FTC to Hold Hearing on Impersonation Rule Amendment
The Federal Trade Commission (FTC) will hold an informal hearing at 1:00pm EST on January 17, regarding the proposed amendment to its existing impersonation rule.
We first wrote about the proposed changes to the FTC rule in an article in February 2024. The current impersonation rule, which governs only government and business impersonation, first went into effect in April 2024, and is aimed at combatting impersonation fraud resulting in part from artificial intelligence- (AI) generated deepfakes. When announcing the rule, the FTC also stated that it was accepting public comments for a supplemental notice of proposed rulemaking aimed at prohibiting impersonation of individuals. In essence, the rule makes the impersonation of a government entity or official or company unfair or deceptive.
The FTC announced the January hearing date in December 2024. The purpose of the hearing is to address amending the existing rule to include an individual impersonation ban and allow interested parties an opportunity to provide oral statements. There are nine parties participating in the hearing, including: the Abundance Institute, Andreesen Horowitz, the Consumer Technology Association, the Software & Information Industry Association, TechFreedom, TechNet, the Electronic Privacy Information Center; the Internet & Television Association, and Truth in Advertising.
While the original announcement of the proposed amendment indicated that the FTC would be accept public comments on the addition of both a prohibition of individual impersonation and a prohibition on providing scammers with the means and instrumentalities to execute these types of scams, the FTC has decided not to proceed with the proposed means and instrumentalities provision at this time. The sole purpose of the January 17 hearing is to “address issues relating to the proposed prohibition on impersonating individuals.” The public is invited to join the hearing live via webcast using this link.
Practical Considerations for Navigating Tariff Risk on Construction Projects
As the second Trump administration begins next week, developers, contractors, subcontractors and suppliers are evaluating the extent of the construction industry’s international ties – and contractual exposure to potential tariff increases. While President-elect Trump has been forthright about his intent to impose and increase tariffs, he has not provided details about which products, goods, and countries may be affected.
This uncertainty leaves many in the construction industry concerned, and both upstream and downstream parties are carefully negotiating contractual risk of changes in tariffs. Broadly speaking, tariffs are typically considered import (or export) taxes imposed on goods and services imported from another country (or exported). In the United States, Congress has the power to set tariffs, but importantly, the president can also impose tariffs under specific laws (most notably in recent years, the Trade Act of 1974), citing unfair trade practices or national security.
Many different contractual provisions may be impacted by the introduction of new tariffs: tax provisions, force majeure provisions, change in law provisions, and price escalation provisions, for example. Procurement contracts routinely rely on Incoterms, which allocate tariff risk to either buyer or seller depending on the selected Incoterm. Negotiating an appropriate allocation of risk of changing tariffs can be as much an art as science and requires consideration of how tariffs are administered and their effects on the market. Consider, for example, the following:
Tariffs are paid by the importer of record to U.S. Customs & Border Protection. If a contractual party is not the importer of record, such party will not be directly liable for payment of tariffs.
Instead, tariffs raise the ultimate cost of goods or services because importers increase their price to buyers to account for the tariffs.
Tariffs also tend to indirectly increase the cost of goods or services related or equivalent to the goods or services subject to tariffs by raising demand for domestic or non-affected substitute goods or services.
Some goods and services are higher risk than others (e.g., goods originating from China, and potentially in a second Trump administration, goods originating from Canada and Mexico). Understanding the extent of the international reach of a construction project’s supply chain may assist in evaluating exposure and negotiating appropriate relief from imposition of new or increased tariffs.
Having a working knowledge of how tariffs are implemented and their impacts on related markets is important to assessing and mitigating contractual risk. Parties to a construction contract may have different methods for managing tariff impacts. A supplier may choose to source goods from less risky countries, even if the cost of such goods is incrementally higher than their Chinese equivalent in the short term. A buyer may choose to enter into a master supply agreement, allowing the buyer to set a long-term fixed price on a guaranteed volume of goods that in turn permits the seller to better forecast its demand and supply chain. Many developers and contractors may negotiate shared risk of changed tariffs, establishing a change order threshold or cost-sharing ratio. Ultimately, those who consider and carefully negotiate provisions addressing changes in tariffs will be better prepared to face and manage their economic impact.
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European Regulatory Timeline 2025
Following the turn of the new year, our UK Regulatory specialists have examined the key regulatory developments in 2025 impacting a range of UK and European firms within the financial services sector. The key dates have been distilled by the Proskauer team in an easy to read timeline with our commentary.
Download the 2025 European Regulatory Timeline
Michael Singh and Sulaiman I. Malik also contributed to this article.
FTC Secures $5.68M HSR Gun-Jumping Penalty From 2021 Deal
Go-To Guide
FTC announced a $5.68 million penalty against Verdun Oil Company II LLC, XCL Resources Holdings, LLC, and EP Energy LLC for premature control of EP Energy during their 2021 transaction.
FTC took issue with the exercise of certain consent rights and coordination of sales and strategic planning with EP Energy before the deal closed.
The settlement also requires that for the next decade, the companies appoint an antitrust compliance officer, conduct annual antitrust training, and use a “clean team” agreement in future transactions.
The case highlights that maintaining independent operations pre-close is critical, regardless of the merits review of a transaction by the antitrust authorities.
On Jan. 7, 2025, the Federal Trade Commission, in conjunction with the Department of Justice Antitrust Division (DOJ), settled allegations that sister companies Verdun Oil Company II LLC (Verdun) and XCL Resources Holdings, LLC (XCL) exercised unlawful, premature control of EP Energy LLC (EP) while acquiring EP in 2021. This alleged “gun-jumping” HSR Act violation involved Verdun and XCL exercising various consent rights under the merger agreement and coordinating sales and strategic planning with EP during the interim period before closing.
In settling, the parties agreed to pay a total civil penalty of $5.68 million, appoint or retain an antitrust compliance officer, provide annual antitrust trainings, use a “clean team” agreement in future transactions involving a competing product, and be subject to compliance reporting for a decade.
Background
Under the HSR Act,1 an acquiror cannot take beneficial ownership of a target prior to observing a waiting-period, which allows the DOJ and FTC to investigate the transaction’s potential impact on competition in advance of any integration. During the pre-close period, parties to a proposed transaction must remain separate, independent entities and act accordingly. Penalties for HSR Act violations are assessed daily, currently at a rate of $51,744 for each day a party is in violation (amount adjusted annually for inflation).
In July 2021, Verdun and XCL agreed to acquire EP’s oil production operations in Utah and Texas for $1.4 billion. The transaction was subject to the HSR Act’s notification and waiting-period requirements. The transaction closed in March 2022 after an FTC investigation, with a consent decree settlement that required divesting EP’s entire Utah operation (an area where XCL also operated as an oil producer).
The FTC’s current complaint asserts that immediately after signing, Verdun and XCL unlawfully began to assume operational control over significant aspects of EP’s day-to-day business during the HSR Act review period. The complaint alleged Verdun and XCL
required EP to delay certain production activities in return for an early deposit of a portion of the purchase price;
exercised consent rights to discontinue new wells EP was developing;
agreed to assume financial risk of production shortfalls arising from EP’s commitments to customers, and then began coordinating sales and production activity with EP, which included receiving detailed information on EP’s pricing, volume forecasts, and daily operational activity;
required changes to EP’s site design plans and vendor selection;
exercised consent rights for expenditures above $250,000, which the complaint alleged inhibited EP’s ability to conduct ordinary course activities, such as purchasing drilling supplies or extending contracts for drilling rigs; and
exercised consent rights for lower-level hiring decisions, such as for field-level employees and contractors for drilling and production operations.
