The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), requires parties to acquisitions of voting securities, assets or non-corporate interests meeting certain thresholds to make a premerger notification to the Federal Trade Commission (“FTC”) and the Antitrust Division of the Department of Justice, and to observe a waiting period prior to consummating such acquisitions. On Jan. 19, 2017, the FTC announced its annual adjustments to the current HSR Act thresholds. Any transaction that will be consummated on or after the Feb. 27, 2017 effective date of such adjustments may be reportable under the HSR Act if, as a result of such transaction, the acquiring person will hold voting securities, assets and/or non-corporate interests of the acquired person valued above $80.8 million (the current adjusted minimum threshold is $78.2 million). The new adjusted thresholds reflect changes in the gross national product for the preceding fiscal year. The size-of-person threshold looks at the total sales or assets of each party to a transaction, including its ultimate parent and certain affiliates, and is also being increased.

The updated size-of-transaction and size-of-person thresholds under the HSR Act are set forth below:

Threshold

HSR Act Original

2017 Adjusted

Size-of-transaction when size-of-person test is met

$50 million

$80.8 million

Size-of-person (if applicable)

$10 million and $100 million

$16.2 million and $161.5 million

Size-of-transaction above which size-of-person test does not apply

$200 million

$323.0 million

The filing fees applicable to premerger notifications filed under the HSR Act have not changed in over a decade and will continue as follows:

Size-of-Transaction (as adjusted)

Filing Fee

Valued at greater than $80.8 million but less than $161.5 million

$45,000

Valued at $161.5 million or greater but less than $807.5 million

$125,000

Valued at $807.5 million or greater

$280,000

When a premerger notification has been filed under the HSR Act, and the applicable waiting period has expired or been terminated, any additional acquisitions by the same acquiring person of the same issuer’s voting securities will be exempt from notification, so long as:

  • The acquiring person’s holdings crossed the notification threshold with respect to which the premerger notification was made, within one year of the expiration or early termination of the HSR Act waiting period; and
  • The subsequent acquisition is consummated within five years following the expiration or early termination of the HSR Act waiting period

unless a higher notification level is met or exceeded. The various notification levels are set forth below:

HSR Act Original

2017 Adjusted

$50 million

$80.8 million

$100 million

$161.5 million

$500 million

$807.5 million

25 percent if value of voting securities to be held is greater than $1 billion

25 percent if value of voting securities to be held is greater than $1,615.0 million

50 percent if value of voting securities to be held is greater than $50 million

50 percent if value of voting securities to be held is greater than $80.8 million

Any subsequent acquisition would be subject to the adjusted thresholds in effect when such subsequent acquisition is consummated.

New for 2017, the maximum civil penalty for violations of the HSR Act will begin to be adjusted annually. This follows on last year’s substantial hike in the maximum penalty from $16,000 to $40,000 per day. On Jan. 12, 2017, the FTC announced the new maximum will increase to $40,654 per day. The new maximum applies to penalties assessed after its effective date — meaning the maximum allowable penalty is based on the date that the penalty is imposed by the FTC or DOJ — and not the dates of the alleged violation.