmaceutical Research and Manufacturers of America (PhRMA) regarding the Commission’s authority to require the pharmaceutical industry to report certain transfers of exclusive patent rights under the Hart-Scott-Rodino (HSR) Act. The dispute centered on a Final Rule promulgated by the FTC in November 2013.  Patents are considered assets by the FTC and their transfer may be reportable.  Some transactions provide for the transfer of certain exclusive patent rights without implicating the transfer of the patent in its entirety.  The FTC maintains that the exclusive right to commercially use all or part of a patent is, in substance, identical to a full acquisition of the patent.  The challenged rule was intended to clarify the circumstances when a transfer of exclusive rights to a pharmaceutical patent is considered a...

Continue Reading

Tweet: No Antitrust Problems Here

by Lincoln Mayer The Federal Trade Commission (FTC) has approved social media heavyweight Twitter’s $350 million stock acquisition of MoPub.  Twitter’s purchase of the mobile advertising exchange, which helps companies place ads on mobile devices, is expected to enhance Twitter’s ability to tailor mobile ads to users.  The size of the deal triggered the Hart-Scott Rodino (HSR) Act’s mandatory filing requirement, but the FTC concluded that the acquisition posed no anticompetitive obstacles. This high-profile transaction is a reminder of the value of good planning and involving antitrust counsel early in the planning process, even where the parties do not anticipate significant antitrust issues.  With enough advance warning, counsel can work with the antitrust agencies to showcase the procompetitive aspects of the transaction, mitigate any problematic aspects and seek rapid clearance of deals that, at least from a competitive standpoint, are relatively...

Continue Reading

CEO Fined for H-S-R Act Violation on Acquisition of Stock-Based Compensation

by Joseph Winterscheid In December 2011, the United States Department of Justice (DOJ) announced that a public company chief executive officer (CEO) will pay a $500,000 civil penalty to settle charges that he violated Hart-Scott-Rodino Act (H-S-R Act) premerger reporting and waiting period requirements.  The DOJ, acting at the request of the Federal Trade Commission, charged the executive for failing to satisfy the H-S-R Act's requirements before acquiring common stock under the company's stock-based compensation program.  The CEO allegedly exceeded the H-S-R Act filing threshold ($59.8 million when the alleged violation occurred) upon the vesting of outstanding restricted stock units awards and the reinvestment of dividends and short term interest through his 401(k) account. Violations of the H-S-R Act's reporting and waiting period requirements are subject to fines of up to $16,000 per day.  The DOJ's recent enforcement action illustrates the...

Continue Reading

STAY CONNECTED

TOPICS

ARCHIVES