The complaint also criticized EP for taking “no meaningful steps to resist” XCL and Verdun’s requests for competitively sensitive information and “making no effort” to limit XCL and Verdun employees’ access or use of information, including data room information.
The alleged gun-jumping conduct occurred for 94 days, from July to October 2021, when an amendment to the agreement allowed EP to resume independent operations.
Takeaways
Gun-Jumping Enforcement is a Bright-Line Issue. The FTC’s action against Verdun, XCL, and EP is consistent with the conduct and “bright-line” enforcement approach in past gun-jumping cases—meaning the agencies will bring an action regardless of the magnitude of the impact on commerce. For example, in 2024, the DOJ brought an action against a buyer involving pre-closing bid coordination;2 in 2015, the DOJ brought an action involving the closing of a target’s mill and transferring customers to the buyer pre-close;3 and in 2010, the DOJ brought an action involving the exercise of merger agreement consent rights with respect to three ordinary course input contracts, one of which represented less than 1% of capacity.4
Significant Penalties May Ensue Regardless of Closing. Even though the parties resolved substantive concerns about the merger with a divestiture, they will have to pay a significant penalty for the gun-jumping violation. Though parties settled for an estimated 40% discount off the statutory maximum penalty, the FTC assessed the penalty to both the buy-side and the sell-side, which, since the deal has closed, leaves the buyer with the full obligation. In the past, both sides have also been assessed in abandoned deals and the authorities also have sought disgorgement when there are financial gains because of the violation.5
Consider Covenants that Allow for Ordinary Course Activities. Sellers should ensure they retain the freedom to operate in the ordinary course of business in purchase agreement interim covenants, which in turn maintains the competitive status quo remains while the deal is pending. As illustrated by this case, parties should be concerned with both the conduct that is allowed—e.g., entering into ordinary contracts, maintaining relationships with customers, or making regular hiring or investment decisions—and the dollar thresholds for any consent rights (ensuring they are sufficiently high).
Clean Team Process Needed Pre- and Post-Signing with Overlap. The FTC criticized EP as the seller for failing to impose restraints on the information it provided for diligence and post-close integration planning. The consent decree settlement obligates the parties to use a “clean team” process for future transactions with product or service overlap that antitrust counsel supervises. It also specifies that information shared must be “necessary” for diligence or integration planning, and where competitively sensitive, not be accessible by those with “direct[] responsibil[ity] for the marketing, pricing, or sales” of the competitive product.
Consult Antitrust Counsel Before Exercising Consent Rights. Even where the parties have agreed to certain interim covenants to protect the acquired assets’ value, the facts and circumstances at the time of exercise should be carefully considered for their impact on the seller’s competitive activities. Accordingly, parties are best served to seek the advice of antitrust counsel prior to either seeking consent or responding to a request for consent. A proactive approach may help avoid delays to closing and penalties.
1 15 U.S.C. § 18a.
2 U.S. v. Legends Hospitality Parent Holdings, LLC.
3 U.S. v. Flakeboard America Limited, et al.
4 U.S. v. Smithfield Foods, Inc. and Premium Standard Farms, LLC.
5 See U.S. v. Flakeboard America Limited, et al.
GT Newsletter | Competition Currents | January 2025
United States
A. Federal Trade Commission (FTC)
1. Competitor collaboration guidelines withdrawal.
On Dec. 11, 2024, the FTC and DOJ Antitrust Division withdrew the Antitrust Guidelines for Collaborations Among Competitors. The agencies determined the Collaboration Guidelines, issued in April 2000, no longer provide reliable guidance on how enforcers assess the legality of collaborations involving competitors due to the subsequent development of Sherman Act jurisprudence, rapid evolution of technologies and business combinations, and reliance on outdated policy statements and analytical methods. The FTC voted 3-2 to withdraw the guidelines. Commissioners Andrew Ferguson and Melissa Holyoak issued separate dissents highlighting the absence of replacement guidance.
2. Trump names Andrew Ferguson as next FTC chair.
President-elect Donald Trump has named FTC Commissioner Andrew Ferguson as the next FTC chair. Sworn in on April 2, 2024, Commissioner Ferguson was one of two Republican FTC Commissioners President Biden appointed. He previously served as Virginia solicitor general, chief counsel to U.S. Sen. Mitch McConnell, and U.S. Senate Judiciary Committee counsel. Ferguson earned undergraduate and law degrees from the University of Virginia before clerking for the D.C. Circuit and U.S. Supreme Courts. The president-elect also announced his intention to nominate Mark Meador, a partner at law firm Kressin Meador Powers and former antitrust counsel to U.S. Sen. Mike Lee, as an FTC Commissioner to fill current FTC Chair Lina Khan’s seat.
B. U.S. Litigation
1. Borozny v. RTX Corp., Case No. 3:21-CV-01657 (D. Conn.).
On Jan. 3, 2025, the Honorable Judge Sarala V. Nagala initially approved a $34 million settlement for a nationwide “no-poach” class action against several aerospace companies. The proposed $34 million settlement from the principal defendant, RTX, settles claims that RTX entered into agreements with several suppliers and competitors to not hire one another’s aerospace engineers—a highly skilled profession. This civil suit ran parallel to the DOJ’s criminal case, which was dismissed by another court. If approved, the $34 million settlement from RTX would augment the $26.5 million settlement previously negotiated with other alleged conspirators.
2. 2311 Racing LLC, et al. v. National Association for Stock Car Auto Racing, LLC, Case No. 3:24-CV-886 (W.D. N.C.).
On Dec. 20, 2024, defendant National Association for Stock Car Auto Racing, LLC (NASCAR) sought to stay a preliminary injunction that prevents NASCAR from barring various racing teams who initiated an antitrust lawsuit from competing in the 2025 season. Initiated by 2311 Racing, the lawsuit alleges that NASCAR exercises monopoly power over racetracks and requires all NASCAR teams not to participate in competing events. According to 2311, NASCAR then barred its participation in the upcoming 2025 season because, among other things, 2311 would not sign contracts that require the teams to relinquish all rights to bring antitrust claims. The Honorable Judge Kenneth D. Bell granted 2311’s preliminary injunction requiring NASCAR to allow the teams to compete, which NASCAR intends to appeal in the Fourth Circuit.
3. SmartSky Networks, LLC v. Gogo Inc., Case No. 3:24-CV-01087 (W.D. N.C.).
On Dec. 17, 2024, airplane technology company SmartSky Networks, LLC brought a $1 billion lawsuit against competitor Gogo, Inc. and Gogo Business Aviation, LLC (collectively, Gogo). SmartSky alleges Gogo unfairly blocked it from selling its in-flight Wi-Fi services to private aircraft customers. According to the lawsuit, Gogo engaged in a systematic campaign to create “fear, uncertainty and doubt” about SmartSky’s allegedly superior services while falsely promoting a future Gogo alternative that never launched. As a result of this campaign, SmartSky claims it failed after nearly 10 years of trying to enter the market.
