Federal Court Rules That Patent Infringement Can Violate Antitrust Laws

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Patent infringement can be considered anticompetitive conduct under federal antitrust law, according to a recent ruling issued by the U.S. District Court for the Eastern District of Texas.

This ruling arose out of a dispute between Retractable Technologies, Inc. (Retractable) and Becton, Dickinson and Company (BD),in which Retractable alleges, among other claims, that BD’s infringement of Retractable’s patents foreclosed competition and maintained BD’s monopoly power in the hypodermic syringe market, thereby violating Section 2 of the Sherman Act.2

Retractable manufactures patented safety syringes and IV catheters, which protect against needlestick injuries by automatically retracting the needle after injection.  According to Retractable’s complaint, BD is the leading U.S. manufacturer of hypodermic syringes and holds a very large share of the relevant market.  Retractable claims that BD took steps to protect its dominant position after Retractable’s entry into the market, including by introducing an inferior line of safety syringes that infringe on Retractable’s patents.  Retractable contends that these actions, together with other exclusionary conduct including unlawful bundling and loyalty discounts, impeded the adoption of new and novel safety syringes, including those of smaller rivals such as Retractable, substantially lessening competition and maintaining BD’s dominance.  Retractable also alleges false advertising and other unfair competition claims.

To prove a violation of Section 2 of the Sherman Act, a plaintiff must demonstrate that the defendant (1) possesses monopoly power, and (2) acquired, enhanced, or maintained that power by exclusionary or anticompetitive conduct.3 In one of several motions to dismiss, BD asked the court to find that, as a matter of law, patent infringement can never be considered “exclusionary or anticompetitive conduct,” and therefore cannot be the basis of a Section 2 monopolization claim.  BD argued that no court has ever found patent infringement to be an “anticompetitive” act under Section 2 and that Retractable’s claim makes no economic sense, because patent infringement actually increases competition by making more products available to consumers.

On September 9, 2013, U.S. District Court Judge Leonard Davis adopted the recommendations of U.S. Magistrate Judge Roy S. Payne’s August 5 Report and Recommendation and issued an order denying BD’s motion.  Judge Davis agreed with Judge Payne that the only binding precedent offered by BD in support of its arguments held that patent infringement is not an injury recognized under the Sherman Act,but this has nothing to do with patent infringement as anticompetitive conduct.  Both judges noted the U.S. Supreme Court’s statement in U.S. v. American Tobacco Co. that the Sherman Act covers “every conceivable act which could possibly come within the spirit or purpose of the prohibitions of the law, without regard to the garb in which such acts were clothed.”5 Judge Payne further explained in his Report that while patent infringement often increases competition and benefits the end consumer despite harming a specific competitor, in this case Retractable alleges that the effect of BD’s patent infringement was to decrease competition by keeping BD’s inferior products on the market and preventing the sale of other, better quality safety syringes.

The complex interactions between intellectual property rights and the antitrust laws have received significant attention recently in various contexts, such as pay-for-delay settlements in pharmaceutical patent cases and abusive enforcement of standard essential patents.  The decision in this case adds an arrow to the quiver of companies with patented technology that are trying to compete in a market with a large and established player.  Companies with high market shares should take note that this ruling may expose them to additional antitrust risks, and should carefully consider whether any of their business practices would support a Section 2 monopolization claim against them.


Retractable Technologies, Inc., et al. v. Becton, Dickinson and Co., Case No. 2:08-CV-00016 (E.D. Tex.).

15 U.S.C. § 2.

United States v. Grinnell Corp., 384 U.S. 563 (1966).

A plaintiff must prove antitrust injury in order to recover damages.

221 U.S. 106, 181 (1911).

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U.S. Medical Oncology Practice Sentenced for Use and Medicare Billing of Cancer Drugs Intended for Foreign Markets

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In a June 28, 2013 news release by the Office of the United States Attorney for the Southern District of Californiain San Diego, it was reported that a La Jolla, California medical oncology practice pleaded guilty and was sentenced to pay a $500,000 fine, forfeit $1.2 million in gross proceeds received from the Medicare program, and make restitution to Medicare in the amount of $1.7 million for purchasing unapproved foreign cancer drugs and billing the Medicare program as if the drugs were legitimate. Although the drugs contained the same active ingredients as drugs sold in the U.S. under the brand names Abraxane®, Alimta®, Aloxi®, Boniva®, Eloxatin®, Gemzar®, Neulasta®, Rituxan®, Taxotere®, Venofer® and Zometa®), the drugs purchased by the corporation were meant for markets outside the United States, and were not drugs approved by the FDA for use in the United States. Medicare provides reimbursement only for drugs approved by the Food and Drug Administration (FDA) for use in the United States. To conceal the scheme, the oncology practice fraudulently used and billed the Medicare program using reimbursement codes for FDA approved cancer drugs.

