When is a transaction that avoids HSR a transaction for avoidance?

NVIDIA is by far the dominant supplier of general-purpose processing units for developing, training and deploying advanced AI models. Groq specializes in AI accelerator application-specific integrated circuits (ASICs) that are customized for inference, which is the process of running AI models to generate outputs for real-world use. The Groq chips are alleged to be far more energy efficient for this use than the general-purpose NVIDIA units. In December 2025, NVIDIA and Groq announced a transaction whereby, for $20 billion, NVIDIA acquired a nonexclusive license to Groq’s ASIC technology. At the same time, many of Groq’s key employees — including its CEO and founder, its president and its core engineering team — accepted employment with NVIDIA. Groq remains an independent company, continuing to operate a cloud-based AI inference platform. Groq remains free to use the intellectual property licensed to NVIDIA, or to allow it to be used by other parties. But, as Sens. Warren and Blumenthal asserted in their March 19 letter, “[a]lthough NVIDIA’s license for Groq’s technology is non-exclusive, NVIDIA’s acquisition of Groq’s key employees significantly reduces the value for other companies of licensing this technology as Groq’s pace of innovation and ability to stay at the cutting-edge of chip design will decline.”

The Premerger Notification Office of the Federal Trade Commission (FTC), which administers the HSR rules, has long taken the position that a nonexclusive license is not an asset for purposes of the HSR rules. Hence, regardless of the price paid, entry into a nonexclusive license is not subject to an HSR filing or a pre-consummation review. The hiring of personnel, even key personnel, is likewise not subject to the HSR Act. Accordingly, the NVIDIA/Groq transaction proceeded without a filing under the HSR Act, and the antitrust agencies did not have an opportunity to review the transaction, or to request additional information from the parties, before the deal became effective. The agencies can review a transaction even after its completion, but the very purpose of HSR review is to avoid having to “unscramble the eggs” of a consummated transaction, with all the difficulty that may entail.^[5]

In their March 19, 2026, letter, Sens. Warren and Blumenthal posed a number of questions to Huang, including whether the Groq transaction was structured as a license of technology and a hiring of key employees to avoid antitrust scrutiny, and implicitly suggested that the transaction may have contravened Rule 801.90. In an earlier letter dated February 4, 2026, sent by Sens. Warren and Blumenthal and Sen. Ron Wyden of Oregon to the Assistant Attorney General of the Department of Justice (DOJ) and the Chair of the FTC, the senators identified, along with NVIDIA’s Groq deal, five other so-called acquihire transactions in the Big Tech space, certain of which they had earlier flagged to the regulators, also implying that the transaction structures there may have been in violation of Rule 801.90.

Put-Call Arrangements

In the late 1980s, the FTC and DOJ weaponized Rule 801.90 against a particular stratagem with the participation of an investment bank to avoid filing under the HSR Act. At the time, the HSR size-of-transaction threshold was only $15 million, which meant that a hostile acquirer of shares in a public company could reach the HSR threshold long before it would be required to report on SEC Schedule 13D as the holder of more than 5% of the company’s shares. Because an acquiring person in a Rule 801.30 transaction — that is, a transaction in which shares are acquired from someone other than the issuer — must inform the company of its HSR filing contemporaneously with the filing, compliance with the HSR Act would have prematurely tipped off the company to the investor’s intentions. 

Certain investors at the time entered into an arrangement with an investment bank whereby the investment bank would purchase shares in the target company. The shares acquired by the investment bank, when added to the shares held by the investor, exceeded the HSR threshold. But because the investor and the investment bank were not within the same “person” for purposes of the HSR Act and rules, a literal application of the HSR rules would not require aggregation of the purchases.

The investor and the investment bank would at the same time enter into a put-call arrangement, whereby after a certain period of time the investment bank could put the shares to the investor or the investor could call the shares from the investment bank. The FTC maintained that the investment bank acted as the agent of the investors and made purchases on their behalf so that the investors had indeed crossed the HSR threshold without filing. At the request of the FTC, the DOJ brought enforcement actions against the investors, and obtained consent judgments against them, for engaging in transactions for avoidance under Rule 801.90.^[6]

Beazer/Koppers

A somewhat similar arrangement facilitated the acquisition by Beazer plc, a UK-based, multinational general construction company, of Koppers Co. Inc., a US-based chemical and construction company. In September 1987, Beazer formulated a plan to acquire Koppers. In September and October 1987, Beazer acquired $14.8 million worth of Koppers shares, just below the $15 million size-of-transaction threshold in effect at the time. At the same time, it entered into a general partnership with two financial institutions. Because none of the three partners held 50% or more of the partnership interests, and because the partnership was a newly formed entity with no regularly prepared balance sheet, the partnership had no ultimate parent entity and itself did not satisfy the size-of-person test under the HSR Act.^[7] The partnership then proceeded to acquire additional Koppers shares in an amount that exceeded the HSR threshold but without any filing under the HSR Act. 

