The Federal Trade Commission (FTC) has approved new thresholds for premerger notification under the Hart-Scott-Rodino (HSR) Act, applicable to transactions that close on or after February 28, 2018, and for interlocking directorates under Section 8 of the Clayton Act, effective January 29, 2018.
FTC Revises Hart-Scott-Rodino Act Premerger Notification Thresholds
The Federal Trade Commission has approved new thresholds for premerger notification under the Hart-Scott-Rodino Act. The statute requires the FTC to revise the thresholds annually based on changes in gross national product. The newly-revised thresholds apply to transactions that close on or after February 28, 2018.
With the changes just approved, the minimum “size-of-transaction” threshold for any acquisition of voting securities, non-corporate interests, or assets not exempt from HSR notification requirements will increase from $80.8 million to $84.4 million.
Currently, acquisitions resulting in holdings valued at more than $80.8 million, but not more than $323 million, are potentially reportable only if the size-of-person test described below is met, and acquisitions resulting in holdings greater than $323 million are potentially reportable regardless of whether the size-of-person test is met. These thresholds will increase, respectively, to $84.4 million and $337.6 million.
The size-of-person test currently provides generally that at least one “person” involved in the transaction must have annual net sales or total assets of at least $161.5 million and the other must have annual net sales or total assets of at least $16.2 million. These thresholds will increase, respectively, to $168.8 million and $16.9 million.
With the revisions, the five thresholds for acquisitions of voting securities (which specify whether a filing, or successive filing, is necessary) will potentially require notification where the acquisition results in:
- Aggregate holdings of an issuer’s voting securities valued at greater than $84.4 million, but less than $168.8 million.
- Aggregate holdings of an issuer’s voting securities valued at $168.8 million or greater, but less than $843.9 million.
- Aggregate holdings of an issuer’s voting securities valued at $843.9 million or greater.
- 25 percent of the outstanding voting securities of an issuer if the holdings are valued at greater than $1.6878 billion.
- 50 percent of the outstanding voting securities of an issuer if the holdings are valued at greater than $84.4 million.
- The graduated HSR filing fee schedule will shift as follows:
|Size (Value) of Transaction||Fee|
|Greater than $84.4 million but less than $168.8 million||$45,000|
|$168.8 million or greater but less than $843.9 million||$125,000|
|$843.9 million or greater||$280,000|
The text of the FTC’s Federal Register notice on the revised HSR thresholds can be found here.
FTC Revises Clayton Act Section 8 Thresholds for Interlocking Directorates
The FTC also announced revised thresholds for interlocking directorates under Section 8 of the Clayton Act. Section 8 prohibits, with certain exceptions, a person from serving as a director or officer of two competing corporations if two thresholds are met. Section 8 as enacted applies if each competitor corporation has capital, surplus, and undivided profits of more than $10,000,000, though not if the competitive sales of either corporation are less than $1,000,000. These amounts are subject to annual revision; following last year’s revision, they were $32,914,000 and $3,291,400, respectively. The new thresholds, which took effect on January 29, 2018, are $34,395,000 and $3,439,500, respectively.
The text of the FTC’s Federal Register notice on the revised Section 8 thresholds can be found here.
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