Important points:
- Legislation passed by the United States House of Representatives would: (1) increase HSR fees for major transactions, (2) require disclosure of and assessment of economic support by certain foreign states/foreign companies as part of the antitrust review of a transaction, and ( 3) Preventing the transfer of litigation brought by Attorneys General.
- The measure now goes to the Senate, where the bill, or parts of it, could be introduced into year-end legislation during the lame duck session after November’s election.
introduction
On Thursday, September 29, 2022, the House of Representatives passed a package of three bipartisan antitrust laws by a vote of 242 to 184.
A total of 39 Republicans voted in favor of the law. A total of 16 House Democrats, many from California, voted against the bill. Senate Antitrust Subcommittee Chair Amy Klobuchar (D-MN) has pledged to try to get the package passed in the Senate, where the bill or parts of it will enter the legislature during the lame duck session after November’s election Legislation could be incorporated by the end of the year.
The following measures were included in the house pass package:
- Merger Filing Fee Modernization Act to amend, expand and increase the fee schedule for tiered merger filing and require that those fees be adjusted each year based on the Consumer Price Index (CPI).
- Foreign Merger Subsidy Disclosure Act to require companies to disclose in their pre-merger filings with federal antitrust authorities a detailed record of economic support they received from certain foreign states.
- State Antitrust Enforcement Venue Act to exempt state antitrust claims from the Judicial Panel on Multidistrict Litigation processes relating to transfers and consolidations of cases.
The merger filing fee modernization bill, which served as the legislative tool for the bills, was previously approved by the House Judiciary Committee in June 2021 (see prior warning here). The Senate Judiciary Committee first passed its version of the measure (p. 228) in May 2021 (see previous warning here), and the following month the entire Senate passed the bill as part of the United States Innovation and Competition Act (USICA). , although the merger filing fee provisions were ultimately exempted from the narrowed CHIPS and Science Act enacted in August 2022.
Ahead of this week’s passage of the three-bill package, during a House Rules Committee meeting, Republicans broadly expressed concern about the provision specifically relating to the merger filing fee modernization law and stressed the need for transparency for distribution of the revenue generated by the increase in filing fees and expressly warns against using these funds for non-enforcement purposes.
Below is a summary of the key provisions in each bill.
Merger Filing Fee Modernization Act (Title I of HR 3843)
The Merger Filing Fee Modernization Act contained in Title I of the bill would apply to all companies filing transactions under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 (HSR), significantly increasing filing fees for high value transactions.
The law would reduce filing fees for smaller transactions while significantly increasing fees for all transactions of $1 billion or more, including increasing HSR filing fees for acquisitions of $5 billion or more to 2.25 million dollars. It would also increase the number of threshold levels and filing fees for each year would increase in line with the CPI.
Below is a table of these proposed changes.
|
Deal Value Thresholds |
HSR Registration Fees |
|
More than $101 million but less than $161.5 million |
$30,000 |
|
$161.5 million – Under $500 million |
$100,000 |
|
$500 million – Under $1 billion |
$250,000 |
|
$1 billion – Under $2 billion |
$400,000 |
|
$2 billion – Under $5 billion |
$800,000 |
|
$5 billion – Bigger |
$2.25 million |
While the previous version of the bill would have increased the Federal Trade Commission’s (FTC) budget to $418 million and the Department of Justice’s Antitrust Division (DOJ) budget to $252 million for fiscal year (FY) 2022, respectively these budget increases have since been removed as agencies’ budgets have already been allocated for FY2022. The FTC’s fiscal year 2022 budget was approximately $376.5 million and the DOJ’s was approximately $201 million. During the discussion, members pointed out that the budget allocation process would decide the agencies’ future budgets. The Congressional Budget Office estimates the legislation would increase HSR filing fees by a total of $1.4 billion between 2023 and 2027.
The legislation also requires annual reporting of total revenue broken down by tier, and the FTC must report on any action where the FTC has taken or denied action by a 3-2 vote.
Foreign Merger Subsidy Disclosure Act (Title II of HR 3843)
The Foreign Merger Subsidy Disclosure Act, located in Title II of the bill, aims to regulate mergers that involve foreign government subsidies. The Act imposes additional obligations on those who are required to file a notice required under Section 7A of the Clayton Act (ie a pre-merger notification form as required under the HSR Act).
The bill specifically requires that companies receiving a subsidy from a “concerned foreign company” within the meaning of Section 40207 of the Infrastructure Investment and Jobs Act (42 USC 18741(a))1 Include a detailed account of each subsidy in the required filing with the goal of ensuring that the FTC and DOJ have the necessary documentation and information to determine whether the acquisition would violate US antitrust laws. This bill would go into effect on the date the rule on that disclosure of notice goes into effect.
State Antitrust Enforcement Venue Act (Title III of HR 3843)
The State Antitrust Enforcement Venue Act, included in Title III of the bill, exempts state antitrust claims from the processes of the Judicial Panel on Multidistrict Litigation for the transfer or consolidation of cases.
Under current law, civil actions involving common issues of fact pending in different districts may be assigned to a single judicial district for coordinated or joint trials. Antitrust claims arising out of consolidation or transfer are exempt only if brought by the United States
As supporters of the bill have noted, the legislation aims to allow antitrust lawsuits by attorney generals to avoid the multiple district state litigation in the same manner as federal antitrust lawsuits, and to encourage states to pursue more federal antitrust lawsuits against anticompetitive behavior and initiate transactions. Every prosecutor has publicly supported the legislation.