Subsequently, a corporation controlled by Beazer launched a tender offer for Koppers, and Beazer filed under the HSR Act. The tender offer closed in June 1988. Thereafter, in a series of transactions involving the corporation, the Koppers shares held by the partnership were effectively distributed to its partners, Beazer and the two financial institutions, and in January 1989, under pre-negotiated put-call arrangements, Beazer effectively purchased the Koppers shares of the two financial institutions. 

In August 1992, the antitrust agencies sued Beazer in Washington, DC, federal court for violating the reporting requirements of the HSR Act.^[8] The agencies maintained that the partnership was formed by Beazer as a device for avoidance. At the same time, the agencies entered into a consent judgment with Beazer, under which Beazer agreed to pay a $760,000 penalty.^[9]

Canon/Toshiba

Fast-forward to March 2016. Toshiba Corp., under pressure on account of financial statement irregularities, agreed to sell its Toshiba Medical Systems Corp. to Canon Inc. Toshiba needed to recognize the proceeds of the sale before the end of its fiscal year on March 31, 2016. Because of the timing of the negotiations with Canon, however, it would not have been possible to file and receive clearance for the sale by that deadline. Instead, Toshiba and Canon did the following: (i) Toshiba formed a special-purpose holding company; (ii) Toshiba created 20 Class A voting shares, a single nonvoting share and options exercisable for nominal consideration for 134,980,000 ordinary voting shares of Toshiba Medical Systems; (iii) Toshiba sold to Canon the special nonvoting share and the options for $6.1 billion; (iv) Toshiba transferred the Class A voting shares in Toshiba Medical Systems to the special-purpose company for a nominal payment; (v) in December 2016, after filing and obtaining clearance under the HSR Act, Canon exercised its options and obtained control of the voting shares of Toshiba Medical Systems; and (vi) Toshiba Medical Systems then bought out the Class A voting shares for a fixed, predetermined price. 

The antitrust agencies characterized the transaction as an avoidance scheme and alleged that Canon had acquired beneficial ownership of Toshiba Medical Systems in March 2016 before compliance with the HSR Act. They noted that the special-purpose company “bore no risk of loss, and no meaningful benefit of gain, for any decrease or increase in [Toshiba Medical Systems’] value. Rather, it was Canon which bore that risk or would realize any potential gain from [Toshiba Medical Systems’] operations.”

The agencies sued Canon and Toshiba in federal court in Washington, DC, on June 10, 2019.^[10]At the same time, Canon and Toshiba entered into a settlement agreement with the agencies, under which each agreed to pay a penalty of $2.5 million and to implement HSR compliance programs.^[11]

More recently, on November 4, 2025, the FTC sent a letter to counsel for Novo Nordisk A/S and counsel for Metsera Inc.^[12] regarding the then-pending proposal of Novo Nordisk to acquire Metsera, a manufacturer of GLP-1 drugs. The FTC expressed concerns that the proposed transaction structure appeared to resemble that of the Canon/Toshiba transaction in that Novo Nordisk would pay $6 billion in cash up front for convertible voting stock, with the cash being disbursed to the shareholders of Metsera, all before filing and receiving clearance under the HSR Act. 

In the letter, the FTC said, “Firms cannot evade HSR review by disaggregating an acquisition into multiple steps and deferring the HSR filing to the end, after potentially anticompetitive harms have already occurred.”

Ultimately, Metsera was acquired not by Novo Nordisk but by Pfizer, which had entered into an earlier acquisition agreement with Metsera and received clearance for the transaction under the HSR Act. 

If parties price an acquisition transaction just below the HSR size-of-transaction threshold, even if they do so for the express purpose of avoiding a filing under the HSR Act, they are not in violation of Rule 801.90. Whatever the parties’ intentions, they have not purchased stock or assets in excess of the threshold. 

The same should be true in a transaction in which an issuer agrees to sell shares to an acquirer in excess of the size-of-transaction threshold in two closings. The parties close on a portion of the shares that does not exceed the threshold before filing under the HSR Act. A second closing for the portion in excess of the size-of-transaction threshold — and importantly the payment for the shares constituting the excess — occurs only after the parties receive clearance under the HSR Act. If the parties do not obtain clearance for the acquisition of the excess, the second closing does not occur. Although the price for the shares at the second closing is fixed so that market risk pending the second closing is borne by the acquirer, from a risk perspective this is no different than if the parties had collapsed the two closings, with the entire purchase to occur only after HSR clearance is received.

