FTC Secures Record $12M HSR Evasion Penalty for Split Deal
M&A deal teams and in-house antitrust counsel must act because the FTC’s record $12M HSR evasion settlement signals aggressive expanded enforcement against split transaction structures designed to avoid premerger filing thresholds.
The FTC settled allegations that Edwards Lifesciences and Genesis MedTech Group structured Edwards’ $140 million acquisition of JC Medical as a $115 million voting securities purchase plus a $25 million nonvoting investment in Genesis to fall below the $119.5 million HSR filing threshold, classifying the structure a prohibited “device in avoidance” under Rule 801.90. The $12 million combined penalty is the largest ever imposed for HSR non-filing, and the FTC is simultaneously scrutinizing acquihire and other nontraditional deal structures for evasion, with a pending request for public comment on expanding HSR coverage. M&A parties must conduct independent HSR analyses for all related transaction components, preserve internal communications related to threshold planning, and avoid characterizing acquisition consideration as nonvoting seller investments to evade filing requirements, as both buyers and sellers face civil penalty exposure for violations.