The Federal Trade Commission (FTC) published today new increased threshold limits under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended (HSR Act). The changes will take effect in 30 days and will therefore apply to transactions that close – or are anticipated to close – on or after February 23, 2022. The FTC is required to revise the thresholds annually based on the change in gross national product.
Unlike last year, given the past year’s economy, the thresholds have been increased. Most importantly, the size of transaction threshold has been increased to $101 million. This means that an acquisition or merger where at least $101 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 23, 2022 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 $202 million or more, and the other party must have total assets or annual net sales of $20.2 million or more. If the acquired person is the $20.2 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 $403.9 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 $101 million of assets or voting securities 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.
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 $202 million||$45,000|
|$202 million or more, but less than $1.0098 billion||$125,000|
|$1.0098 billion or more||$280,000|