On January 31, 2005, the Federal Trade Commission ("FTC") published in the Federal Register[1] revised thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act").[2]  The HSR Act requires parties that meet certain size tests to submit filings with the FTC and the Department of Justice before completing proposed stock or asset acquisitions exceeding the HSR Act's filing thresholds.  The 2000 Amendments to the HSR Act require the FTC to adjust the thresholds annually beginning in 2005 based on the percentage change in the gross national product from the previous year.  The revised thresholds become effective on March 2, 2005. 

A. Size of the Transaction Test

Under the current Size of the Transaction Test, no HSR Act filing is required unless the acquisition results in an acquiring person holding an aggregate amount of voting securities and/or assets of the acquired person having a value in excess of $50 million.  The  new threshold will be $53.1 million. 

B.  Size of the Parties Test

Under the current thresholds, acquisitions valued in excess of $200 million are reportable regardless of the size of the parties.  The new threshold will be $212.3 million. 

Acquisitions valued at greater than $50 million (now $53.1 million) but less than or equal to $200 million (now $212.3 million) are reportable only if the Size of the Parties Test is met.     The current Size of the Parties Test is typically met if the acquiring or acquired person has annual net sales or total assets of $100 million or more and another party to the transaction has annual net sales or total assets of $10 million or more.  The new thresholds will be $106.2 million and $10.7 million, respectively. 

C. Acquisition of Additional Voting Securities

The revisions will also increase notification thresholds for acquisitions of additional voting securities of the same issuer.  As a result, notifications will be required at each of the following thresholds: $53.1 million; $106.2 million; $530.7 million; 25% of the voting securities if their total value exceeds $1,061.3 million; and 50% of the voting securities if their total value exceeds $53.1 million.

D. Filing Fee Thresholds

The new thresholds for determining the applicable filing fee [3] will be as follows:

Old Transaction Value

New Transaction Value

Filing Fee

 

>$50 million to

<$100 million

 

 

>$53.1 million to

<$106.2 million

 

$45,000

 

>$100 million to

<$500 million

 

 

>$106.2 million to

<$530.7 million

 

$125,000

 

>$500 million

 

 

>$530.7 million

 

$280,000

E.  Exemptions

The revised thresholds will also result in corresponding adjustments to the thresholds used for determining the applicability of certain exemptions under the HSR Act. For example, the current $50 million threshold applicable to the foreign assets and foreign voting securities exemptions will be raised to $53.1 million.

Conclusion

The FTC will adjust the thresholds annually and publish them in the Federal Register each January. Parties contemplating a transaction should keep abreast of annual changes in the thresholds.  It is important to note that the published rules, forms and instructions for the HSR Act will still include the current thresholds, but the words "as adjusted" will be inserted after each threshold - this will serve as a reminder to consult the new thresholds published by the FTC each January.


[1] 70 Fed. Reg. 5020 (Jan. 31, 2005).

[2] 15 U.S.C.A. §18a (2005).

[3] The filing fees themselves are not subject to adjustment under the 2000 Amendments to the HSR Act.

The preceding is only a summary of certain provisions of the HSR Act and the impact of the new thresholds. If you would like more information, please contact the authors.