Pre-merger notifications filed on or after February 28, 2008, must comply with the new thresholds.

The U.S. Federal Trade Commission (FTC) recently announced revised thresholds for the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976 as well as revised thresholds for determining whether competing corporations may have interlocking directors.

Notification Threshold Adjustments

Pursuant to the amendments passed by the U.S. Congress in 2000, the FTC published the revised thresholds for HSR pre-merger notifications in the Federal Register on January 29, 2008. These revised thresholds will become effective on February 28, 2008. Any HSR pre-merger notifications filed on or after February 28, 2008, must comply with these new thresholds.

As required, the FTC adjusted the notification thresholds for inflation, and the thresholds will increase relative to the increase in the gross national product for the fiscal year ending September 30, 2007. Most notably, the base filing threshold of $50 million, which frequently determines whether filing an HSR notification is required, will increase to $63.1 million following this revision. The changes also will affect other dollar-amount thresholds:

  • The alternative statutory size-of-transaction test, which captures all transactions valued above $200 million regardless of the "size-of-persons," will be adjusted to $252.3 million.
  • The statutory size-of-person thresholds (applicable to transactions now valued at less than $252.3 million) will increase from $12 million to $12.6 million and from $119.6 million to $126.2 million.

The adjustments will affect parties contemplating HSR notifications in various ways. Parties may be relieved from the obligation to file a notification for transactions that fall below the adjusted base threshold. For example, a transaction resulting in the acquiring person holding voting securities or assets valued less than $63.1 million would not be reportable on or after the effective date. The adjustments will also affect various exemptions under the HSR rules. For example, acquisitions of foreign assets and foreign issuers will now be exempt unless they generated U.S. sales in excess of $63.1 million.

Parties may also realize a benefit of lower notification filing fees for transactions that just cross current thresholds. Although filing fees for HSR-reportable transactions will remain unchanged, the applicable filing fee tiers will shift upward as a result of the inflation indexing adjustments.

  • Transactions valued at or in excess of $63.1 million but less than $126.2 million require parties to pay a $45,000 filing fee.
  • Transactions valued at or in excess of $126.2 million but less than $630.8 million require parties to pay a $125,000 filing fee.
  • Transactions valued at or above $630.8 million require parties to pay a $280,000 filing fee.

Interlocking Directorate Thresholds Adjustment

On January 29, 2008, the FTC also published in the Federal Register revised thresholds for interlocking directorates, which are effective immediately. The FTC also must revise these thresholds annually according to the change in gross national product. Section 8 of the Clayton Act prohibits a person from serving as a director or officer of two competing corporations if certain thresholds are met. The prohibition against interlocking directors applies if a corporation has more than $10 million (as adjusted) in capital, surplus and undivided profits; however, if either corporation has less than $1 million (as adjusted) in competitive sales, then the prohibition does not apply. According to the recently revised thresholds, Section 8 of the Clayton Act applies to corporations with more than $25,319,000 in capital, surplus and undivided profits, while it does not apply to corporations with less than $2,531,900 in competitive sales.

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