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United States: Biden signs omnibus spending package with Antitrust Law changes

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In brief

President Joe Biden’s omnibus spending package included three pieces of new antitrust legislation: (1) the Merger Filing Fee Modernization Act; (2) the State Antitrust Enforcement Venue Act; and (3) the Foreign Merger Subsidy Disclosure Act.

In depth

1) Merger Filing Fee Modernization Act
 
The Merger Filing Fee Modernization Act will alter filing fees for transactions requiring antitrust review under the Hart-Scott-Rodino Act (“HSR Act”).  The HSR Act requires merging parties to provide notice to the Federal Trade Commission (“FTC”) and Department of Justice (“DOJ”) prior to closing certain transactions, generally those that have a nexus to the US and a transaction value over a minimum size, currently USD 101 million.
 
The new fee structure will reduce filing fees for smaller transactions, while significantly increasing fees for the largest ones.  At least in part, the new structure is intended to increase funding for the FTC and DOJ.  Senator Amy Klobuchar (D-MN), a supporter of the legislation, remarked: “We cannot expect our antitrust enforcers to take on the most powerful companies the world has ever known with duct tape and Band-Aids.  By restructuring outdated merger filing fees, our bipartisan legislation will enable Congress to get much-needed resources to our antitrust enforcers so they can protect competition.”

The Merger Filing Fee Modernization Act replaces the current three-tiered graduated fee schedule with the following six tiers—that have higher fees corresponding to increasing transaction values:

Transaction ValueNew HSR Filing FeeCurrent Filing Fee
Over USD 101 million but under USD 161.5 million$30,000$45,000
Over USD 161.5 million but under USD 500 million$100,000$45,000 – $125,000
Over USD 500 million but under USD 1 billion$250,000$125,000
Over USD 1 billion but under USD 2 billion$400,000$125,000 – $280,000
Over USD 2 billion but under USD 5 billion$800,000$280,000
USD 5 billion or more$2,250,000$280,000

IMPACT
 
The Merger Filing Fee Modernization Act’s impact will vary depending on the value of the transaction.  For many transactions, particularly those valued under USD 1 billion, the impact will be relatively small, and filing fees may be lower than they would be under the current schedule.
 
For larger transactions, however, filing fees will increase significantly, almost as much as ten-fold for transactions valued over USD 5 billion.  While the acquiring party still remains responsible for payment of the applicable filing fee by statute, these increased fees likely will result in more attention and negotiation around the antitrust risk-shifting provisions in transaction agreements.  In particular, the new fee burden may make fee-sharing agreements more prevalent for large transactions.  Moreover, the higher filing fees may dissuade parties from submitting notifications on the basis of anything short of a definitive agreement.
 
Notably, the filing fee amounts will be adjusted annually along with the transaction value thresholds, which typically happens in February or March.  The new fee structure will take effect in 2023, after the FTC’s Premerger Notification Office, which administers the HSR Act, posts the updated filing fees and the related changes to reporting and payment requirements. The specific implementation date is not yet available.
 
2) State Antitrust Enforcement Venue Act
 
The State Antitrust Enforcement Venue Act will prevent defendants from transferring parallel antitrust claims brought by state attorneys general into a single district.  Under current law, when state Attorneys General (“AGs”) bring antitrust claims in federal district courts in their home states related to similar conduct, defendants may request that the Judicial Panel on Multidistrict Litigation (“JPML”) transfer these claims into a single federal district court for common pre-trial proceedings. Under the new law, defendants would not be able to request JPML transfer of state AG antitrust claims, and thus may need to litigate related state AG cases separately in each state AG’s chosen venue.
 
IMPACT
 
The State Antitrust Enforcement Venue Act will make litigation more complex and costly for large companies defending antitrust litigation brought separately by multiple state AGs.  Specifically, companies will need to closely coordinate litigation teams across numerous states on varying procedural timelines.
 
Beyond the burden and expense of managing multiple duplicative lawsuits in different courts, the legislation also increases the risk of inconsistent rulings by separate district courts on similar issues in related cases.   
 