Mexico
A. COFECE discovers possible collusion in radiological material sales to the government.
COFECE’s Investigating Authority has issued a Probable Liability Opinion against several companies and individuals accused of rigging public tenders for radiological material, an illegal act under the Federal Economic Competition Law.
In Mexico, public health institutions perform more than 20 million x-rays a year. The Mexican Social Security Institute conducts approximately 19 million of these studies annually, while the Institute of Security and Social Services for State Workers conducts an additional 1.6 million.
In its announcement, COFECE highlighted that when companies agree not to compete in tenders, they not only affect public finances, but also compromise Mexicans’ access to essential medical services. COFECE further emphasized that transparency, equity, and efficiency are fundamental principles that should govern government procurement, especially in the health sector. A trial will follow.
B. COFECE investigates lack of effective competition in live entertainment events.
COFECE’s Investigating Authority (AI) has initiated an investigation into live entertainment markets to determine if there are obstacles that limit competition in these markets, which could negatively impact the millions of live entertainment event consumers.
Between 2023 and 2024, half of adults in Mexico attended live entertainment events, such as concerts, live music or dance performances, plays, and art or history exhibitions. In 2023 alone, Mexicans spent more than MEX 7 billion on online tickets for music events. This positions Mexico as the largest Latin American market for the sale of tickets to musical events and the 16th largest market worldwide.
Through its investigation, the AI seeks to identify and eliminate the barriers that prevent competition in these markets. If the AI identifies barriers to competition or essential inputs, the COFECE Plenary may order eliminating those barriers, issue recommendations and guidelines for their regulation, and/or order divestment to improve efficiency.
The Netherlands
Dutch ACM Statement
Further investigation into KPN joint venture’s acquisition of DELTA needed.
The Dutch Authority for Consumers and Markets (ACM) has decided that further investigation is required for Glaspoort’s (a joint venture of KPN and APG) acquisition of a portion of Delta Fiber Nederland’s fiber optic network. KPN is the incumbent telecommunications operator in the Netherlands, while Delta is currently KPN’s largest competitor in the fiber optic market.
According to the ACM, the acquisition may significantly reduce competition in the areas where KPN and Delta operate, potentially leading to higher prices for consumers. The ACM also points out that KPN already has a substantial market position, and the acquisition could further strengthen this position, putting smaller providers at a disadvantage. Finally, while each individual small acquisition may have a limited impact, the cumulative effect of KPN’s multiple, small acquisitions could significantly undermine competition in the long term, which may weaken smaller providers’ negotiating positions.
Before the acquisition can be finalized, Glaspoort and Delta must apply for an acquisition license – the equivalent of a Phase II or in-depth investigation in other jurisdictions – after which the ACM will continue its investigation.
Poland
A. The UOKiK President questions consortium agreements and other competitor practices accompanying tenders.
The Polish Office of Competition and Consumer Protection (UOKiK) has fined 11 geodesy and cartography companies PLN 1.8 million (approximately EUR 422,000 / USD 436,000) for bid-rigging in cartographic services contracts with the Geodesy and Cartography Agency.
The investigation found that these companies engaged in anticompetitive practices through several coordinated actions. The companies formed unnecessarily large consortia, submitted coordinated bids, and divided awarded contracts among themselves. Some participating companies performed no actual work, serving only as nominal consortium members. UOKiK determined that smaller consortia could have completed the projects independently, indicating the larger groups were formed solely to eliminate competition.
In a separate case, UOKiK has initiated antitrust proceedings against seven laundry service providers suspected of bid-rigging in hospital service contracts. The investigation uncovered evidence of potential price-fixing across multiple provinces and coordinated withdrawal of bids. During court-approved searches conducted with police assistance, investigators discovered mobile app communications showing companies exchanging specific price information to influence tender outcomes. The investigation revealed that participants strategically withdrew lower bids to ensure higher-priced bids would win, likely resulting in increased costs for hospitals and patients. This investigation remains ongoing.
Companies found engaging in bid-rigging face severe penalties under Polish law. Organizations can be fined up to 10% of their annual turnover, while individual managers may face personal fines up to PLN 2 million. These regulations apply regardless of company size, as there are no exemptions for companies with small market share. Any anti-competitive provisions in contracts are automatically void under law. Furthermore, affected parties retain the right to seek damages through private antitrust litigation. Notably, bid-rigging stands as the only form of competition-restricting agreement that may result in criminal penalties, including imprisonment.
B. The UOKiK President investigates ENEA Group’s potential abuse of dominant position in renewable energy market.
The Polish Office of Competition and Consumer Protection (UOKiK) has launched an explanatory investigation into the ENEA Group, a major Polish energy conglomerate responsible for electricity generation, distribution, and trading. The investigation focuses on ENEA Operator, the group’s distribution arm, which holds a natural monopoly in its regional distribution network.
The investigation stems from allegations that ENEA Operator may have provided unfair advantages to renewable energy installation (OZE) applications from its own group companies and select third-party businesses. Following these concerns, UOKiK conducted searches at three ENEA Group facilities. Complaints UOKiK received indicate that ENEA Operator may have shown preferential treatment by issuing connection approvals to certain entities that failed to meet formal requirements or by disregarding the chronological order of application submissions. These practices allegedly resulted in other entities being unfairly denied network connections for their renewable energy installations.
UOKiK suspects that this preferential allocation of connection capacity may have depleted available capacity at crucial balancing nodes, leading to the rejection of other companies’ connection requests due to claimed technical limitations. This issue is particularly significant because network access is fundamental for participation in the electricity trading market.
The investigation is examining whether these actions constitute an abuse of dominant market position, particularly regarding the selective restriction of access to essential infrastructure, discriminatory access conditions, or intentional delays in providing access. Additionally, UOKiK is investigating potential illegal agreements between ENEA Operator and the entities receiving preferential treatment for renewable energy installations.
Should the investigation yield sufficient evidence, UOKiK may initiate formal antitrust proceedings against the involved parties. Under Polish law, companies found to have abused their dominant position face fines of up to 10% of their previous year’s turnover. This penalty may extend to entities exercising decisive influence over the company engaged in such practices. Furthermore, any anti-competitive contractual provisions are automatically void, and affected parties maintain the right to pursue damages through court proceedings.
Italy
Italian Competition Authority (ICA)
1. ICA launches investigation into alleged cartel in copper cable manufacturing industry.
On Dec. 3, 2024, ICA opened an investigation against the Italian main copper cable producers for an alleged restrictive competition agreement aimed at coordinating prices and commercial conditions for producing and selling low-voltage copper cables in violation of Article 101 TFEU.
The proceeding started after a company submitted an application for leniency that disclosed the cartel to benefit from a reduced penalty.
The leniency applicant provided evidence to ICA about price coordination between the different parties. According to the applicant, this coordination started in 2005 when the parties aligned their list prices and initial discounts. Later, in 2008, they created a shared system within their association to adjust prices when copper costs changed. The system included a common way to calculate copper prices. This made the copper component a fixed price that was the same for all producers in the association.
