Congress Increases U.S. Merger Filing Fees, Adds Foreign Subsidy Disclosure Requirements, and Empowers State Attorneys General
Hart-Scott-Rodino (“HSR”) Act (“HSR Act”) fees are changing, and the HSR process is also changing with the inclusion of new filing tiers, one less expensive tier, several much more expensive tiers, and new state-level and foreign filing provisions. This is not the typical beginning-of-year update to the filing thresholds (the HSR thresholds adjust every year). This update is more extensive than usual, although the basic structure of the HSR process remains intact.
In December 2022, Congress passed the most significant suite of updates to the antitrust laws in decades as part of a $1.7 trillion omnibus spending package. The Merger Filing Fee Modernization Act of 20221 consists of three bipartisan bills:
- The Merger Filing Fee Modernization Act (Title I) will overhaul the premerger filing fee structure by imposing significantly higher fees on large deals;
- The Foreign Merger Subsidy Disclosure Act (Title II) will add new disclosure requirements for company subsidies in countries deemed “foreign adversaries”; and
- The State Antitrust Enforcement Venue Act (Title III) will give state antitrust enforcers greater independence to pursue their claims in federal court.
The three process-oriented pieces of legislation are the first concrete antitrust reforms taken by a Congress and presidential administration for which antitrust enforcement has become a public talking point.
A Revamped HSR Filing Fee Structure
The Merger Filing Fee Modernization Act restructures filing fees for merger control notifications submitted under the HSR Act. Fees for small and medium-sized mergers — those valued at less than $1 billion — will drop to a range between $30,000 and $250,000. Companies will pay a $400,000 fee for mergers valued between $1 and 2 billion, an $800,000 fee for mergers valued between $2 and $5 billion, and a $2,250,000 fee for mergers valued at $5 billion or more. The fees, which have not been updated in two decades, will also be updated (generally meaning they will increase) each year.
The table below illustrates the new filing fee structure:
| New HSR Filing Fee Structure
(Fees and Size-of-Transaction Now Revised Annually)
|$30,000||Valued in excess of $101 million but less than $161.5 million|
|$100,000||Valued $161.5 million or greater but less than $500 million|
|$250,000||Valued $500 million or greater but less than $1 billion|
|$400,000||Valued $1 billion or greater but less than $2 billion|
|$800,000||Valued $2 billion or greater but less than $5 billion|
|$2,250,000||Valued at $5 billion or greater|
The legislation, intended to increase the Federal Trade Commission (“FTC”) and Department of Justice (“DOJ”) Antitrust Division’s enforcement resources, also requires the agencies to report annually on the amount of revenue derived from the new fee structure. The agencies have not yet stated when exactly the new fee structure will come into effect.
Disclosure Requirements for Foreign Subsidies
The Foreign Merger Subsidy Disclosure Act imposes a new reporting obligation within HSR filings, which likely will be a separate item on the HSR form, to provide information relating to foreign subsidies received from “foreign entities of concern,” which will be certain foreign governments and related entities “that are strategic or economic threats to the United States.”
Such a change responds to policymaker concerns that certain governments and their state-owned entities are able to distort competition with their access to economic subsidies. Similar concerns in the European Union (“EU”) have led to enhanced scrutiny and changes that will require notifications to the European Commission (“EC”) in a parallel regime to the EC’s existing merger control apparatus.
Greater State Enforcer Authority
The State Antitrust Enforcement Venue Act (“Venue Act”) will exempt antitrust actions filed by state attorneys general from transfer or consolidation by the Judicial Panel on Multidistrict Litigation (“JPML”) under 28 U.S.C. 1407. Under the previously existing legal framework, civil actions in different jurisdictions with “one or more common questions of fact” could be transferred to a single jurisdiction for “coordinated and consolidated pretrial proceedings.” Federal antitrust enforcement actions always have been, and still are, exempt from these transfer requirements, but previously state attorney general actions were not exempt. The new Venue Act makes state attorney general actions more like federal enforcement cases; in effect, state attorneys general will now receive the same deference as federal antitrust enforcers regarding the venue in which their cases are litigated.
The amendments will also give state and federal enforcers a more direct path towards monetary relief in antitrust cases where the government itself is an alleged victim. Section 4A of the Clayton Act allows the government to recover treble damages in cases where it is injured by an antitrust violation.2 Prior to the amendments, these cases — which are distinct from those in which the government seeks injunctive or equitable relief — were subject to JPML consolidation with antitrust actions filed by private plaintiffs. Now, state and federal enforcers have a more direct path towards monetary relief in antitrust cases.
The practical effect of these amendments is that while the JPML may centralize private antitrust actions, federal and state actions will remain in enforcers’ venue(s) of choice. Defendants must still litigate and coordinate multiple antitrust cases in multiple jurisdictions. Especially in cases involving multiple states actions, defendants may face duplicative discovery, competing interests among plaintiffs, inconsistent outcomes based on the same set of facts, and greater legal costs. That said, many state attorneys general have already been circumventing JPML centralization by filing parens patriae actions in state courts — effectively ensuring their ability to litigate in their chosen forum. While states may also now bring similar actions under federal law in their forum of choice, defendants that have already been managing sprawling state-level litigation are unlikely to see much change.
The package of reforms leaves out two more sweeping and more controversial legislative antitrust initiatives discussed in the last Congress. First is the proposed American Innovation and Choice Online Act,3 which proponents claimed to be designed to prevent so-called “self-preferencing” by large online platforms like Amazon, Google, Meta, and Apple. Second is the Open App Markets Act,4 which targets Apple’s and Google’s app store policies. Both pieces of legislation failed to make it into the final bill and would now need to be reintroduced and pass through a new Congress, which will likely have different priorities under the new House Republican leadership.
1 H.R. 2617, 117th Cong. (2022) (enacted), https://www.congress.gov/117/bills/hr2617/BILLS-117hr2617enr.pdf (Pub. L. No. 117-328).
2 15 U.S.C. § 15a.
3 S. 2992, 117th Cong. (2022) [https://www.congress.gov/bill/117th-congress/senate-bill/2992/text].
4 S. 2710, 117th Cong. (2021); H.R. 5017, 117th Cong. (2021).
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.