The Federal Trade Commission (FTC) has revised the annual thresholds that determine whether companies are required to notify federal antitrust authorities about a proposed merger or acquisition.
The Hart-Scott-Rodino ("HSR") Antitrust Improvements Act (Section 7A of the Clayton Act) requires parties to certain mergers and acquisitions to notify the FTC and U.S. Department of Justice (DOJ) in advance of transactions that could create antitrust issues due to the size of the transaction and the parties involved. The FTC is required to update the HSR thresholds annually to reflect changes in the gross national product. The new thresholds will apply to all transactions that close on or after the effective date of February 20, 2015.
For 2015, the threshold for reporting proposed mergers and acquisitions will increase from $75.9 million to $76.3 million. If the value of the transaction meets or exceeds $76.3 million ("size of the transaction test") and the parties involved are large enough ("size of the person test"), both parties may be obligated to file Premerger Notification with the FTC and DOJ unless an exemption applies. Also, for 2015, if the transaction is valued at $305.1 million or more, an HSR filing may be required, regardless of the size of the parties involved.
HSR Test (New 2015 Thresholds)
- An HSR Premerger Notification may be necessary if:
- As a result of the proposed transaction, the buyer will hold in the aggregate (including from previous transactions between the parties) securities, non-corporate interests, and/or assets of a seller valued between $76.3 million and up to and including $305.1 million;
- One of the parties to the transaction has $152.5 million or more in annual sales or total assets and the other has $15.3 million or more in annual sales or total assets;
- As a result of the proposed transaction, the buyer will acquire (in the aggregate) securities, non-corporate interests, and/or assets from a seller valued at more than $305.1 million and regardless of the size of the parties.
The waiting period for most Premerger Notifications is 30 days after filing unless the acquisition involves federal bankruptcy or a cash tender offer in which case the waiting period is normally 15 days. It is also possible to request expedited review and early termination of the waiting period if the FTC and DOJ determine no remedial or enforcement action is necessary.
Failure to file a required HSR Premerger Notification can result in serious penalties of up to $16,000 per day of noncompliance. Also, the FTC has the ability to unwind a completed transaction if it discovers after the fact that a non-reported transaction violates antitrust laws.
The HSR thresholds are only one part of the analysis to determine whether an HSR filing is required, and the rules are complex. Consult with an HSR attorney early when contemplating any transaction that may be subject to HSR notification requirements.
FTC press release: http://1.usa.gov/14HtHvP
FTC Notice in the Federal Register: http://1.usa.gov/1Dkzeo5