United States: HSR Pre-Merger Reporting Threshold Increased To $101 Million

The Federal Trade Commission ("FTC") announced its annual revision to the thresholds for premerger reporting of proposed acquisitions to the United States antitrust authorities under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act").¹ Effective February 23, 2022, the minimum size-of-transaction threshold will increase to $101 million.² The FTC and the U.S. Department of Justice ("DOJ" and, together with the FTC, the "agencies") have not yet reinstated their practice of granting early termination of the 30-day waiting period under the HSR Act.

The HSR Act thresholds are adjusted annually, based on the change in gross national product, and unlike the lower thresholds last year, this year the thresholds increased substantially. Under the new thresholds, transactions that will result in one person holding more than $101 million (originally $50 million) of another person's assets, voting securities or non-corporate interests may be subject to the HSR Act's premerger reporting requirements.³

The HSR Act requires all persons contemplating mergers or acquisitions of voting securities, non-corporate interests, or assets that satisfy the size-of-transaction and size-of-person thresholds to notify the FTC and DOJ, pay a filing fee of $45,000 to $280,000 (depending on the size of the transaction) and observe a waiting period before completing the transaction. Once the agencies receive the required HSR Act forms and the filing fee, a 30-day waiting period commences (in most cases) and the transaction cannot close until the expiration or early termination of the waiting period or, in the event the waiting period is extended by issuance of a "Second Request" for additional materials because significant antitrust concerns exist, expiration of an additional 30-day waiting period or a negotiated schedule following substantial compliance with the Second Request.

The HSR Act and rules are complex. They include many exemptions and exceptions and at times require the aggregation of pre-acquisition holdings and reporting of various transactions, including (i) acquisitions of minority holdings of voting securities, (ii) subsequent acquisitions when a secondary threshold is crossed, and (iii) acquisitions of additional voting securities from the same issuer after more than five years, among other scenarios. The antitrust agencies may impose fines for failure to make required notifications, and the rules should be carefully reviewed with respect to any particular transaction.⁴

The FTC also revised thresholds for restrictions on interlocking directorates under Section 8 of the Clayton Antitrust Act of 1914, as amended, which prohibits the same person from serving as a director or officer of two competing corporations whose combined sales exceed certain thresholds. Competing corporations are covered if each one has capital, surplus, and undivided profits in aggregate of more than $41,034,000 (originally $10,000,000), with the exception that no corporation is covered if the competitive sales of either corporation are less than $4,103,400 (originally $1,000,000).⁵

CGR Memo - HSR Pre-Merger Reporting Threshold Increased to $101 Million.pdf (pdf | 169.59 KB )

Footnotes

1 15 U.S.C. § 18a.

2 Revised Jurisdictional Thresholds for Section 7A of the Clayton Act, 87 Fed. Reg. 3541 (Jan. 24, 2022), available at https://www.govinfo.gov/content/pkg/FR-2022-01-24/pdf/2022-01214.pdf .

3 Attached as Appendix A to this memorandum is a table indicating the adjusted filing thresholds and related filing fees.

4 The civil penalties for premerger filing notification violations under the HSR Act are now $46,517 per day. Adjustments to Civil Penalty Amounts, 87 Fed. Reg. 1070 (Jan. 10, 2022), available at https://www.govinfo.gov/content/pkg/FR-2022-01-10/pdf/2022- 00213.pdf . The FTC must adjust these penalties for inflation annually each January. Id.

5 Revised Jurisdictional Thresholds for Section 8 of the Clayton Act, 87 Fed. Reg. 3540 (Jan. 24, 2022), available at https://www.govinfo.gov/content/pkg/FR-2022-01-24/pdf/2022-01215.pdf .

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