2. Investigation against Booking.com (Italy) closed for allegedly abusing dominant position.
On Dec. 17, 2024, ICA closed its investigation against Booking.com S.r.l. (Italy), Booking.com B.V., and Booking.com International B.V. (Booking) for alleged abuse of dominant position after it accepted Booking’s proposed commitments.
ICA had initiated the proceedings because of Booking’s potentially abusive conduct that allegedly limited Italian hotel facilities’ autonomy to differentiate their rates between Booking.com and other online sales channels by adhering to certain programs Booking promoted, such as the Partner Preferiti and Preferiti Plus programs, which give search result visibility advantages in exchange for higher commissions, and the so-called Booking Sponsored Benefit, which allows Booking to apply – without the hotels’ consent – a discount to align the offer on its platform with the best among those available online.
The group submitted a commitment package that would seek to ensure that prices facilities charge on online sales channels, other than booking.com, would not be taken into account at any stage of its operation and program promotions. In addition, greater transparency around the Preferred Partner, Preferred Plus, and Booking Sponsored Benefit program operations allows facilities to make informed decisions regarding the costs and benefits of participating in them. According to ICA, Booking’s commitments are suitable both for removing competitive concerns and for ensuring the commercial autonomy of Italian hotel facilities.
3. ICA imposed penalties exceeding EUR 2 million on Hera S.p.A. and ComoCalor S.p.A. for excessive and unjustified district heating prices.
Between May and June 2023, ICA initiated three proceedings into the networks of Ferrara (operated by Hera S.p.A.), Como (operated by ComoCalor S.p.A.), and Parma and Piacenza (operated by Iren Energia S.p.A.) to investigate whether and to what extent the three companies had passed on an excessive and unjustified burden to the users of district heating networks between 2021 and 2022, when there had been natural gas price increases.
On Nov. 26, 2024, ICA stated that the conduct that Hera S.p.A. and ComoCalor S.p.A. engaged in from Jan. 1-Dec. 31, 2022, consisting of applying unjustifiably burdensome prices to district heating users, constitutes abusive conduct of their dominant position.
ICA imposed a penalty of EUR 1,984,736 on Hera S.p.A. and EUR 286,600 on ComoCalor S.p.A., arguing that the companies prevented consumers from benefiting from available and affordable renewable sources to produce an essential good (heat), and imposed prices that were unfair in relation to costs (including a fair return on investment).
ICA found no violations related to the Parma and Piacenza networks that Iren Energia S.p.A. operates.
European Union
A. European Commission
1. European Commission fined Pierre Cardin and Ahlers EUR 5.7 million for limiting cross-border clothing sales.
The European Commission fined Pierre Cardin and its licensee Ahlers EUR 5.7 million for violating EU antitrust rules. Pierre Cardin, a French fashion house, licenses its trademark to third parties for producing and distributing clothing branded with its name. Ahlers was Pierre Cardin’s largest licensee of clothing in the EEA during the relevant period. Between 2008 and 2021, both companies participated in anti-competitive agreements and coordinated practices that safeguarded Ahlers from competition within its licensed EEA area. This included preventing other licensees from selling Pierre Cardin clothing outside their territories or to low-price retailers. The Commission calculated the fines based on the severity, geographic scope, and duration of the infringement, with Pierre Cardin receiving a EUR 2,237,000 fine and Ahlers being fined EUR 3,500,000.
2. European Commission approves Nvidia’s acquisition of Run:ai.
The European Commission has unconditionally approved Nvidia’s below-threshold acquisition of Run:ai, concluding that it raises no competition concerns. This decision follows a referral by the Italian Competition Authority under Article 22 of the EU Merger Regulation (EUMR), which allows member states to request deal reviews that fall below national turnover thresholds, following concerns about Nvidia’s potential “super-dominance” in the advanced GPU market.
A recent ruling from the European Court of Justice influenced the European Commission’s review; the case invalidated its previous approach to Article 22 EUMR. In its recent assessment, the European Commission determined that the acquisition would not impair competition, as Nvidia would not have the incentive to make its GPUs less compatible with competitors’ software. The European Commission also found Run:ai’s position in the software market for GPU orchestration to be not significant, with sufficient alternative providers available.
B. ECJ Decision
Preliminary CJEU ruling in ongoing proceedings between Tallinna and KIA Auto.
The Court of Justice of the European Union (CJEU) provided a preliminary ruling on the interpretation of Article 101(1) TFEU (the EU’s cartel prohibition provision), following questions from the Administrative Regional Court of the Republic of Latvia. The case involved Tallinna Kaubamaja Grupp AS and KIA Auto AS, which were fined for a vertical agreement that imposed restrictions on car warranties. The national competition authority determined that this agreement hindered access to the Latvian market for independent repairers and restricted independent spare parts manufacturers. The CJEU stated that Article 101(1) TFEU should be interpreted to mean that a national competition authority does not need to demonstrate the existence of concrete and actual competition-restricting effects when investigating an agreement that imposes restrictions on car warranties. It is sufficient to establish the existence of potential competition-restricting effects, provided they are sufficiently appreciable. Now the proceedings shall resume, and the national court will have to evaluate if the Latvian competition authority’s decision demonstrated sufficiently appreciable effects on competition.
Alan W. Hersh, Rebecca Tracy Rotem, Sarah-Michelle Stearns, Miguel Flores Bernés, Hans Urlus, Robert Hardy, Chazz Sutherland, Gillian Sproul, Manish Das, Robert Gago, Filip Drgas, Anna Celejewska-Rajchert, and Ewa Głowacka also contributed to this article.
FTC Announces 2025 Thresholds for HSR Act Filings and Interlocking Directorates Violations
The Federal Trade Commission (FTC) announced Friday increased jurisdictional thresholds for (1) notifications under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the HSR Act), (2) the HSR Act filing fee schedule, and (3) the interlocking directorate thresholds under Section 8 of the Clayton Act.
Revised HSR Thresholds
The FTC revises these thresholds annually based on changes in the gross national product. The new thresholds will be effective 30 days after publication in the Federal Register and will apply to all transactions closing on or after that date.
The HSR Act requires parties engaged in certain transactions (including mergers, joint ventures, exclusive licenses, and acquisitions of voting securities, assets, or non-corporate interests) to file an HSR notification and report form with the FTC and the Antitrust Division of the Department of Justice — and to observe the statutorily prescribed waiting period (usually 30 days, or 15 days in the case of cash tender offers and bankruptcy) prior to closing — if the parties meet “Size of Transaction” and “Size of Person” thresholds (absent any applicable exemptions).
A transaction is reportable if:
Size of Transaction Threshold
The acquiring person will hold, as a result of the transaction, an aggregate total amount of voting securities and assets of the acquired person valued in excess of $505.8 million;
Or
The acquiring person will hold, as a result of the transaction, an aggregate total amount of voting securities and assets of the acquired person valued in excess of $126.4 million, AND the Size of Person thresholds below are met.
Size of Person Threshold
Either the acquiring or the acquired person has at least $252.9 million in total assets (or annual net sales if that party is engaged in manufacturing), and the other party has at least $25.3 million in total assets or annual net sales.
