Notification thresholds
Interlocking directorates threshold
On January 19 2017 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, while the revisions to Section 8 will become effective immediately on publication in the Federal Register.
Under the Hart-Scott-Rodino Act, certain acquisitions of assets, voting securities or interests in non-corporate entities are subject to pre-closing notification 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 the applicable Hart-Scott-Rodino filing fees to be paid, but do affect the threshold levels applicable to each of the filing fees.
The principal changes to the Hart-Scott-Rodino jurisdictional thresholds will be as follows.
Existing threshold | New threshold effective 30 days after Federal Register publication | |
Size-of-transaction threshold test | Notification may be required if the acquiring person will acquire and hold certain assets, voting securities or interests in non-corporate entities valued at more than $78.2 million. | $80.8 million |
Size-of-person threshold test | Generally, one person to the transaction must have at least $156.3 million in total assets or annual net sales, and the other must have at least $15.6 million in total assets or net sales. | At least $161.5 million and $16.2 million in total assets or annual net sales |
Transactions valued at more than $312.6 million are not subject to the size-of-person threshold test and therefore are reportable unless exempt. | $323 million | |
Filing fee threshold levels | Hart-Scott-Rodino filing fee of $45,000 for transactions where the acquiring person will hold an aggregate total amount of assets, voting securities or controlling non-corporate interests valued at more than $78.2 million but less than $156.3 million. | More than $80.8 million but less than $161.5 million Hart-Scott-Rodino filing fee remains unchanged |
Hart-Scott-Rodino filing fee of $125,000 for transactions where the acquiring person will hold an aggregate total amount of assets, voting securities or controlling non-corporate interests valued at more than $156.3 million but less than $781.5 million. | More than $161.5 million but less than $807.5 million Hart-Scott-Rodino filing fee remains unchanged | |
Hart-Scott-Rodino filing fee of $280,000 for transactions where the acquiring person will hold an aggregate total amount of assets, voting securities or controlling non-corporate interests valued at $781.5 million or more. | $807.5 million or more Hart-Scott-Rodino filing fee remains unchanged | |
Notification thresholds | When completing a Hart-Scott-Rodino filing, the acquiring person in a voting securities acquisition must indicate which notification threshold it will cross:
These notification thresholds are also relevant to a certain HSR exemption. | The new notification thresholds are:
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In addition, the civil penalty for pre-merger filing notification violations under the Hart-Scott-Rodino Act has increased from $40,000 to $40,654, effective January 24 2017.
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 exception applies. The FTC must adjust annually certain thresholds related to Section 8 based on changes to the gross national product.
Under the new thresholds that will become 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 $32,914,000, unless one of the corporations has competitive sales of less than $3,291,400. 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 $31,841,000 unless one of the corporations had competitive sales of less than $3,184,100.
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 ([email protected]). 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 ([email protected] or [email protected]). The Hogan Lovells website can be accessed at www.hoganlovells.com.