The Federal Trade Commission (FTC) announced on January 28, 2020 that threshold limits under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended (HSR Act) will be increased. The changes apply to transactions that close on or after the effective date of this announcement, which is 30 days after publication in the Federal Register. The FTC is required to revise the thresholds annually based on the change in gross national product. Most importantly, the size of transaction threshold has been increased to $94 million. This means that an acquisition or merger where at least $94 million of assets or voting securities will be held as a result of a transaction that is anticipated to close on or after February 27, 2020 should be evaluated for a potential reporting obligation under the HSR Act. The size of person thresholds have also been increased.
Basic Filing Thresholds
The HSR Act requires parties that meet the HSR Act’s size-of-person thresholds to submit premerger notification filings with the FTC and the Department of Justice before completing certain proposed stock, asset or non-corporate interest acquisitions exceeding the HSR Act’s size-of-transaction threshold. The thresholds have been revised as follows:
- Size of Person. Either the acquiring or acquired person must have total assets or annual net sales of $188 million or more, and the other party must have total assets or annual net sales of $18.8 million or more. If the acquired person is the $18.8 million entity and is not engaged in manufacturing, the test looks only to the total assets of the acquired person, not annual net sales. Annual net sales are determined by looking at the last regularly prepared annual statement of income and expense, and total assets are determined by looking at the last regularly prepared balance sheet. If the value of the assets or voting securities being acquired exceeds $376 million, this test is deemed to be automatically met, regardless of the actual size of the parties.
- Size of Transaction. This test is met if more than $94 million of assets or voting securities of the acquired person will be held as a result of the transaction.
Various other thresholds under the HSR Act have been adjusted, as well. Certain exemptions may apply and certain other aspects of the rules should be considered if it appears filings are required or the parties are close to meeting the above thresholds.
A filing fee, determined based on the size of the transaction, must be submitted along with filings under the HSR Act. The filing fee thresholds have been revised as follows:
|Size of Transaction||Filing Fee|
|Less than $188 million||$45,000|
|$188 million or more, but less than $940.1 million||$125,000|
|$940.1 million or more||$280,000|