Revised Filing Fee Schedule
Size of Transaction (transaction value)
New Filing Fee
Less than $179.4 million
$30,000
Not less than $179.4 million but less than $555.5 million
$105,000
Not less than $555.5 million but less than $1.111 billion
$265,000
Not less than $1.111 billion but less than $2.222 billion
$425,000
Not less than $2.222 billion but less than $5.555 billion
$850,000
$5.555 billion or more
$2,390,000
Revised Interlocking Directorate Thresholds
The FTC also approved revised jurisdictional thresholds under Section 8 of the Clayton Act, which become effective upon publication in the Federal Register. Section 8 prohibits an officer or director of one firm from simultaneously serving as an officer or director of a competing firm if each firm has capital, surplus, and undivided profits of more than $51,380,000 unless one of the following de minimus exemptions is met:
The competitive sales of either corporation are less than $5,138,000.
The competitive sales of either corporation are less than 2% of its total sales.
The competitive sales of each corporation are less than 4% of its total sales.
The FTC’s upcoming changes to the HSR Rules,[1] effective February 10, place an emphasis on gathering additional information as part of the merger filing process to better inform the agencies of potential Section 8 violations. In addition, the agencies have evidenced an increased scrutiny of interlocking directorates through numerous policy statements and actions.[2]
It is therefore especially important in the current antitrust enforcement environment to monitor roles of a company’s officers and directors at other organizations.
Endnotes
[1] Bruce D. Sokler, Robert G. Kidwell, Kristina Van Horn, Payton T. Thornton, Federal Trade Commission Finalizes HSR Changes, Mintz (Oct. 11, 2024), available at: https://natlawreview.com/article/federal-trade-commission-finalizes-hsr-changes.
[2] See, e.g., Karen S. Lovitch, Bruce D. Sokler, Joseph M. Miller, Raj Gambhir, FTC Hosts Panel and Launches Public Inquiry with DOJ and HHS on Private Equity and Health Care, Mintz (Mar. 6, 2024), available at: https://natlawreview.com/article/ftc-hosts-panel-and-launches-public-inquiry-doj-and-hhs-private-equity-and-health; Bruce D. Sokler, Robert G. Kidwell, Payton T. Thornton, FTC Proposed Settlement Requires Private Equity Firm to Divest Shares, Relinquish Potential Board Seat, and Other Expansive Remedies, Mintz (Aug. 21, 2023), available at: https://natlawreview.com/article/ftc-proposed-settlement-requires-private-equity-firm-to-divest-shares-relinquish; Bruce D. Sokler, Joseph M. Miller, Payton T. Thornton, A Dose of Steroids: Chair Khan’s FTC Releases Expansive Policy Statement on Unfair Methods of Competition, Mintz (Nov. 14, 2022), available at https://natlawreview.com/article/dose-steroids-chair-khan-s-ftc-releases-expansive-policy-statement-unfair-methods.
Bank M&A Outlook for 2025
Overall M&A activity in 2024 continued to be subdued; however, the fourth quarter, especially after the Trump bump, showed signs of a significant pick up. Our M&A outlook for 2025 suggests the potential for a banner year. Numerous variables could hinder deal activity, but improving economic conditions coupled with enhanced net interest margins (NIMs) from lower short term interest rates and possible tax cuts should improve fundamentals. Moreover, a less hostile regulatory regime should eliminate a risk overhang to earnings.[1] The prospect for a more relaxed antitrust enforcement regime or at least less distrust of business combinations could create significant opportunities for strategic growth and investment.
Positive Factors for Dealmaking in 2025
CEO Confidence and Stock Market Performance. CEO confidence continues to go up, which can give C-suites and boards the necessary conviction to pursue M&A. If economic conditions improve, then capital markets should also strengthen. M&A volume frequently tracks stock market performance. In addition, improved economic conditions and higher trading price multiples could narrow valuation gaps between buyers and sellers that were obstacles to some transactions last year.
Antitrust. Not since Grover Cleveland has a President lost a bid for reelection and then ran again successfully. Thus, while a change in Presidential administration and political party leadership ordinarily brings policy uncertainty, we can look to President Trump’s first term for some guidance – but no guarantees – as to how his administration may govern this time around. This is particularly the case with the current regulatory skepticism, if not hostility, toward M&A. In 2023, President Biden adopted an Executive Order ostensibly designed to promote competition. The effect of that admonition was that regulators touching M&A across his administration, whether as part of an independent agency or otherwise, added criteria for M&A while also slowing the pace of review to allow for greater scrutiny. Bank regulators leaned into this Executive Order. Over the next four years, we generally expect regulators to be more open to structural remedies and less likely to block mergers outright. But caution is warranted. We may see bipartisan scrutiny of certain aspects of banking such as Fintech in light of lingering Synapse concerns. There are also populist views in the Trump administration and Congress that may scrutinize major consolidations or mergers, particularly if they will impact US jobs. The current expectation is also that the recently adopted HSR filing requirements for nonbank acquisitions will remain in effect.
Lower Interest Rates. Acquisition financing should become more attractive if the Federal Reserve moderates its rate cutting, so that long-term rates might stabilize. Because acquisition financing tends to be longer term in duration, long term rates are much more important. If Department of Government Efficiency (DOGE) is truly effective in cutting spending or at least the pace of increased spending, then long-term rates might actually come down. Private equity financing of corporate debt has taken bank market share. This competition has lead to greater availability of deal funding. An open issue is whether private credit will continue to play as large a role in corporate financing if the cost of traditional bank debt goes down.
For bank buyers, the Federal Reserve may maintain the current Fed Funds rate. As a result, NIMs may continue to widen as the yield curve steepens. Short term deposit rates have declined while the bond market expects long term rates to increase from inflationary tariffs, government spending and tax policy. Wider NIMs lead to higher bank valuations.
Tax Policy. If Congress pursues tax cuts, the resulting savings could generate more cash flow to pursue acquisitions and make exit transactions even more attractive to selling shareholders. Another issue to watch is whether the Tax Cuts and Jobs Act (TCJA), which expires at the end of 2025, is extended and/or modified.
Deregulation. Dealmaking could be impacted if the new administration carries out its goal of deregulation, although it is not clear how quickly that impact might be felt. Deregulation is most likely to open M&A doors not just in banking but for fintech, crypto, and financial services generally. The nominations of Scott Bessent for Treasury, Kevin Hassett for the National Economic Council, and Paul Atkins for the Securities and Exchange Commission all indicate a more hospitable banking environment.
While we expect a significant uptick in M&A activity, we may see particular volume from the following:
Private Equity Exits. It has been widely reported that many private equity funds need to sell their interests in portfolio companies in order to wind-up and return profits to their investors. Exit transactions have been delayed for a variety of reasons, including valuation gaps and a lack of sponsor-to-sponsor M&A activity (largely due to the increased cost of capital associated with leveraged acquisitions caused by higher interest rates).
Strategic Divestments. Banks will continue to explore divesting branches, non-core assets and business lines, especially insurance, to simplify their organizations and footprints and possibly to ward off threats from activist shareholders.
