FTC Secures Record $12 Million Penalty for HSR Act Violations

The Federal Trade Commission has imposed $12 million in civil penalties-the largest ever-against Edwards Lifesciences Corp. ("Edwards") and Genesis MedTech Group Limited ("Genesis") to settle allegations that the parties intentionally structured Edwards' acquisition of JC Medical, Inc. ("JC Medical") to evade the HSR Act.[1] In announcing the settlement, FTC Chairman Andrew Ferguson framed the action in stark terms: "Companies that try to sneak deals through without lawful FTC review should take notice. The FTC will be vigilant in enforcing the requirements of the [HSR Act] and we will not hesitate to seek penalties for its violation."

According to the FTC, the basis for the HSR violation was that while Edwards acquired JC Medical for total direct consideration of approximately $116.8 million,[2] at a time when the applicable HSR size-of-transaction threshold was $119.5 million, Edwards also committed to a contemporaneous $25 million investment in Genesis itself. The FTC alleged that the $25 million investment constituted additional consideration for the acquisition of JC Medical, such that the total value of the transaction exceeded $119.5 million. According to the complaint, Genesis valued JC Medical at $125 to $150 million and the investment was proposed to "close the gap" between the stated acquisition price and Genesis' valuation while keeping the ostensible purchase price below the reporting threshold.

In the complaint, the FTC cited the parties' internal documents and communications to support its allegation that the investment was part of an intentional scheme to avoid HSR review. Among the evidence cited: (1) JC Medical sent Edwards two term sheets simultaneously-one for the JC Medical acquisition and one for the Genesis investment-with a transmittal email making clear that both were part of a single transaction and that the Genesis investment would close concurrently with the JC Medical acquisition; (2) internal documents showed that Edwards and Genesis considered the investment "part of the deal" but did not count it for HSR purposes; and (3) communications from an Edwards employee to a third party reflecting knowledge of the HSR impact of the structure.

Critically for investors, this alleged avoidance scheme came to light because the FTC investigated and ultimately sued to block Edwards' subsequent proposed acquisition of JenaValve Technology, Inc. ("JenaValve"). The day after closing the JC Medical deal (and without announcing it publicly) Edwards entered into an agreement to acquire JenaValve, which according to the FTC was JC Medical's only competitor. The FTC obtained a preliminary injunction blocking the JenaValve acquisition in January 2026, and it was during that investigation that the JC Medical sacquisition structure was uncovered.

This enforcement action carries several important implications for investors:

• The FTC will look through creative deal structures. Under 16 C.F.R. § 801.90, if a transaction is structured for the purpose of avoiding HSR, the FTC will disregard the form and determine filing obligations based on the substance of the transaction.
  
  
• Both buyers and sellers face financial exposure for HSR violations. While often only the buyer is fined for HSR violations, here Edwards agreed to pay $10 million and Genesis $2 million.[3] The maximum statutory penalty is currently $53,088 per day of violation.[4]
  
  
• HSR penalties could extend beyond fines. In addition to monetary penalties, the proposed settlement requires Edwards to provide at least 30 days' written notice to the FTC before acquiring any ownership interest in a company that sells or is conducting clinical trials in the same space as JC Medical, unless the proposed acquisition requires an HSR filing.[5] Edwards must also establish and maintain a comprehensive antitrust compliance program and designate an internal antitrust compliance officer.[6]
  
  
• HSR avoidance is most often uncovered during investigations of other activity. Here, the alleged avoidance came to light because the FTC conducted an antitrust investigation of Edwards' JenaValve acquisition. Investors should assume that any aggressive structuring choices will be discoverable in the event of future regulatory scrutiny of adjacent deals.

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