In what appears to have been in part a trade for tabling new antitrust legislation, at least for now, the Biden administration dramatically increased funding for the Federal Trade Commission and the Antitrust Division of the Department of Justice. It remains unclear whether this additional funding will increase the agencies’ success rates before the judiciary who will see no changes to the antitrust laws themselves.
The Consolidated Appropriations Act, 2023 (the Spending Bill) increases the annual budget of the Federal Trade Commission (FTC) from $376.5 million in FY 2022 to $430 million and the annual budget of the Antitrust Division of the Department of Justice (Antitrust Division) from $200 million in FY 2022 to $225 million. These increases come off the heels of last year’s budget increments of about $25.5 million for the FTC and $16.7 million for the Antitrust Division.
These recent spikes in funding for the antitrust agencies reflect the Biden administration’s renewed vigor for antitrust enforcement. In total, the administration has increased FTC and Antitrust Division funding by $99 million and $58 million, respectively; as a recent comparison, between FY 2016 and FY 2019, the FTC’s annual budget increased by just $3 million, while the Antitrust Division’s remained virtually unchanged.
Far more impactful, as part of the Spending Bill, President Biden signed into law the Merger Filing Fee Modernization Act of 2022 (Fee Modernization Act), which will (1) increase HSR filing fees for transactions valued at $500 million or greater and lower filing fees for smaller transactions and (2) require parties to disclosure “subsidies” received from certain foreign governments as part of their HSR filings. These changes are expected to result in $1.4 billion in additional funding for the agencies over the next five years.
The Fee Modernization Act introduces a new HSR filing fee structure that increases HSR filing fees for the largest transactions (above $5 billion) nearly tenfold from $280,000 to $2.25 million, and modestly lowers HSR filing fees for transactions valued below $500 million. Currently, the filing fees range from $45,000 to $280,000. The fees are expected to increase funding to the FTC and Antitrust Division by approximately $1.4 billion over the next five years, bringing additional resources to the US antitrust agencies, which have become increasingly aggressive during the Biden administration. [1]
|
Forthcoming Filing Fee Thresholds |
|
|
Size of Transaction |
HSR Filing Fee |
|
< $161.5 million |
$30,000 |
|
$161.5 million – $499.999 million |
$100,000 |
|
$500 million – $999.999 million |
$250,000 |
|
$1 billion – $1.999 billion |
$400,000 |
|
$2 billion – $4.999 billion |
$800,000 |
|
≥ $5 billion |
$2,250,000 |
|
Current Filing Fee Thresholds |
|
|
Size of Transaction |
HSR Filing Fee |
|
In excess of $101 million, but less than $202 million |
$45,000 |
|
$202 million or more, but less than $1.0098 billion |
$125,000 |
|
$1.0098 billion or more |
$280,000 |
The new filing fees will adjust each year in accordance with the Consumer Price Index, and it is expected that the FTC will announce the effective date of the new fees shortly. Until the FTC announces the new filing fees, the current filing fees remain in effect.
It is doubtful that this additional funding will dampen M&A activity, but the additional funding will give the antitrust agencies resources to prosecute more cases. Whether this additional funding results in a higher judicial win rate remains a question, especially given that the antitrust laws will remain unchanged.
In addition, the Fee Modernization Act requires parties submitting and HSR filing to disclose information about subsidies received from “a foreign entity of concern” which includes “countries or entities that are strategic or economic threats to the United States.” The term “subsidy” is broad and includes direct subsidies, grants, loan guarantees, tax concessions, preferential government procurement policies, and government ownership or control.
The Fee Modernization Act requires the Antitrust Division and the FTC to collaborate with the Committee on Foreign Investment and other agencies to define the scope of the disclosure. This new requirement for the HSR filers will not be effective until the Antitrust Division and FTC issue rules and instructions for the implementation.
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[1] Congressional Budget Office, “S. 228, Merger Filing Fee Modernization Act of 2021” (Sept. 28, 2022). Senator Amy Klobuchar noted that “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.” See Senator Amy Klobuchar, Klobuchar Bipartisan Legislation to Restructure Merger Fees, Strengthen Antitrust Enforcement Passes Congress, (Dec. 23, 2022).