Consider as well a transaction in which two parties form a limited liability company in which each holds a 49% interest, and 2% is held by an unrelated third party. Assume the limited liability company is a newly formed entity with no balance sheet. The limited liability company agrees to acquire a business for a purchase price in excess of the size-of-transaction threshold but beneath the price at which the size-of-person test no longer applies.^[13] Because the limited liability company has no ultimate parent entity under the HSR rules, the size-of-person test is not satisfied.^[14] Although the parties structured the limited liability company as they did to avoid filing under the HSR Act, the parties have no arrangements or intentions for taking out the unaffiliated 2%. The agencies should not be able to claim against the parties under Rule 801.90, because in fact the acquiring limited liability company does not meet the size-of-person test and there are no plans to change the structure of the limited liability company or its ownership of the acquired business. In contrast, if under some formal or informal arrangements, the parties had agreed that the 2% interest would be subsequently transferred to the other members and delayed a filing under the HSR Act to the time of transfer, there would be a basis for invoking Rule 801.90.

It is difficult to articulate a bright line, all-encompassing test for a transaction for avoidance under Rule 801.90. In the aftermath of the enforcement action against Canon and Toshiba, the staff of the FTC articulated this approach:

Some have argued that so long as there is a legitimate purpose for the overall structure of the transaction, then there is not a purpose to avoid. This is not correct. Rule 801.90 is not a normative provision, nor is it even focused on the competitive effects of transactions. Rather, it poses a simple question: does the benefit that is the motive behind the transaction’s structure result from avoiding or delaying filing? If the answer is yes, the structure is an avoidance device under the Rule. So, in this case where Toshiba’s desire to quickly realize the gains from the transaction so as to avoid bankruptcy may have been “legitimate” — and certainly was not anticompetitive — that benefit flowed directly from delaying the filing. In contrast, if a transaction’s structure creates a benefit entirely unrelated to HSR filing — such as a tax benefit from a proposed structure that has nothing to do with filing — but the filing is delayed or avoided as an incidental consequence of the structure, there is no avoidance device.^{,[15, 16]}

Despite the attempt of the staff to distill the Rule 801.90 inquiry to a single question, the matter is clearly not that simple, as illustrated by the examples in the prior section. It might be useful, therefore, to identify certain factors and considerations that may lead to a determination that an avoidance transaction has occurred based on the actual enforcement actions:

• A party is acting as an agent for another party, with no economic interest in the shares or assets to be acquired, other than its agency compensation.
• The purchase price or similar transaction consideration is paid in full, or virtually in full, before filing under the HSR Act and is therefore independent of whether clearance under the HSR Act is obtained.
• Elements of the transaction structure shift after clearance under the HSR Act is obtained. For example, ownership of the shares or assets comes to rest in different hands or ownership of an acquiring entity is reconfigured.
• Risk of loss or prospect of gain is transferred to the acquiring person, so as to indicate that it has acquired beneficial ownership, before filing under the HSR Act. This cannot be an absolute criterion, however, as all fixed-price transaction agreements shift some measure of risk from seller to buyer between signing and closing.
• The transaction is conducted in a series of steps that had they been collapsed would have required a filing under the HSR Act before closing on the collapsed structure. This too is not a hard-and-fast rule, as it is perfectly permissible to engage in an acquisition program that contemplates exceeding the HSR size-of-transaction threshold, where the acquisitions are paused prior to filing and exceeding the threshold.

Rule 801.90 is broadly drafted, and no doubt other factors could be envisioned that counsel in favor of application of the rule. Transaction structures that lack economic substance are ripe for scrutiny in this regard. Conversely, as the FTC staff has observed, just because a transaction structure offers some economic advantage does not mean that the structure is not a device for avoidance. Nonetheless, a transaction with economic consequence that has been structured so as not to require a filing under the HSR Act should not, without some additional indicia of subterfuge, constitute a transaction for avoidance.

Whatever may be the merits of pre-transaction review of so-called acquihires — arrangements in which an acquirer hires key employees of a target coupled with a transaction with the target that is not reportable under the HSR Act — these transactions should not automatically implicate Rule 801.90 as transactions for avoidance. None of the case-based factors identified above come into play in an acquihire. There is no veiled agency. There is no shift in transaction structure, nor is there a step transaction that if collapsed would lead to a different result under the HSR Act and rules. There is no risk-shifting indicating an otherwise reportable transfer of beneficial ownership. And there is no accelerated payment of transaction consideration. Notably, following the NVIDIA/Groq transaction, Groq remained in operation and capable of licensing to third parties the intellectual property licensed to NVIDIA on a nonexclusive basis.