In pleading guilty, the practice admitted that from 2007 to 2011 it had purchased $3.4 million of foreign cancer drugs, knowing they had not been approved by the U.S. Food and Drug Administration for use in the United States. The practice admitted that it was aware that the drugs were intended for markets other than the United States and were not the drugs approved by the FDA for use in the United States because: (a) the packaging and shipping documents indicated that drugs were shipped to the office from outside the United States; (b) many of the invoices identified the origin of the drugs and intended markets for the drugs as countries other than the United States; (c) the labels did not bear the “Rx Only” language required by the FDA; (d) the labels did not bear the National Drug Code (NDC) numbers found on the versions of the drugs intended for the U.S. market; (e) many of the labels had information in foreign languages; (f) the drugs were purchased at a substantial discount; (g) the packing slips indicated that the drugs came from the United Kingdom; and (h) in October, 2008 the practice had received a notice from the FDA that a shipment of drugs had been detained because the drugs were unapproved.

In a related False Claims Act lawsuit filed by the United States, the physician and his medical practice corporation paid in excess of $2.2 million to settle allegations that they submitted false claims to the Medicare program. The corporation was allowed to apply that sum toward the amount owed in the criminal restitution to Medicare. The physician pleaded guilty to a misdemeanor charge of introducing unapproved drugs into interstate commerce, admitting that on July 8, 2010, he purchased the prescription drug MabThera (intended for market in Turkey and shipped from a source in Canada) and administered it to patients. Rituxan®, a product with the same active ingredient, is approved by the Food and Drug Administration for use in the United States.

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Resale Price Maintenance in China: Enforcement Authorities Imposing Large Fines for Anti-Monopoly Law Violations

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Recently Shanghai High People’s Court reached a decision in the first lawsuit involving resale price maintenance (RPM) since China’s Anti-Monopoly Law (AML) came into effect five years ago.  Shortly thereafter, a key enforcement agency announced RPM-related fines against six milk powder companies, five of which are non-Chinese.  Both cases clearly show that RPM can be a violation of the AML, and that RPM is currently under much greater scrutiny by enforcement authorities.  It would be prudent for all foreign corporations active in China’s consumer markets to take heed of these changes in China and conduct an immediate review of any potential RPM violations.

On 1 August 2013 the Shanghai High People’s Court reached a decision in the first anti-monopoly lawsuit involving resale price maintenance (RPM) since China’s Anti-Monopoly Law (AML) came into effect in August 2008.  In addition to this judicial decision, on 7 August 2013 one of the key agencies in charge of enforcing the AML, the National Development and Reform Commission (NDRC), announced RPM-related fines of USD 109 million against six milk powder companies, five of which are non-Chinese.  Both the High People’s Court and the NDRC have been striving to clarify how they will treat RPM, and specifically have focused on the issue of whether RPM should be treated as a per se violation or should be evaluated according to a “rule of reason” analysis.

Judicial Decisions in Civil Lawsuits

According to the recent decision by the Shanghai High People’s Court, in order to hold that an RPM provision is a monopoly agreement, the court must find that the RPM provision has restricted or eliminated competition.  Furthermore, the burden of proof will be on the plaintiff to show a restriction or elimination of competition arising out of the RPM.  The High People’s Court explicitly stated that this burden is the opposite from the burden of proof for horizontal monopolies, such as a cartel, in which case the burden of proof falls on the defendant to show that the agreement does not have any effect of eliminating or restricting competition.  This burden for horizontal monopolies has been further examined and confirmed by the “Judicial Interpretation of Anti-Monopoly Disputes” that was issued by China’s Supreme People’s Court on 1 June 2012.

