FTC Revises Hart-Scott-Rodino Act Premerger Notification Thresholds
The Federal Trade Commission (FTC) has approved new thresholds for premerger notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR). 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 the date 30 days after formal publication of the new thresholds in the Federal Register. Formal publication is expected to occur this week.
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 $84.4 million to $90 million.
Currently, acquisitions resulting in holdings valued at more than $84.4 million, but not more than $337.6 million, are potentially reportable only if the size-of-person test described below is met, and acquisitions resulting in holdings greater than $337.6 million are potentially reportable regardless of whether the size-of-person test is met. These thresholds will increase, respectively, to $90 million and $359.9 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 $168.8 million and the other must have annual net sales or total assets of at least $16.9 million. These thresholds will increase, respectively, to $180 million and $18 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 $90 million, but less than $180 million.
- Aggregate holdings of an issuer’s voting securities valued at $180 million or greater, but less than $899.8 million.
- Aggregate holdings of an issuer’s voting securities valued at $899.8 million or greater.
- 25 percent of the outstanding voting securities of an issuer if the holdings are valued at greater than $1.7995 billion.
- 50 percent of the outstanding voting securities of an issuer if the holdings are valued at greater than $90 million.
The graduated HSR filing fee schedule will shift as follows:
|
Size (Value) of Transaction
|
Fee |
|
Greater than $90 million, but less than $180 million
|
$45,000 |
|
$180 million or greater, but less than $899.8 million
|
$125,000 |
|
$899.8 million or greater
|
$280,000 |
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 million, though not if the competitive sales of either corporation are less than $1 million. These amounts are subject to annual revision; following last year’s revision, they were $34,395,000 and $3,439,500, respectively. The new thresholds, which will take effect upon formal publication in the Federal Register (also expected this week), are $36,564,000 and $3,656,400, respectively.
FTC Revises Maximum Civil Penalty Amount for HSR Violations
Finally, the FTC has announced the annual increase to the maximum civil penalty amount for HSR violations, raising the amount from $41,484 per day to $42,530 per day. The new maximum applies to civil penalties assessed on or after February 14, 2019, even where the underlying violation preceded that date.
The text of the FTC’s Federal Register notice on the revised civil penalty amount can be found here.