As implied by Sens. Warren, Blumenthal and Wyden in their February 4, 2026, letter to the antitrust agencies, the agencies have the authority to review and to challenge a transaction, irrespective of whether a transaction is reportable under the HSR Act. Indeed, the agencies routinely review, and often challenge, transactions that fall below the size-of-transaction threshold.^[17] The suggestion that acquihire transactions necessarily run afoul of Rule 801.90, however, is unsupported by precedent, stretches the bounds of Rule 801.90 and may improperly threaten the imposition of penalties on the parties.

Judge Learned Hand famously declared that a taxpayer is entitled to conduct his affairs to reduce his taxes as much as possible.^[18] A similar statement can be made regarding the HSR Act. There should be no obligation to structure a transaction so that it is reportable under the act. 

The line between a legitimate structuring exercise so as not to require reporting under the HSR Act and a transaction for avoidance contemplated by Rule 801.90 is necessarily imprecise. In part, it may partake of Justice Potter Stewart’s well-known dictum of “I know it when I see it.”^[19] There have not been a multitude of cases brought by the antitrust agencies under Rule 801.90, but those that have been instituted offer some guidance. Principles extracted from those cases would seem to indicate that acquihire transactions, without more, do not offer good paradigms for enforcement under Rule 801.90. 

This is not to say that such transactions do not raise antitrust concerns, and in appropriate circumstances they might, even if they are non-reportable. Many transactions that could properly invite antitrust scrutiny are not captured by the HSR rules.^[20} It is also not to say that there can never be an acquihire transaction to which Rule 801.90 applies. A nominally nonexclusive license may in fact be exclusive, as where the licensor, while maintaining its legal existence, dissolves after granting the license. But Rule 801.90 should not be reflexively invoked simply because a transaction with economic substance has been structured to lie outside the rules.

^[1] Available at https://www.warren.senate.gov/imo/media/doc/letter_from_senators_warren_blumenthal_to_nvidia_on_groq_deal.pdf. 

^[2]  The antitrust agencies themselves have also questioned whether acquihire structures are being used as a means to avoid antitrust scrutiny. See Bloomberg Talks, “FTC Chairman Andrew Ferguson Talks Acquihires” (January 16, 2026); available at https://www.youtube.com/watch?v=8u_hazxCplM; and U.S. News/Reuters, “Acquihires, Often Used by Big Tech, Are a ‘Red Flag,’ DOJ Antitrust Head Says” (citing Acting US Attorney General in charge of the Justice Department Omeed Assefi); available at https://money.usnews.com/investing/news/articles/2026-03-18/acquihires-often-used-by-big-tech-are-a-red-flag-doj-antitrust-head-says. See also Commissioner Mark Meador, Keynote Address, The Tech Antitrust Conference, Concurrences (January 15, 2026); available at https://www.ftc.gov/system/files/ftc_gov/pdf/meador-concurrences-keynote.pdf. 

^[3]   Rule 801.90 reads in full:

Transactions or devices for avoidance.

Any transaction(s) or other device(s) entered into or employed for the purpose of avoiding the obligation to comply with the requirements of the act shall be disregarded, and the obligation to comply shall be determined by applying the act and these rules to the substance of the transaction. 16 C.F.R. § 801.90.

^[4]  See American Bar Association, Premerger Notification Practice Manual, Interpretation #26 (5th Ed. 2015). 

^[5]  See, e.g., Kolasky, Proger & Englert, “Anticompetitive Mergers: Prevention and Cure,” in Antitrust and Regulation: Essays in Memory of John J. McGowan 49 (F. Fisher ed. 1985).

^[6]  United States v. Wickes Cos. (D.D.C. April 1988); United States v. First City Fin. Corp. (D.D.C. April 1988); United States v. Trump (D.D.C. April 1988). See Premerger Notification Practice Manual, Interpretation #32. Each of these cases, in which the government alleged that the investment agent acted as agent for the acquirer, was settled on consent. In the latter case, now-President Donald J. Trump agreed to pay a fine of $750,000. See United States v. Trump, Final Judgment (April 12, 1988); available at https://www.justice.gov/d9/case-documents/attachments/1988/04/12/325370.pdf. 

^[7]  See footnote 13 and accompanying text.

^[8]  Complaint available at https://www.ftc.gov/sites/default/files/documents/cases/1992/08/920814beazercmpt.pdf. 

