The Federal Trade Commission (FTC) announced new increased threshold limits under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended (HSR Act). The changes will take effect 30 days after the thresholds are published in the Federal Register, which is anticipated to be on January 25, 2023, and will therefore apply to transactions that close – or are anticipated to close – on or after February 24, 2023. The FTC is required to revise the thresholds annually based on the change in gross national product.
In addition, due to the 2023 Consolidated Appropriations Act, a new filing fee structure will also take effect 30 days from publication in the Federal Register. The new structure significantly increases filing fees for larger transactions, but lowers the fee for the lowest size of transaction level.
This year, the thresholds have been increased. Most importantly, the size of transaction threshold has been increased to $111.4 million. This means that an acquisition or merger where at least $111.4 million of assets, voting securities, or non-corporate interests will be held as a result of a transaction that closes, or is anticipated to close, on or after February 24, 2023 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, Antitrust Division 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 $222.7 million or more, and the other party must have total assets or annual net sales of $22.3 million or more. If the acquired person is the $22.3 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, voting securities, or non-corporate interests to be held as a result of the acquisition exceeds $445.5 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 $111.4 million of assets, voting securities, or non-corporate interests of the acquired person will be held as a result of the transaction.
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. It is recommended that parties to a transaction consult counsel experienced in HSR filings.
New Filing Fee Structure
A filing fee, determined based on the size of the transaction, must be submitted along with filings under the HSR Act. The new structure adds three categories of fees. In addition, the 2023 Consolidated Appropriations Act requires that the filing fees be increased by an amount equal to the percentage increase, if any, in the consumer price index each year after this year. The FTC will publish the new fees no later than January 31 of each year.
The filing fee thresholds have been revised as follows:
|Size of Transaction
|less than $161.5 million
|not less than $161.5 million but less than $500 million
not less than $500 million but less than $1 billion
not less than $1 billion but less than $2 billion
not less than $2 billion but less than $5 billion
$5 billion or more