3) Foreign Merger Subsidy Disclosure Act
 
The Foreign Merger Subsidy Disclosure Act will require companies filing pre-merger notifications that have any subsidies from a “foreign entity of concern” to include notification of those subsidies in the filing.  “Foreign entity of concern” is defined under 42 USC. 18741(a), and includes China, Iran, North Korea, and Russia as well as other entities, or specific persons.
 
IMPACT
 
The Foreign Merger Subsidy Disclosure Act will require antitrust advisors to perform additional diligence when filing merger notifications.  Counsel will need to confirm whether any foreign entity has subsidized the proposed transaction and if so, whether the entity is of concern within the meaning of 42 USC. 18741(a).  This likely will require consultation with trade or sanctions experts to ensure proper identification of any entities that may require disclosure.

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Author

John Fedele is a member of Baker McKenzie's antitrust practice and is located in its Washington, DC office. While he has a broad range of antitrust experience, he most frequently represents clients before the Antitrust Division of the US Department of Justice (DOJ) and the Federal Trade Commission (FTC) in investigations of proposed mergers and acquisitions, and routinely analyzes and manages filing obligations under the Hart-Scott-Rodino (HSR) Act and foreign competition regimes. John is a member of the Washington D.C. office’s Diversity Advisory Committee, serves as a contact in the firm’s PointONE program designed to allow employees to raise workplace concerns in a safe space, and maintains an active pro bono practice. He also is a member of Baker McKenzie’s Global Merger Control Task Force.

Author

Mark H. Hamer is Global Chair of the Firm's Antitrust & Competition Practice Group, comprised of over 300 competition lawyers in over 60 offices across 43 countries. Mark has over 25 years of wide-ranging litigation experience, including first-chair roles in jury trials, bench trials and arbitrations. His primary focus is antitrust litigation. Before joining Baker McKenzie, Mark was a successful trial attorney in the Antitrust Division of the US Department of Justice. He was involved in some of the DOJ's highest-profile antitrust trials. Before joining the DOJ, Mark was a partner at another global law firm where he handled complex multidistrict antitrust class actions in courts across the nation.

Author

Creighton Macy is the Chair of Baker McKenzie's North America Antitrust & Competition Practice Group. Creighton is recognized as a leading global antitrust practitioner.

Creighton has extensive experience representing clients in a wide variety of antitrust matters, including mergers and acquisitions, investigations by the United States Department of Justice and the Federal Trade Commission, private litigation, and counselling on issues such as antitrust compliance. Before joining the Firm, Creighton served as Chief of Staff and Senior Counsel in the DOJ Antitrust Division, working as a senior advisor to the Assistant Attorney General on civil and criminal antitrust enforcement and policy matters, as well as budget and personnel issues. During Creighton's time at the DOJ, the Antitrust Division undertook an unprecedented volume of high-profile civil and criminal matters.

Creighton began his career as a Trial Attorney in the Litigation III and Transportation, Energy, and Agriculture sections of the Antitrust Division, working on a number of notable merger and civil non-merger investigations and cases. Before rejoining the Antitrust Division as its Chief of Staff, he was a member of another global law firm's antitrust practice, where he advised clients on a wide range of US and international antitrust issues.

Creighton is consistently recognized globally for his market-leading antitrust practice with respect to high-stakes transactions, investigations, and compliance and counseling work. For example, clients have noted that Creighton “shines above the rest’ due to his first-rate cartel and merger control-related practice.’” He also regularly speaks and publishes articles relating to a variety of antitrust issues, and has been recognized many times for his contributions and thought-leadership on these issues.

Creighton is currently Co-Chair of the American Bar Association Antitrust Law Section’s Young Lawyers Task Force. In previous roles, he served as Reporter of the Presidential Transition Task Force, as well as Chair of the Trade, Sports, and Professional Associations Committee. He is highly involved in mentoring programs, including with the Antitrust Law Section, as well as Marquette University Law School, where he previously served as the DC Representative of the Alumni Board.

Creighton graduated from Marquette University, where he was an NCAA Division I Academic All-American tennis player. During his time at Marquette, he was awarded the Athletic Department’s Cura Personalis award by his peers, as well as several leadership awards. More recently, Creighton was named the Athletic Department’s Young Alumnus of the Year Award.

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