^[9]  See FTC News, “Beazer plc Agrees to Pay $760,000 Civil Penalty to Settle Charges that It Failed to Notify FTC Before Acquiring Koppers Company Stock”; available at https://www.justice.gov/archive/atr/public/press_releases/1992/211248a.pdf. 

^[10]  Complaint available at https://www.ftc.gov/system/files/documents/cases/canon-toshiba_complaint_6-10-19.pdf. 

^[11]  See FTC Press Release, “Canon Inc., Toshiba Corporation Agree to Pay $5 Million for Violating Federal Antitrust Laws” (June 10, 2019); available at https://www.ftc.gov/news-events/news/press-releases/2019/06/canon-inc-toshiba-corporation-agree-pay-5-million-violating-federal-antitrust-laws. 

^[12]  Available at https://www.documentcloud.org/documents/26217572-2025-11-04-ftc-letter-re-novo-nordisk-metsera/. 

^[13]  For transactions priced below $200 million (as adjusted) — currently $535.5 million — parties to a transaction must satisfy prescribed size-of-person thresholds for the filing requirements of the HSR Act to apply. See Section 7A(a) of the Clayton Act, 15 U.S.C. § 18a(a); and FTC Press Release, “New HSR thresholds and filing fees for 2026” (January 20, 2026); available at https://www.ftc.gov/enforcement/competition-matters/2026/01/new-hsr-thresholds-filing-fees-2026. 

^[14] See HSR Rule 801.11(e).

^[15]  Marian Bruno, FTC Bureau of Competition, “Avoidance devices won’t avoid HSR penalties” (November 14, 2019); available at https://www.ftc.gov/enforcement/competition-matters/2019/11/avoidance-devices-wont-avoid-hsr-penalties. See also Premerger Notification Office Staff, “Seeing the whole picture on avoidance devices” (September 23, 2020) (withdrawing prior guidance that special dividends are categorically excluded from consideration as an avoidance device and stating, “Under 801.90, the Commission determines whether there was a purpose to avoid or delay by applying a ‘but for’ test: but for the requirement to file and observe the waiting period, would the parties have selected this form of transaction? Put another way: was the transaction structure motivated by some benefit from avoiding or delaying filing? If the answer is yes, the structure is an avoidance device under the Rule.”); available at https://www.ftc.gov/enforcement/competition-matters/2020/09/seeing-whole-picture-avoidance-devices. 

^[16] In a 2015 update to its informal interpretations, the staff of the FTC Premerger Notification Office said that the office does not advise on the applicability of Rule 801.90 but will refer parties to the FTC’s Compliance Division for help in analyzing applicability of the rule. See Informal Interpretation 0610024; available at https://www.ftc.gov/legal-library/browse/hsr-informal-interpretations/0610024. It should be noted, however, that notwithstanding the seeming breadth of the staff pronouncement quoted in text on the applicability of Rule 801.90, the antitrust agencies have been judicious in the cases they have brought under the rule. The cases described in text, most would agree, were not borderline. 

^[17]  See Leslie C. Overton, Deputy Assistant Attorney General for Civil Enforcement, Antitrust Division, US Department of Justice, “Non-reportable Transactions and Antitrust Enforcement” (April 25, 2014); available at https://www.justice.gov/archives/atr/file/517791/dl. 

^[18]  Helvering v. Gregory, 69 F.2d 809, 810 (2d Cir. 1934) (“Anyone may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.”) (but, in this case, a restructuring was ignored for tax purposes as lacking economic substance), aff’d, 293 U.S. 465 (1935).

^[19] Jacobellis v. Ohio, 378 U.S. 184, 197 (1964) (Stewart, J., concurring).

^[20] See FTC Press Release, “FTC Staff Presents Report on Nearly a Decade of Unreported Acquisitions by the Biggest Technology Companies” (September 15, 2021); available at https://www.ftc.gov/news-events/news/press-releases/2021/09/ftc-staff-presents-report-nearly-decade-unreported-acquisitions-biggest-technology-companies. Subject to the jurisdictional criteria of the HSR Act, the agencies could, if they chose to do so, amend the HSR rules to capture transactions that are not currently subject to reporting. For example, in 2013, the HSR rules were amended to require reporting of certain licenses in the pharmaceutical industry previously regarded as nonexclusive. See FTC Press Release, “FTC Finalizes Amendments to the Premerger Notification Rules Related to the Transfer of Exclusive Patent Rights in the Pharmaceutical Industry” (November 6, 2013); available at https://www.ftc.gov/news-events/news/press-releases/2013/11/ftc-finalizes-amendments-premerger-notification-rules-related-transfer-exclusive-patent-rights.