Hart-Scott-Rodino notification thresholds
Interlocking directorates threshold

On January 21 2016 the Federal Trade Commission (FTC) released the annual jurisdictional adjustments for pre-merger notification filings made pursuant to Section 7A of the Clayton Act (known as the Hart-Scott-Rodino Antitrust Improvements Act of 1976), as well as for Section 8 of the Clayton Act. The new filing thresholds for Hart-Scott-Rodino notification will become effective 30 days after publication in the Federal Register and the revisions to Section 8 will become effective on publication in the register. Both changes should be effective by the end of February 2016.

Hart-Scott-Rodino notification thresholds

Under the Hart-Scott-Rodino Act, certain acquisitions of assets, voting securities or interests in non-corporate entities are subject to pre-merger notification filing and waiting period requirements if the applicable jurisdictional thresholds are satisfied and no exemption applies.

Each year the FTC adjusts the Hart-Scott-Rodino jurisdictional threshold tests based on changes to the US gross national product. The threshold changes do not affect the amount of applicable Hart-Scott-Rodino filing fees to be paid, but do affect the threshold levels applicable to each of the filing fees.

The principal proposed changes to the Hart-Scott-Rodino jurisdictional thresholds are set out in the table below.

 

Current threshold

New threshold effective 30 days after Federal Register publication

Size-of-transaction threshold test

Notification may be required if the acquirer will acquire and hold certain assets, voting securities or interests in non-corporate entities valued at more than $76.3 million.

$78.2 million.

Size-of-person threshold test

Generally, one person in the transaction must have at least $152.5 million in total assets or annual net sales and the other must have at least $15.3 million in total assets or annual net sales.

At least $156.3 million and $15.6 million in total assets or annual net sales.

Transactions valued at more than $305.1 million are not subject to the size-of-person threshold test and are therefore reportable unless exempt.

$312.6 million.

Filing fee threshold levels

Hart-Scott-Rodino filing fee of $45,000 for transactions where the acquirer will hold an aggregate total amount of assets, voting securities or controlling non-corporate interests valued between $76.3 million and $152.5 million.

Between $78.2 million and $156.3 million.

Hart-Scott-Rodino filing fee remains unchanged.

Hart-Scott-Rodino filing fee of $125,000 for transactions where the acquirer will hold an aggregate total amount of assets, voting securities or controlling non-corporate interests valued between $152.5 million and $762.7 million.

Between $156.3 million and $781.5 million.

Hart-Scott-Rodino filing fee remains unchanged.

Hart-Scott-Rodino filing fee of $280,000 for transactions where the acquirer will hold an aggregate total amount of assets, voting securities or controlling non-corporate interests valued at $762.7 million or more.

$781.5 million or more.

Hart-Scott-Rodino filing fee remains unchanged.

Notification thresholds

When completing a Hart-Scott-Rodino filing, the acquirer in a voting securities acquisition must indicate which notification threshold it will cross:

  • $76.3 million;
  • $152.5 million;
  • $762.7 million;
  • 25% (if the value of the voting securities to be held is greater than $1.525 billion); or
  • 50%.

These notification thresholds are also relevant to a certain Hart-Scott-Rodino exemption.

The new notification thresholds are:

  • $78.2 million;
  • $156.3 million;
  • $781.5 million;
  • 25% (if the value of the voting securities to be held is greater than $1.563 billion); or
  • 50%.

Interlocking directorates threshold

Section 8 of the Clayton Act prohibits a person from serving as a director or officer of two competing corporations if certain thresholds are satisfied and no exemption applies. The FTC must adjust annually certain thresholds relating to Section 8 based on changes to the gross national product.

Under the new thresholds that will be effective on publication in the Federal Register, a person may not serve as a director or officer of competing corporations if each corporation has capital, surplus and undivided profits aggregating more than $31,841,000 unless one of the corporations has competitive sales of less than $3,184,100. Previously, a person was prohibited from serving as a director or officer of competitive corporations if each corporation had capital, surplus and undivided profits aggregating more than $31,084,000 unless one of the corporations had competitive sales of less than $3,108,400.

For further information on this topic please contact Michele S Harrington at Hogan Lovells US LLP's McLean office by telephone (+1 703 610 6100) or email (michele.harrington@hoganlovells.com). Alternatively, contact Joseph G Krauss or Robert Baldwin at Hogan Lovells US LLP's Washington DC office by telephone (+1 202 637 5600) or email (joseph.krauss@hoganlovells.com or robert.baldwin@hoganlovells.com). The Hogan Lovells website can be accessed at www.hoganlovells.com.

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