Ronan P. Harty is a partner at Davis Polk & Wardwell LLP. This post is based on a Davis Polk publication by Mr. Harty, Arthur J. Burke, Joel M. Cohen, Arthur F. Golden, Jon Leibowitz, and Jesse Solomon.
On June 29, 2016, the Federal Trade Commission (“FTC”) announced an increase in the maximum civil penalties it may impose for violations of the Hart-Scott-Rodino Act (“HSR Act”) and various other rules and orders governed by the FTC. The maximum civil penalty for HSR violations has increased from a daily fine of $16,000 per day, to a much larger fine of $40,000 per day. While these higher maximum civil fines will apply to any penalties assessed after August 1, 2016, they will also apply to violations that predate the effective date.
This recent announcement and significant penalty increase stems from the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (“IAAI Act”), which requires federal agencies to adjust civil penalties for violations of any acts that those agencies are tasked to enforce. The practical effect of the IAAI Act is that the agencies must adjust the statutory civil penalties they impose to account for inflation using a prescribed “catch-up adjustment” formula.