A $12 Million Lesson in HSR Rule 801.90: Purpose is the Whole Ballgame

The authors explain that the case centers on HSR Rule 801.90, which allows regulators to disregard deal structures designed primarily to evade filing obligations. According to the FTC, Edwards’ $115 million acquisition of JC Medical and a subsequent $25 million investment in Genesis were effectively parts of the same transaction, pushing the total value above the HSR reporting threshold. Internal documents and communications—including one describing the structure as “below the threshold! Intentional”—became key evidence supporting the agency’s theory.

The article also explores how the alleged violation came to light. Because the acquisition itself was never reported, the FTC only uncovered the relevant documents while investigating Edwards’ subsequent attempt to acquire JenaValve, JC Medical’s main U.S. competitor. That broader merger investigation exposed emails and testimony suggesting the two transactions had been intentionally structured to avoid regulatory review.

The authors conclude with five practical lessons for companies and their antitrust counsel: clearly document legitimate business reasons for transaction structures, aggregate related payments when assessing HSR thresholds, exercise caution in internal communications, recognize that related acquisitions may attract broader scrutiny, and seek legal review whenever a transaction appears designed to avoid filing requirements. Their central message is that Rule 801.90 focuses on intent, making careful planning and documentation essential to avoiding costly enforcement actions…

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