On June 30, 2016, the Federal Trade Commission (“FTC”) announced increases to the maximum civil penalties issuable for violations of several key competition statutes. The agency made these changes to comply with the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, which required the agency adjust penalty amounts for laws it enforces based on a methodology provided for by Congress.
Pursuant to the FTC’s announcement:
- Section 5 of the FTC Act, 15 U.S.C. 45: Violations of cease and desist orders issued under 5(b) will have a maximum fine increase from $16,000 to $40,000.
- Section 7A(g)(1) of the Clayton Act, 15 U.S.C. 18a(g)(1): Violations of premerger reporting and waiting requirements, pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR”), will have a maximum fine increase from $16,000 to $40,000.
- Section 11 of the Clayton Act, 15 U.S.C. 21: Violations of cease and desist orders issued under Clayton Act Section 11(b) will have a maximum fine increase from $8,500 to $21,250.
- Section 5 of the Webb-Pomerene Act, 15 U.S.C. 65: Violations for associations solely engaged in export trade from failing to file required statements will have a maximum fine increase from $8,500 to $21,250.
- Section 1115(a) of the Medicare Prescription Drug Improvement and Modernization Act of 2003, 21 U.S.C. 355: Violations for failing to comply with filing requirements will have a maximum fine increase from $12,100 to $12,142.
- Section 814(a) of the Energy Independence and Security Act of 2007, 42 U.S.C. 17304: Violations due to prohibited market manipulation conduct or the provision of false information to federal agencies will have a maximum fine increase from $1,100,000 to $1,138,330.
These adjustments are particularly noteworthy for at least several reasons. First, all but two of the above statutes have had their violation fee ceilings doubled (e.g., Section 5 violations will increase 250% over the prior value). Second, for many of these penalties, continuing violations are assessed daily, with each new day counting as a separate violation. Thus, an entity failing to comply for 30 days with HSR filing requirements previously faced a fine up to $480,000. Under the new limits, the fine could rise as high as $1.2 million. Third, the adjustments are again for the maximum civil penalty to be applied. The agency, and courts, will first look at whether the maximum fee could be mitigated, including—for certain violations—examining factors such as: “(1) harm to the public; (2) benefit to the violator; (3) good or bad faith of the violator; (4) the violator’s ability to pay; (5) deterrence of future violations by this violator and others; (6) vindication of the FTC’s authority.” See United States v. Boston Scientific Corp., 253 F. Supp. 2d 85, 98 (D. Mass. 2003).
The changes are scheduled to take effect on August 1, 2016, and will be annually adjusted each January to keep with inflation.