Credit Unions. While we have started to see pushback on credit union and bank tie ups from state regulators, it is likely that the NCUA will continue to permit such combinations. The rise in bank stock valuations may add competition in 2025 that was not available for many deals in 2024. Nonetheless, the lack of credit union taxation or comparable tangible equity requirement and risk-based capital rules should enable credit unions to continue to compete effectively for deals.
Higher Long-term Rates. Certain banks continue to suffer AOCI pressure from the run-up in long-term rates that accompanied recent Federal Reserve rate cuts. Increasingly, national banks with less than 2% tangible capital and all banks with poor NIMs may be pushed by their regulators to sell or at least engage in a dilutive capital raise.
Purchase Accounting/Stock Valuations. For over 40 years, economies of scale have led to vibrant annual results for bank M&A transactions. The punishing accounting marks (AOCI, loan mark-to-market and core deposit intangibles) from M&A have held back such pent up need for growth. Buyers need to use stock consideration to replace the capital from purchase accounting. Higher stock prices are allowing more buyers to do so with less dilution to their shareholders.
Countervailing Factors and Uncertainties
Of course, M&A activity in 2025 may fall short of expectations, particularly if economic conditions deteriorate. Various factors that could adversely impact M&A in 2025 include:
Trade Wars / Tariffs. President Trump has made clear his goal to negotiate trade agreements and expressed his willingness to impose tariffs, which would necessarily impact borrowers in affected industries as well as inbound/outbound investment involving certain countries. As with most government policies, tariffs invariably have winners and losers. To the extent tariffs allow businesses to raise prices, the higher returns could impact creditworthiness, while other businesses will suffer if their supply chain falls apart or they are unable to pass along higher costs to consumers. There may also be bipartisan support for some tariffs, particularly on China.
Politics. Uncertainty over important government policies could hold M&A back. There is the constant specter of disfunction in Washington, D.C., and a thin Republican majority. In addition, proposed cuts in government spending—perhaps led by DOGE—could impact the economy. Staffing or other budget cuts at key governmental agencies (e.g., banking regulators) could also delay the ability to consummate M&A transactions.
Near-Term Transition Issues. Compared to his first term, President Trump is acting more quickly in naming key appointees. Nonetheless, the people who need to run the various important government agencies must obtain Senate approval, where a successful confirmation is not guaranteed and there is a backlogged Senate calendar. Delayed appointments may also stall President Trump’s high-priority items such as border security and tax policy.
Inflationary Pressures. Ongoing inflation will impact markets and economic conditions generally. There are also particular government policies under discussion (e.g., immigration) that could contribute to inflationary pressures. If the Federal Reserve reverses recent accommodation, banks may again suffer shrinking NIMs. This would revive the negative spiral of reduced valuations and impact whether there can be a meeting of the minds on price.
State Attorneys General/State Bank Regulators. A more business-friendly antitrust posture from the federal government could be offset by state attorneys general or state level bank regulators. This could be led by more localized concerns about competition or by state officials who see political upside in challenging transactions.
Geopolitical Risks. Numerous geopolitical risks could escalate in 2025, including the spread of war in the Middle East, Europe or elsewhere, acts of terrorism, sanctions, and the worsening of diplomatic and economic relations with certain countries, any of which could adversely affect markets.
[1] Bank Director survey indicated that almost 75% of bankers viewed regulatory risk as one of the top three risk areas.
Carleton Goss, Michael R. Horne, Lucia Jacangelo, Nathaniel “Nate” Jones, Jay Kestenbaum, Marysia Laskowski, Abigail M. Lyle, Brian R. Marek, Joshua McNulty, Betsy Lee Montague, Alexandra Noetzel, Sumaira Shaikh, Jake Stribling, and Taylor Williams also contributed to this article.
Significant Increases to 2025 HSR Act Merger Thresholds and Filings Fees
Go-To Guide:
FTC raises merger notification thresholds, with initial reporting starting at $126.4 million, up from $119.5 million.
The updates also adjust the six-tier filing fee system, with fees ranging from $30,000-$2,390,000 based on deal size.
FTC also updates limits on interlocking directorates.
On Jan. 10, 2025, The Federal Trade Commission announced that it will publish revised thresholds and fees for premerger notifications under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). These changes include updated size-of-transaction thresholds for mergers and acquisitions, as well as increased filing fee tiers and fees for larger transactions, as required by the Merger Filing Fee Modernization Act of 2022 (Fee Modernization Act).
Congress first amended the HSR Act in 2000 to require annual adjustments of notification thresholds based on the change in gross national product (GNP). The Fee Modernization Act replaced the prior three-tier filing fee system with corresponding transaction size thresholds with a six-tier filing fee system based on transaction value. The tiers set forth below are also adjusted annually based on GNP change. The fees within each tier increase annually based on the percentage change in the consumer price index, comparing the most recent fiscal year ending in September to the previous fiscal year.
The FTC also published revisions to the thresholds that trigger, under Section 8 of the Clayton Act, a prohibition preventing companies from having interlocking memberships on their corporate boards of directors. These revisions represent the annual adjustment of thresholds based on GNP changes.
Revised HSR Act Thresholds
The initial threshold for a HSR Act notification increases from $119.5 million to $126.4 million. For transactions valued between $126.4 million and $505.8 million (increased from $478 million), the size of the person test continues to apply. That test makes the transaction reportable only where one party has sales or assets of at least $252.9 million (increased from $239 million), and the other party has sales or assets of at least $25.3 million (increased from $23.9 million). All transactions valued more than $505.8 million are reportable without regard to party size.
The new thresholds apply to transactions closing 30 days or more after the official Federal Register publication date. Official publication is expected in the next few business days.
The following is a summary chart of the threshold adjustments:
PRIOR THRESHOLD
REVISED THRESHOLD
Size of the transaction test
more than $119.5 million
more than $126.4 million
Size of the person test
$23.9 million/$239 million
$25.3 million/$252.9 million
Transaction value above which size of the person test is inapplicable
$478 million
$505.8 million
The amendments will adjust all notification thresholds as follows:
NOTIFICATION LEVELS
more than $50 million
more than $126.4 million
$100 million
$252.9 million
$500 million
$1,264 million
25% of total outstanding shares worth
more than $1 billion
25% of total outstanding shares worth
more than $2,529 million
50% of total outstanding shares worth
more than $50 million
50% of total outstanding shares worth
more than $126.4 million
These notification threshold adjustments also adjust upward thresholds applicable to certain exemptions, such as those involving the acquisition of foreign assets or voting securities of foreign issuers.
Revised HSR Filing Fee Thresholds
Below is the new filing fee schedule, which applies to transactions closing 30 days or more after Federal Register publication. Official publication is expected in the next few business days.
NEW FILING FEE LEVELS
Size-of-Transaction*
Fee**
more than $126.4 but less than $179.4 million
$30,000
$179.4 million or greater, but less than $555.5 million
$105,000
$555.5 million or greater, but less than $1.111 billion
$265,000
$1.111 billion or greater, but less than $2.222 billion
$425,000
$2.222 billion or greater, but less than $5.555 billion
$850,000
$5.555 billion or greater
$2,390,000
* Adjusted annually based on GNP.