Administrative Decisions in Enforcement Actions—Liquor and Infant Milk Formula

There have been several key RPM enforcement actions in 2013.  In February, the NDRC imposed a fine of USD 80 million on the famous Chinese liquor brands Maotai and Wuliangye for requiring distributors to resell the products above a certain price, which is common in some sectors in China.  On 2 July, according to the Price Supervision and Anti-Monopoly Bureau of the NDRC, six milk powder companies came under investigation for RPM violations of the AML.  According to the NDRC’s statements on the case, “from the evidence obtained, the milk powder companies under investigation instituted price controls over distributors and retailers, which excluded and limited market competition and therefore are alleged to have violated the Anti-Monopoly Law”.  The NDRC later announced record fines in that case of USD 109 million, which were the equivalent of between 3 per cent and 6 per cent of the companies’ revenue in 2012.

According to media reports, in the Maotai and Wuliangye cases, the NDRC provided clear indications about some of the factors that it will consider when determining whether the RPM has “eliminated or restricted competition”.   Specifically, when assessing the relevant market and market power of the two companies, the NDRC analysed the market structure and the role played by the two companies in the liquor industry, as well as the degree to which the products are substitutable with similar products and the loyalty of consumers towards the two liquors.  Based on this analysis, the NDRC concluded that the RPM provisions in the agreements with distributors of the two liquor giants eliminated and restricted competition, and thus were vertical “monopoly agreements”.

According to recent media reports, the NDRC has indicated it will “severely crack down” on and sanction vertical monopoly agreements such as RPM if they are maintained by business operators dominant in the market.  If business operators are not dominant, the NDRC reportedly indicated that it would still investigate all vertical monopoly conduct and determine if there has been any elimination or restriction of competition.

Conclusions

These civil lawsuits and administrative cases clearly show that RPM can be a violation of the AML and that RPM is currently under much greater scrutiny by enforcement authorities.  If RPM is an issue in civil lawsuits, a plaintiff will have to prove that RPM eliminates or restricts competition.  However, there are some indications that this burden of proof may be easily met.  In administrative cases, the NDRC will have to be satisfied that it has sufficient proof to show there is an elimination or restriction of competition.  However, it is unclear what level of evidence would be required to show such a restriction and it may not be a very high level, especially if the accused business operator is dominant in the market.

RPM has been a common feature of distribution agreements and other contracts in many sectors in China.  However, the recent cases clearly show there is a serious compliance risk if RPM continues to be part of a corporation’s normal practices.  This is particularly true for business operators that have a dominant market position or a group of business operators that are regarded as jointly dominant under the AML (in China, in certain circumstances, dominance is presumed with a market share as low as 10 per cent).  Unless the RPM conduct clearly falls within an exception in Article 15 of the AML, a company using RPM may face serious fines and confiscation of illegal gains.  It would be prudent for all foreign corporations active in China’s consumer markets to take heed of these changes to the enforcement priorities of the competition/antitrust authorities in China and conduct an immediate review of any potential RPM violations.

Alex An and Jared Nelson also contributed to this article.

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Federal Judge Finds that Apple Conspired to Raise E-book Prices

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On July 10, 2013, Judge Denise Cote of the Southern District of New York issued a 160-page opinion holding that Apple conspired with five book publishers to raise e-book prices and eliminate retail price competition in violation of Section 1 of the Sherman Act and several relevant state statutes.  United States v. Apple Inc., case number 12-civ-2826 (DLC).  The five publishers – Hatchett, HarperCollins, Macmillan, Penguin and Simon & Schuester – had all previously settled with the U.S. Department of Justice (DOJ).

The opinion stated that as Apple prepared to launch its iPad to the public and sought to concurrently enter the e-book market with its iBookstore, it met with the publishers and agreed to provide them with an “agency model” for e-book pricing that allowed the publishers to set the prices of the e-books themselves, subject to certain price caps.  Apple’s agreements with the publishers also included Most Favored Nation provisions which ensured that Apple could match its competitors’ prices and also provided an incentive for the publishers to lobby Amazon and other retailers to change their wholesale business models to agency models.  According to the court’s opinion, these agency model agreements caused e-book prices to increase, sometimes 50% or more for a specific title.

A separate trial for potential damages will be scheduled later.  Apple said it will appeal the ruling.

