Hart–Scott–Rodino Antitrust Improvements Act
The Hart–Scott–Rodino Antitrust Improvements Act of 1976 (Public Law 94-435, known commonly as the HSR Act) is a set of amendments to the antitrust laws of the United States, principally the Clayton Antitrust Act. The HSR Act was signed into law by president Gerald R. Ford on September 30, 1976. The context in which the HSR Act is usually cited is 15 U.S.C. § 18a, title II of the original law. The HSR Act is named after senators Philip Hart and Hugh Scott and representative Peter W. Rodino.
Hart–Scott–Rodino Antitrust Improvements Act of 1976
94th United States Congress
September 30, 1976
The HSR Act provides that parties must not complete certain mergers, acquisitions or transfers of securities or assets, including grants of executive compensation, until they have made a detailed filing with the U.S. Federal Trade Commission and Department of Justice and waited for those agencies to determine that the transaction will not adversely affect U.S. commerce under the antitrust laws. While parties can carry out due diligence and plan for post-merger integration, they may not take any steps to integrate operations, such as an acquiring party obtaining operational control of the acquired party.[1]
Parens patriae actions[edit]
Title III of the Act[9] allows attorneys general of states to sue companies in federal court for monetary damages under antitrust laws as parens patriae,[10] on behalf of their citizens. Previously, there was no practicable way for large numbers of individual persons harmed by such anticompetitive activities as small overcharges per person, to sue for damages; it was too costly.[11] Congress sought to remedy that problem with this statute.[12] Title III is in substance the original bill introduced in the House of Representatives by congressman Peter W. Rodino; the other titles of the Act were added as the bill was amended during congressional deliberations.
The effectiveness of the parens patriae provision of HSR was greatly weakened by the Supreme Court's Illinois Brick decision, which substantially limited damages relief to direct purchasers, making consumer indirect purchasers unable to sue.[13] Accordingly, wholesalers or retailers might be able to sue in federal court in a price-fixing case, even though they passed overcharges on to ultimate consumers,[14] but the consumer purchasers could not; yet, the parens patriae provision in HSR is directed at vindicating the right of those very victims. To some extent, however, this effect was mitigated by the availability of state law and congressional passage of the Class Action Fairness Act of 2005 (CAFA),[15] under which class actions can be removed from state court to federal court but state parens patriae actions cannot. Consequently, state attorneys general can pursue price-fixing cases on behalf of the state's consumers under state law in state courts.[16]
Effectiveness[edit]
Peter Rodino commented in 2002 on the 25th anniversary of the legislation, "the legislation absolutely has transformed merger enforcement. Competition, as well as the consumer, has benefitted."[17] The Federal Trade Commission's Deputy Director stated that implementation of the Act "has been instrumental in detecting transactions that have been the subject of numerous enforcement actions and [it] continues to do its job well".[17]