Yesterday, the Federal Trade Commission announced increases to reporting thresholds and exemptions that dictate whether companies must notify antitrust authorities about a transaction. To keep pace with inflation, the Hart-Scott-Rodino Act of 1976 (the โHSR Actโ) requires the FTC to adjust these thresholds annually based on changes in gross national product. The revised thresholds will apply to all transactions that close on or after the effective date, which is 30 days after the Federal Register publishes the FTC announcement (likely within the next week).
Additionally, the FTC announced updated filing fees, which are also adjusted annually based on changes in the GNP and the consumer price index in accordance with last year's Consolidated Appropriations Act. Filing fees are determined by the value of the transaction at the time of filing.
Under the new thresholds:
The minimum transaction threshold is $119.5 million (up from $111.4 million). Acquisitions below this threshold are not reportable.
Transactions that exceed the transaction size threshold, but less than $478.0 million, are reportable if the ultimate parent entity of one party has sales or assets of at least $239.0 million and the ultimate parent entity of the other party has sales or assets of at least $239.0 million. minus $23.9 million (vs. $222.7 million and $22.3 million, respectively) (the โperson sizeโ test).
Transactions valued at more than $478.0 million (up from $445.5 million) must be reported regardless of the size of the person's evidence.
Both the filing fees and transaction size thresholds (on which the filing fee is based) have been changed. They are the following:
| Presentation fee | Transaction size as determined under Section 7A(a)(2) of the Act |
|
$30,000 |
Less than $173.3 million |
|
$105,000 |
Not less than $173.3 million but less than $536.5 million |
|
$260,000 |
Not less than 536.5 million dollars but less than 1,073 million dollars |
|
$415,000 |
Not less than 1,073 million dollars but less than 2,146 million dollars |
|
$830,000 |
Not less than 2,146 million dollars but less than 5,365 million dollars |
|
$2,335 million |
$5 billion or more |
The notification threshold for 25% of outstanding voting shares is $2.39 billion; for 50% of the outstanding voting shares, it is $119.5 million (up from $2,227.4 million and $111.4 million, respectively).
Even if a transaction is reportable under the thresholds above, it may qualify for one of the HSR Act's exemptions, some of which also contain modified financial thresholds. For example, the acquisition by a U.S. person of shares of a foreign issuer is exempt unless the foreign issuer has assets or sales in the United States that exceed $119.5 million. Elaborated rules govern valuation of arrangements and exemptions under the HSR Act. Consult HSR counsel to determine whether a settlement is reportable.
To read the FTC press release, click here.
If you have any questions about the new HSR or HSR transaction size thresholds and antitrust/competition regulations and rules generally, please contact a member of our Antitrust and competition equipment.
This memorandum is a summary for general information and discussion only and may be considered an announcement for certain purposes. It is not a complete analysis of the issues presented, cannot be considered legal advice, and is not intended to represent the views of our clients or the Firm. Courtney Dyer, an O'Melveny partner licensed to practice law in New York and the District of Columbia, Julia Schiller, an O'Melveny partner licensed to practice law in the District of Columbia, New Jersey and New York, and Courtney C. Byrd, an O'Melveny attorney licensed to practice law in the District of Columbia and Maryland, contributed to the content of this newsletter. The opinions expressed in this newsletter are the opinions of the authors, unless otherwise indicated.
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