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Supreme Court Narrows ‘State Action’ Immunity From Antitrust Laws

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The U.S. Supreme Court has referred to the federal antitrust laws as “a charter of freedom [having] a generality and adaptability comparable to that found to be desirable in constitutional provisions.” The antitrust laws are generally broadly worded, and they have been subject to various interpretations and reinterpretations over the past century. Certain types of anti-competitive activity, such as horizontal price fixing, have been deemed so obviously harmful to the marketplace as to be declared per se illegal. Others are judged by the so-called “rule of reason” analysis, in which courts weigh the effect on a defined market of the alleged anti-competitive activity.

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Bid-Rigging Remains Focus of DOJ Antitrust Criminal Enforcement: Businesses Need to Ensure Their Compliance

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A number of recent U.S. Department of Justice Antitrust Division (“Antitrust Division”) press releases highlight the agency’s ongoing criminal enforcement initiatives regarding hard-core antitrust violations such as bid-rigging. Businesspersons often seem to forget that the nation’s antitrust laws carry both civil and criminal penalties. Provisions of both the Sherman Antitrust Act (15 U.S.C. §§ 1-7) and Clayton Act (15 U.S.C. §§ 12-27), the primary federal antitrust statutes, include significant criminal penalties that can be imposed against violators. The statutes do not state what specific violations should result in criminal penalties or the factors to be used in determining when such penalties apply. However, historically, the Antitrust Division (which has exclusive responsibility for criminal enforcement of the federal antitrust laws) has focused its criminal enforcement efforts on so-called hard-core per seviolations of Section 1 of the Sherman Antitrust Act (15 U.S.C. § 1). The recent Antitrust Division press releases announcing guilty pleas, convictions and sentencings of individuals involved in hard-core antitrust violations suggest that the Antitrust Division is, and will be, aggressively pursuing such criminal enforcement, especially regarding the financial industry, for at least the next several years.

Criminal Penalties For Hard-Core Antitrust Violations Are Substantial

Section 1 of the Sherman Antitrust Act prohibits contracts, combinations and conspiracies in restraint of interstate trade or commerce. The maximum criminal penalties for corporations and individuals under this statute are substantial:

Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court.

15 U.S.C. § 1. Although the maximum $100 million fine for corporations and $1 million fine for individuals may seem stiff enough, the Antitrust Division has also obtained larger maximum fines by arguing that 18 U.S.C. § 3571(d) allows the maximum fine to be increased to twice the gain derived from the violation or twice the loss suffered by the victims if either amount is greater than the statutory maximum.

The Antitrust Division’s 2012 fiscal year (which ended on September 30, 2012) proved to be a record-breaking year regarding criminal fines. The Antitrust Division obtained criminal fines of $1.1 billion in FY2012, the second time it had topped the $1 billion mark since 2003 (the other time was FY2009 when the Antitrust Division obtained criminal fines of $1 billion). The figure for the recently ended fiscal year rises to approximately $1.35 billion when other monetary remedies that the Antitrust Division has obtained, such as disgorgement, restitution and other penalties, are included. In the past two years, the Antitrust Division has been pursuing these other so-called “equitable monetary remedies,” more aggressively. In FY2009, the Antitrust Division filed 72 criminal cases. In FY2012, it filed 67 criminal cases, down from 90 in FY2011. Thus, it is clear that the Antitrust Division is aggressively pursuing, and obtaining, larger fines and monetary remedies against antitrust violators.

In addition, the Antitrust Division has announced that the average prison sentence it has obtained for criminal antitrust violations has been increasing. For fiscal years 2010-2012, the average prison sentence obtained has been 25 months, up from 20 months for fiscal years 2000-2009 and 8 months for fiscal years 1990-1999. In terms of total prison days sentenced, the increase is from an average of 3,313 days for fiscal years 1990-1999, to 12,722 for fiscal years 2000-2009, to 23,398 for fiscal years 2010-2012. Thus, the Antitrust Division has also been successful in obtaining longer prison sentences for individuals who have engaged in per se antitrust violations.

In light of the increasing magnitude of the criminal penalties for hard-core antitrust violations, both corporations and businesspersons must be zealous in their efforts to avoid practices that run afoul of the antitrust laws, especially hard-core per seviolations of Section 1 of the Sherman Antitrust Act that prohibits contracts, combinations and conspiracies in restraint of trade.

Bid-Rigging Is A Per Se Antitrust Violation Often Leading To Criminal Enforcement

So-called per se antitrust violations are practices that historically have been shown to result in harm to competition. They are practices that require little or no economic analysis to determine their negative impact on consumers and/or the competitive process. These violations normally include price-fixing, bid-rigging, and customer or market allocations – i.e., agreements among two or more competitors to eliminate the competition among them so that the participants often obtain higher prices for their products or services.