** Adjusted annually when the CPI increases by more than 1% compared to the baseline CPI from Sept. 30, 2023.
Revised Section 8 Thresholds
The FTC also published revisions to the thresholds that trigger a prohibition preventing companies from having interlocking memberships on their corporate boards of directors under Section 8 of the Clayton Act. These revised thresholds are effective 30 days after official publication in the Federal Register. Official publication is expected in the next few business days.
Section 8 prohibits a “person,” which can include a corporation and its representatives, from serving as a director or officer of two “competing” corporations, unless one of the following exemptions applies:
either corporation has capital, surplus, and undivided profits of less than $51,380,000 (increased from $48,559,000);
the competitive sales of either corporation are less than $5,138,000 (increased from $4,855,900);
the competitive sales of either corporation amount to less than 2% of that corporation’s total sales; or
the competitive sales of each corporation amount to less than 4% of each corporation’s total sales.
“Competitive sales” means “the gross revenues for all products and services sold by one corporation in competition with the other, determined on the basis of annual gross revenues for such products and services in that corporation’s last completed fiscal year.” “Total sales” means “the gross revenues for all products and services sold by one corporation over that corporation’s last completed fiscal year.”
Health Care Providers Should Seriously Consider Claims Under Two Antitrust Class Actions
Now is the time for health care providers to consider participating in the recent Blue Cross Blue Shield (BCBS) antitrust class action settlement and the newly filed antitrust cases alleging widespread price fixing for out-of-network claims by MultiPlan and health insurers.
Health care provider antitrust litigation challenging health insurer anticompetitive conduct is on a recent hot streak, with health care providers securing billions of dollars in a class action settlement with BCBS health plans for alleged anticompetitive price-fixing in the prices they pay health care providers. Additionally, last year, health care providers filed antitrust suits seeking damages from MultiPlan and health insurers due to MultiPlan’s alleged price-fixing of out-of-network medical claims.
These two cases deserve providers’ attention right now before important deadlines pass.
First, a nationwide settlement was preliminarily approved in the class action of providers alleging that BCBS health plans around the country conspired to fix payment rates to providers. The details of the settlement are available at www.bcbsprovidersettlement.com.
Key deadlines in the BCBS settlement are coming up soon:
March 4, 2025: Opt Out/Objection Deadline
July 29, 2025: Provider Claims Submission Deadline
July 29, 2025: Final Approval Hearing
As a result, it is critical that health care providers — both facilities and physicians — promptly consider:
Whether they have claims at issue subject to the settlement.
Whether they want to participate in the settlement or opt out.
If they choose to participate, what information and data they need to obtain and should submit that could increase their settlement payment.
Analyze the scope of the class action settlement releases and how those provisions may impact future legal claims against the settling BCBS health plans.
Meanwhile, another potentially massive antitrust class action is gearing up right now in In re Multiplan Health Insurance Provider Litigation, Civ No. 1:24-CV-06795 (N.D. Ill.), where the American Medical Association and dozens of health care facilities and providers allege that nearly all of the largest US health insurers engaged in price-fixing for the payment of out-of-network claims by using a single vendor, MultiPlan, to share pricing information and set common, low prices. These cases are still quite early in the litigation process. But health care providers with out-of-network claims affected by the alleged price-fixing could recover a significant monetary award or settlement if the litigation proceeds and is successful.
If you have significant commercial health plan out-of-network claims exposure, now is the time to evaluate participating in the MultiPlan litigation in Illinois federal court.
Key Employment Law Issues Employers Need to Watch in 2025
As the United States enters a new administration, changes in workplace regulations and enforcement priorities are on the horizon.
For employers, this means staying prepared for potential shifts in federal policies, heightened oversight, and new legislative initiatives. Whether you’re navigating changes in wage laws, addressing pay transparency, or adapting to evolving labor relations, staying ahead is essential.
Partnering with a human resources attorney or a labor and employment law firm is more critical than ever to successfully manage these challenges. Below, we outline the key employment law issues employers should prioritize in 2025.
Overtime Pay
With the change in administration, workplace policies are expected to shift to reflect new leadership priorities. In November 2024, we reported on a federal judge in Texas striking down the U.S. Department of Labor’s (DOL) rule that significantly raised the minimum salary thresholds for executive, administrative, and professional employees.
The rule proposed two increases: the first, effective July 1, 2024, raised the threshold from $684 per week ($35,568 annually) to $844 per week ($43,888 annually). The second increase, scheduled for January 1, 2025, would have raised the threshold to $1,128 per week ($58,656 annually).
The court’s ruling vacated the entire rule, including the July 1 increase.
While the 2024 rule is unlikely to be revived, the Trump Administration could support a moderate increase above the current $684 weekly threshold.
This potential shift in overtime pay regulations is just one example of how workplace policies may evolve under the new administration. Another key area to watch is the classification of independent contractors, which has long been a focus of labor and employment law.
Independent Contractors
The 2021 Rule, issued under President Trump’s first term, simplified worker classification by emphasizing two primary factors: the degree of control over work and the worker’s opportunity for profit or loss. If these core factors didn’t provide a clear classification, additional considerations—such as the skill required, the permanence of the relationship, and whether the work was integral to the employer’s production—were applied. This pro-employer framework allowed businesses greater flexibility in classifying workers as independent contractors.
We previously detailed the 2024 rule, which reinstates the long-established economic reality test used by the DOL and courts. This test evaluates six factors:
The worker’s opportunity for profit or loss based on managerial skill
Investments made by both the worker and the employer
The permanence of the work relationship
The nature and degree of control exercised
The extent to which the work is integral to the employer’s business
The worker’s skill and initiative
This shift reflects a return to a more traditional, worker-focused standard. Employers should monitor developments as policy priorities evolve under the new administration.
Non-Competes Ban
Another significant area of concern for employers is the regulation of non-compete agreements, which could see substantial changes under the new administration.
In October, we wrote on the Federal Trade Commission’s appeal of a Texas District Court ruling that blocked its proposed nationwide ban on non-compete agreements. If implemented, the rule would:
Prohibit employers from creating or enforcing non-competes with all workers, including employees, independent contractors, volunteers, and others providing services.
Invalidate most existing non-competes, except for those involving senior executives.
Require employers to notify current and former workers (excluding senior executives) that their non-competes are no longer enforceable.
Now, with the rule likely stalled, appeals are being reviewed by the Fifth and Eleventh Circuits. In the meantime, employers should ensure their restrictive covenants align with evolving state laws in all jurisdictions where they operate.
Union Restrictions, Maybe?
While non-compete agreements remain in legal limbo, another area likely to face scrutiny under the new administration is union-related activities, as shifts in leadership at the National Labor Relations Board (NLRB) could significantly impact labor relations and worker protections.
President-elect Trump has a history of opposing unions, with his previous appointees to the National Labor Relations Board (NLRB) favoring employers. He has also publicly criticized the Protecting the Right to Organize Act (PRO Act). While the next General Counsel of the NLRB has not been named, recent decisions, including the February 2024 Home Depot USA, Inc. v. Morales case that we covered, could face reconsideration.
In that case, the NLRB ruled Home Depot violated the National Labor Relations Act (NLRA) by “constructively” terminating Antonio Morales. Morales refused to remove the initials “BLM” from his company-issued apron, which he used to express support for the Black Lives Matter movement.
