On June 29, 2016, the Federal Trade Commission (FTC) announced significant increases in the maximum civil penalties for violations of 16 provisions of law it enforces, including the FTC Act and Clayton Act.
Effective August 1, maximum civil penalties will increase from $16,000 to $40,000 (per day in violation) for the following violations, among others listed in the Federal Register notice1:
- Premerger filing notification violations under the Hart-Scott-Rodino Antitrust Improvements Act (section 7A(g)(1) of the Clayton Act)
- Unfair or deceptive acts or practices under section 5(m)(1)(A) and (B) of the FTC Act
- Violations of final Commission orders under section 5(l) of the FTC Act
The increased penalties are required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, which requires federal agencies to implement a “catch-up adjustment,” based on a prescribed formula. Following the initial catch-up, agencies are required to adjust their civil penalties for inflation every January thereafter.
The FTC noted that when it seeks civil penalties, it is “mindful” of the statutory criteria under section 5(m) of the FTC Act that courts must apply when determining the amount of the civil penalty for violations of that section, including the degree of culpability, any history of prior such conduct, ability to pay, and effect on ability to continue to do business. The FTC also pointed out its civil penalty leniency program for small businesses that meet certain criteria.
Undoubtedly, the increased fines, combined with recent enforcement actions, highlights the need for all parties to a merger, acquisition, or joint venture to follow adequate measures to ensure compliance with the HSR Act.