Bid-rigging is the very antithesis of what should be a competitive bidding process. The entity holding the bidding process – often federal, state, or local governments – is attempting to obtain the best bid (in terms of prices, services, quality, etc.) by soliciting bids from competing providers. It would seem to be common sense that such competitors should not collude or agree to subvert the bidding process by coordinating their bids in some fashion so that the outcome is skewed toward the conspirators’ desired result. However, as the Antitrust Division’s recent press releases show, bid-rigging is still a common practice in some industries. Bid-rigging conspiracies can take many forms, including (i) certain competitors agreeing not to bid so that the conspirators’ chosen competitor will win the bid; (ii) certain competitors submitting purposely inflated bids to give the appearance of a competitive bidding process; and (iii) the conspirators rotating which competitor will be the low bidder. No matter the form, the goal of almost all bid-rigging schemes is that the participants hope to ensure the winning bidder is their chosen participant and the elimination of competition among the conspirators regarding the bidding process.

Obviously, given the nation’s economic woes in recent years, the pressure to maximize profits and secure business can lead businesspersons to make poor decisions regarding their business practices, but certain of the recent enforcement actions have related to bid-rigging conspiracies that took place over numerous years, including prior to the current economic downturn. Whether it is the familiarity with their competitors that businesspersons often gain after years of pursuing the same customers and contracts, or the importance of each long-term or financially sizable contract that is being pursued, businesspersons still engage in bid-rigging practices at a level that it would seem they should not, given the substantial criminal penalties (and prison time) they, and their companies, face for such practices.

Recent Bid-Rigging Enforcement By The Antitrust Division

Just since August 2012, the Antitrust Division has announced convictions, guilty pleas and sentencings regarding bid-rigging practices in several industries, including bidding for contracts for the proceeds of municipal bonds, public foreclosure auctions, municipal tax lien auctions, and the automobile anti-vibration rubber parts industry. The investigation and prosecution of bid-rigging conspiracies often involve joint efforts by the Antitrust Division, the FBI and the U.S. Attorneys’ Office. Indeed, regarding the first three industries – municipal bonds, public foreclosure auctions, and municipal tax lien auctions – the enforcement actions were the result of President Obama’s Financial Fraud Enforcement Task Force “created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.”http://www.justice.gov/atr/public/press_releases/2012/290188.htm. The Task Force includes “more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, . . . [and] [o]ver the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants.” Id. Such inter-agency coordination at the federal, state and local level highlights the aggressive nature of the efforts to identify and prosecute financial crimes, including criminal antitrust violations such as bid-rigging schemes.

Foreclosure Auctions

The Antitrust Division has obtained guilty pleas from numerous real estate investors who participated in separate bid-rigging conspiracies (taking place at various times from 2001 to 2010) at public foreclosure auctions, including agreeing not to bid against one another and selecting a designated winning bidder or agreeing to bid at suppressed prices, in Alabama, North Carolina and Northern California. The Antitrust Division has stated that such conspiracies “cause financial institutions, homeowners and others with a legal interest in rigged foreclosure properties to receive less than the competitive price for the properties.” http://www.justice.gov/atr/public/press_releases/2012/290188.htm.

Municipal Bonds

The Antitrust Division obtained the conviction of at least six former financial services executives for their participation in conspiracies related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts. The conspiracies took place from 1999 through 2006 and involved collusion by financial institutions regarding investment agreements offered to state, county and local governments and agencies that the government entities used to raise money for public projects. The Antitrust Division alleged that the conspiracies resulted in the government entities’ obtaining non-competitive interest rates for the investment agreements that cost them millions of dollars.

Municipal Tax Lien Auctions

The Antitrust Division obtained the guilty plea of a Pennsylvania corporation that participated in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities throughout New Jersey. From at least 1998 through 2006, the conspirators allocated bids such that the winning bidder obtained a higher interest rate for the tax lien, to the detriment of the homeowner who had failed to pay property taxes. The Antitrust Division has obtained 10 guilty pleas from the ongoing investigation.

