US obtains largest penalty for evading HSR premerger notification requirements

The Federal Trade Commission (FTC) and the Antitrust Division of the US Department of Justice (DOJ) cracked down on a recent transaction which was structured in such a way as to avoid the “size of transaction” filing threshold under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the HSR Act). The resulting $12 million penalty¹ serves as a fresh reminder that M&A parties may not intentionally split or structure transactions to evade HSR Act requirements.

What you need to know

• HSR filing obligations cannot be avoided through improper deal structuring. The FTC and DOJ alleged that Edwards Lifesciences Corp. (Edwards) and Genesis MedTech Group Limited (Genesis) intentionally structured the purchase price for medical device maker JC Medical to avoid exceeding the HSR Act’s “size of transaction” threshold.
• Non-compliance can result in significant consequences. The settlement resulted in $12 million in penalties payable by both Edwards and Genesis, along with and other terms imposed on Edwards.
• US antitrust agencies are increasing enforcement of HSR violations. Although HSR enforcement actions have historically been less common than substantive antitrust cases, regulators are increasingly pursuing violations, including for "gun-jumping" and withholding required documents.

US premerger notification requirements

The HSR Act provides the FTC and DOJ (collectively referred to as the antitrust agencies) with an opportunity to consider the potential effects on US competition that proposed mergers and acquisitions may have before transactions are consummated. When parties are required submit a notification under the HSR Act, they must observe a waiting period of at least 30 days before closing. The antitrust agencies can hold a transaction in further abeyance by issuing a “second request” for more information and, in some instances, will go to court in an effort to block a deal they believe will substantially lessen competition in the US.

In Canada, the Competition Act affords the Competition Bureau similar authority and powers.

Many, but not all, corporate transactions must comply with HSR Act filing requirements when there is a nexus to the US measured by sales or assets and certain dollar thresholds are exceeded. An initial “bright line” test is whether the consideration a buyer will pay the seller for a business—the “size of transaction”—is greater than $50 million as adjusted annually for inflation. In 2024, that adjusted figure was $119.5 million; today it stands at $133.9 million.

The HSR Act prohibits “transactions or other devices entered into or employed for the purposes of avoiding the obligation to comply with [its] requirements”.

A buyer and seller agree to evade the HSR Act

In July 2024, Edwards agreed to acquire JC Medical from Genesis for $115 million, plus milestone payments of up to $2.5 million—totaling less than the HSR Act’s $119.5 million size of transaction threshold applicable at that time. JC Medical was in clinical trials for a heart-related treatment called transcatheter aortic valve replacement for aortic regurgitation (TAVR-AR).

Edwards also agreed to contemporaneously invest $25 million in Genesis, which the antitrust agencies allege was additional consideration for JC Medical. Because the headline price for the deal, however, was not more than the HSR Act threshold, the parties did not submit HSR Act filings and instead simultaneously signed and closed Edwards’s acquisition of JC Medical. Edwards allegedly wanted to avoid the review and delay associated with an HSR filing because it concurrently was negotiating to acquire JC Medical’s only competitor, JenaValve Technology, Inc. (JenaValve), thereby seeking to own the only two companies in the US with TAVR-AR devices in clinical trials.

The FTC and DOJ make an example of an HSR Act violation

Just a day after closing the JC Medical acquisition, Edwards entered into an agreement to purchase JenaValve for $945 million: a transaction which was notified under the HSR Act. Following a year-long investigation by the FTC into the JenaValve deal, and a proposal rejected by Edwards that it divest JC Medical to resolve the FTC’s concerns, the FTC sued to block Edwards’ acquisition of JenaValve and a court issued an injunction in early 2026.

Through the JenaValve investigation, the FTC apparently learned the terms of the JC Medical transaction and determined that Edwards and Genesis intentionally had structured the deal to avoid triggering the HSR Act notification requirement. Specifically, it concluded that Edwards’ agreement to invest in Genesis was additional consideration to acquire JC Medical and, therefore, the substance of the transaction required compliance with the HSR Act. The DOJ filed a complaint on the FTC’s behalf in US federal court for civil penalties and other relief for violations of the HSR Act.

The FTC has accepted a settlement that requires Edwards and Genesis to pay a $10 million and $2 million penalty respectively, adding up to the largest penalty in history for failing to make an HSR filing. Edwards additionally will not be permitted to invest in or acquire a business involving TAVR-AR without prior FTC approval and is required to develop an antitrust compliance program. In connection with settling the charges, FTC Chairman Andrew Ferguson said, “[c]ompanies that try to sneak deals through without lawful FTC review should take notice. The FTC will be vigilant in enforcing the requirements of the Hart-Scott-Rodino Act and we will not hesitate to seek penalties for its violation”.

Takeaways

While the antitrust agencies’ enforcement of the HSR Act has been much less frequent than their efforts to ensure compliance with substantive antitrust laws, particularly the Clayton and Sherman Acts, this matter reflects another instance in recent years to make a public example of an HSR Act violation to send a message to market participants.

In 2025, the FTC penalized several crude oil producers for “gun jumping” violations involving premature operational control and information exchanges before the HSR waiting period expired. The DOJ meanwhile is suing private equity firm KKR for failing to make complete and accurate HSR filings in connection with numerous transactions, emphasizing KKR’s alleged as alteration and omission of documents required by Item 4(c) of the HSR form.

The Edwards-Genesis penalties will now serve as a fresh reminder that M&A parties may not intentionally structure a transaction to avoid a required HSR Act filing.