The Board found that his actions qualified as protected concerted activity under Section 7 of the NLRA due to the context of his statement.
The Home Depot decision serves as a reminder to private employers about the limits of lawful workplace policies. Employers cannot prohibit employees from making public statements about workplace conditions, even through written expressions on company-provided apparel. This case highlights the importance of carefully reviewing dress codes and related personnel policies to ensure compliance with the NLRA.
As union-related policies face potential changes, another area likely to experience shifts under the new administration is Diversity, Equity, and Inclusion (DEI) initiatives, particularly in light of recent court rulings and evolving federal priorities.
More Rollback of DEI Initiatives
Last year, several major U.S. companies scaled back or eliminated their Diversity, Equity, and Inclusion (DEI) programs following the U.S. Supreme Court’s ruling that race-based considerations in college admissions are unconstitutional. Under President Trump, we could see the revival of a previous executive order that restricted federal contractors from implementing certain DEI initiatives. Additionally, the administration may roll back other executive orders designed to advance equal employment opportunities.
However, DEI initiatives, if implemented properly, still are important and should be considered a valuable tool to foster an inclusive workplace environment.
Staying Ahead of Employment Law Changes
As workplace regulations continue to evolve under the new administration, employers must remain proactive to ensure compliance and mitigate risks. Regularly reviewing and updating policies—such as wage and hour classifications, non-compete agreements, DEI initiatives, and workplace conduct guidelines—is essential to staying aligned with federal and state laws.
Employers should also monitor legal developments, especially in areas like worker classification, union-related activities, and restrictive covenants, and adapt accordingly. Implementing robust training programs for managers and human resources personnel can further help maintain compliance and address emerging legal requirements.
Preparing for New Trump Tariffs: 10 Approaches
Here are 10 ways to avoid, mitigate, or delay the costs of new tariffs that President-elect Trump has promised for countries like China, Canada, and Mexico:
Confirming country of origin: Determine whether tariffs apply by confirming the country of origin of your imported goods. When goods have inputs from multiple countries, you must carefully apply the “substantial transformation” standard utilized by US Customs and Border Patrol (CBP) to determine country of origin.
Seeking alternative sources: If imported goods originate from a targeted country, determine whether they can be sourced from a non-targeted country at lower cost.
Confirming HTS Codes: Although tariffs were promised on “all” goods from targeted countries, historically, tariffs apply only to goods classified under certain Harmonized Tariff Schedule (HTS) subheadings. Classification is complex and errors are common, so carefully verify the HTS classification of your imports.
Tariff Engineering: If imported goods originate in a targeted country and are classified under a targeted HTS subheading, consider options for modifying the goods to change their origin or HTS classification. For example, further processing in a nontargeted country might “substantially transform” the goods so they originate in a non-targeted country. Also, importing components or subassemblies, rather than finished goods, may allow you to import under HTS subheadings not subject to the tariffs.
Product exclusions: If new tariffs follow the pattern of Section 301 tariffs on Chinese goods and Section 232 tariffs on steel and aluminum, US authorities may implement a “product exclusion” process. Product exclusions, if granted upon application, exempt goods from tariffs. Applications are more likely to be granted when the targeted country is the sole source for the goods or when tariffs would harm national security.
Examining declared value: Tariff duties are a percentage of the value declared to CBP, so ensure you declare the lowest value permitted under CBP regulations. Under the “first sale rule,” you can (subject to conditions) value goods based on the price paid the first time they are sold for U.S. import, as opposed to higher prices subsequently paid to middlemen. Alternatively, if your supplier acts as the importer of record, tariffs could be based on their cost, rather than your higher sale price.
Shifting tariff costs: Contracts with “change of law” provisions may entitle you to renegotiate contracts and shift some or all tariff costs to your counterparties.
Stockpiling goods: Although only a temporary solution, new tariffs can be avoided by stockpiling imported goods prior to the tariffs’ effective date.
Bonded warehousing: Tariff payments can be delayed by storing imported goods in a bonded warehouse. Tariffs are paid when the goods are sold and leave the warehouse, instead of the time of import.
Temporary Imports: If goods will be imported only temporarily because they will be exported or incorporated into other goods for export, consider whether tariffs can be avoided through programs such as: temporary importation under bond (TIB), duty drawback, or use of a free trade zone.
New US Sanctions Target Russia’s Energy Sector
On 10 January 2025, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a package of new sanctions targeting Russia’s energy sector. In an effort to curtail Russia’s oil revenue and ability to evade US sanctions, OFAC issued: (1) a Determination authorizing sanctions on parties operating in Russia’s energy sector; (2) a Determination banning US petroleum services to Russia; and (3) blocking sanctions against oil and gas majors, vessels in the so-called “shadow fleet,” certain traders of Russian oil, Russian maritime insurers, and Russian oilfield service providers.
Operating in Russia’s Oil Sector
The new “Energy Sector” Determination broadens OFAC’s authority to block parties that operate in Russia’s “energy sector,” which OFAC will define in forthcoming regulations to broadly cover activities in Russia’s oil, nuclear, electrical, thermal, and renewable sectors.
Ban on US Petroleum Services
The “US Petroleum Services” Determination prohibits most petroleum services (directly or indirectly) to Russia from the US or by US persons, effective 27 February 2025. OFAC plans to define “petroleum services” to include services related to oil exploration, production, refining, storage, transportation, distribution, marketing, among others. OFAC confirmed this Determination does not ban all US services for maritime transportation of Russian oil, provided services comply with applicable price caps and do not involve blocked parties. FAQ 1217.
Blocking Sanctions
OFAC designated hundreds of entities, vessels, and individuals to the Specially Designated Nationals and Blocked Persons List (SDN List). Notably, these blocking sanctions targeted:
Gazprom Neft and Surgutneftegas (two of Russia’s biggest oil producers and exporters) and numerous subsidiaries.
183 vessels in the “shadow fleet” that aids Russia’s sanctions evasion, including Sovcomflot vessels previously covered by General License 93, which OFAC revoked.
A network of traders of Russian oil that are linked to the Russian government or otherwise have suspicious ownership.
Over 30 Russian oilfield service providers.
Russian maritime insurance providers, Ingosstrakh Insurance and Alfastrakhovanie.
US persons are prohibited from all dealings with parties listed on the SDN List and entities owned more than 50% by parties on the SDN List. The property interests of these parties must be blocked/frozen and reported to OFAC if they are within US jurisdiction or US person possession/control.
General Licenses
OFAC issued several General Licenses (GLs) to authorize: petroleum services for certain projects (GL 121), wind down transactions related to energy (GL 8L), certain transactions for nuclear projects (GL 115A), certain transactions involving Russian oil majors (GL 117, 118, and 119), and safety-related transactions for blocked vessels (GL 120).
Conclusion
These new sanctions increase risk and pose considerable challenges for companies with connections to Russia’s energy sector. While US companies are prohibited from providing most petroleum services to Russia, non-US companies face the risk of blocking sanctions if their operations support the broader Russian energy sector. Although OFAC intends to issue regulations and guidance that clarify these measures, businesses must assess risk now, with the assistance of counsel, to identify effected transactions and implement appropriate compliance measures.