Automobile Anti-Vibration Rubber Parts

The Antitrust Division has obtained guilty pleas, or agreements to plead guilty, from nine companies and 12 executives as a result of an ongoing investigation regarding price-fixing and bid-rigging in the automobile anti-vibration rubber parts industry. As part of a conspiracy that took place from at least 2005 through 2011, the conspirators agreed, in part, to submit noncompetitive bids for parts contracts.

Regular Antitrust Training And Rigorous Oversight Are the Key To Avoiding Violations

These recent enforcement actions and ongoing investigations highlight the need for companies and businesspersons to be knowledgeable about the antitrust laws and vigilant in their compliance with these laws. In light of the significant criminal penalties for corporations and individuals stemming from bid-rigging violations of the antitrust laws, companies should increase their training and oversight of their employees with responsibility for competitive bidding processes. Regularly scheduled training sessions should emphasize the types of unlawful bid-rigging practices that violate the antitrust laws. In addition, companies should perform regular audits of their bidding efforts and the bidding-related activities of the businesspersons responsible for such bids. Such audits should include a rigorous review of entertainment and expense reports that might indicate meetings with businesspersons from competitors that may lead to, or be in furtherance of, anticompetitive bid-rigging conspiracies. The cost of lax oversight may be significant for the company and its employees.

This article appeared in the January 2013 issue of The Metropolitan Corporate Counsel.  

Copyright © 2012 Sills Cummis & Gross P.C.

FTC Raises Hart-Scott-Rodino Thresholds

An article about the FTC was recently published in The National Law Review and was written by the Antitrust Practice of Morgan, Lewis & Bockius LLP:

 

As of the effective date (on or about February 23, 2012) transactions must be valued in excess of $68.2 million to be subject to the preclosing notification requirements of the Hart­Scott­Rodino Act.

The Federal Trade Commission (FTC) has announced that it will raise the Hart­Scott­Rodino Act (HSR Act) jurisdictional and filing fee thresholds. Any transaction closing as of February 23, 2012 (or, if different, the effective date, which may be a few days after February 23, 2012) will be subject to the revised thresholds. The new rules include an increase in the “size of transaction” test from greater than $66 million to greater than $68.2 million-which means that under the new threshold, acquisitions valued for HSR Act purposes at $68.2 million or less will not require preclosing filing and approval.

New Jurisdictional Thresholds

As a general rule, the HSR Act requires both Acquiring and Acquired Persons (as defined in the HSR Act) to file notifications if the following post-adjustmentjurisdictional thresholds are met:

1.         One person has net sales or total assets of at least $13.6 million.

2.         The other person has net sales or total assets of at least $136.4 million.

3.         As a result of the transaction, the Acquiring Person will hold an aggregate amount of stock and assets of the Acquired Person valued at more than $68.2 million.

-OR-

4.         As a result of the transaction, the Acquiring Person will hold an aggregate amount of stock and assets of the Acquired Person valued at more than $272.8 million, regardless of the sales or assets of the Acquiring and Acquired Persons.

Conditions 1 and 2 are generally referred to as the “size of person” test, while conditions 3 and 4 are commonly described as the “size of transaction” test.

The HSR Act rules relating to acquisitions of partnership interests and membership interests in a limited liability company (LLC) remain the same. Only acquisitions of economic control in an LLC or partnership may be reportable. “Control” is defined as having a right to 50% or more of the profits of a partnership or LLC or 50% or more of the assets upon the dissolution of such entity.

New Filing Fee Thresholds

Filing fees are also determined by a threshold test relating to the size of the transaction. While the valuation thresholds have changed, the fees themselves have not been adjusted:

 

Valuation of Transaction Filing Fee
in excess of $68.2 million or greater, but less than $136.4 million $45,000
$136.4 million or greater, but less than $682.1 million $125,000
$682.1 million and greater $280,000

The figures above represent the new “as adjusted” threshold figures. The table below illustrates the changes.

 

Current Threshold
(in millions)
“As Adjusted”
Threshold
(in millions)
$13.2 $13.6
$66 $68.2
$131.9 $136.4
$263.8 $272.8
$659.5 $682.1

These changes are being implemented pursuant to the 2000 amendments to Section 7A of the Clayton Act. Section 7A(a)(2) of the Clayton Act requires the FTC to revise the jurisdictional thresholds annually, based on the change in gross national product, in accordance with Section 8(a)(5). The revised thresholds will apply to all transactions that close on or after the effective date.

Copyright © 2012 by Morgan, Lewis & Bockius LLP.