The FTC’s Largest-Ever Penalty for HSR Act Violations Highlights the Risks of HSR “Avoidance” Strategies

Earlier this week, the Federal Trade Commission (FTC) announced a record-breaking civil penalty of $12 million for violations of the federal premerger notification statute, the Hart-Scott-Rodino (HSR) Act.

The FTC’s settlement resolves allegations that Edwards Lifesciences Corp. and Genesis MedTech Group Limited “structured” Edwards’ acquisition of JC Medical to evade HSR review. The HSR Act requires parties to provide advance notification to the FTC and DOJ before consummating transactions that meet certain thresholds. The HSR Act expressly prohibits parties from structuring deals to avoid the Act’s notification requirements.

In a post on X.com, FTC Chair Andrew Ferguson praised the settlement as a “big win” for competition and innovation in healthcare, warning that “companies that try to sneak deals past the FTC will not escape our notice and they will be held accountable.” 

Background of the Case

In July 2024, Edwards acquired JC Medical, a developer of transcatheter aortic valve replacement devices for aortic regurgitation (TAVR-AR devices), without making an HSR filing. Shortly thereafter, Edwards attempted to acquire JenaValve Technology Inc., the only other U.S. company with a TAVR-AR device in clinical trials. The FTC successfully blocked the JenaValve deal in January 2026.

The FTC alleged that the parties intentionally kept the base purchase price of JC Medical ($115 million) just below the then-applicable HSR size-of-transaction threshold ($119.5 million) by adding a separate $25 million investment in Genesis.

Under the proposed final judgment:

• Edwards (including JC Medical) will pay a $10 million civil penalty.
• Genesis will pay a $2 million civil penalty.
• Edwards must provide prior written notice to the FTC before acquiring any interest in companies involved in TAVR-AR devices.
• Edwards must implement and maintain an antitrust compliance program.

HSR Avoidance: The Governing Statute and Regulation

The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (codified at 15 U.S.C. § 18a) requires parties to certain mergers and acquisitions to file pre-merger notifications with the FTC and DOJ and observe a statutory waiting period, typically 30 days.

A key implementing regulation, 16 C.F.R. § 801.90 (“Transactions or devices for avoidance”), prohibits structuring tactics:

“Any transaction(s) or other device(s) entered into or employed for the purpose of avoiding the obligation to comply with the requirements of the Act shall be disregarded, and the obligation to comply shall be determined by applying the Act and these rules to the substance of the transaction.”

Under this rule, the agencies look beyond the formal structure of a deal to its economic reality. Common avoidance devices that have drawn scrutiny include:

• Splitting transactions into smaller components, each falling below filing thresholds.
• Using side agreements, contingent payments, investments, or other contemporaneous arrangements to transfer value or control while keeping nominal consideration low.
• Creating artificial entities or multi-step structures designed primarily to evade reporting.

FTC Chair Andrew Ferguson explained the rationale for the FTC’s vigorous enforcement against HSR avoidance: “Cheating is wrong. Congress requires merging companies to file with the FTC before they merge, so that we can make sure the deal won’t hurt American consumers. That system doesn’t work if companies play games to avoid filing with the FTC.”

Penalties for violations can reach up to $51,744 per day (inflation-adjusted) per violation, though settlements often resolve the matter with a lump-sum payment.

Key Takeaways

• Heightened Focus on HSR Act Violations: This case illustrates the Trump Administration’s willingness to pursue significant penalties for HSR violations, particularly where the parties appear to be attempting to evade HSR review by “structuring” the transaction in ways that serve no legitimate business purpose.
• Engage with Experienced Antitrust/HSR Counsel: The rules for determining whether a transaction meets HSR size thresholds are complex. Engage with antitrust counsel to analyze the full set of agreements and economic realities, not just the headline purchase price.
• Documentation Matters: Maintain clear records showing legitimate business or tax reasons (unrelated to HSR) for transaction structures.
• Enhanced Compliance: Consider integrating HSR avoidance analysis into deal checklists and antitrust training for parties that regularly do M&A transactions.