On January 28, 2020, the Federal Trade Commission (FTC) announced an increase in the thresholds determining whether companies must notify federal antitrust authorities under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and its rules and regulations (HSR Act), before consummating a transaction.

The HSR Act requires that the FTC revise these jurisdictional thresholds annually based upon the change in gross national product. Further, the HSR Act requires companies of a certain size involved in a transaction exceeding reportability thresholds to file a pre-merger notification with the FTC and Department of Justice and observe a waiting period unless an exemption applies.

2020 Threshold Increases

For 2020, the "size of transaction" threshold under the HSR Act will increase from $90 million to $94 million. Transactions in which the acquiring party will hold voting securities, non-corporate interests, or assets valued above $94 million (as determined under the HSR Act's rules and regulations) may require a pre-merger notification if the "size of parties" test is also satisfied and no HSR Act exemptions are applicable.

The HSR "size of parties" thresholds will also increase. The "size of parties" test generally requires that one party to the transaction have annual net sales or total assets of $188 million or more (up from $180 million), and that the other party have annual net sales or total assets of $18.8 million or more (up from $18 million). For transactions valued at more than $94 million, but less than $376 million, no HSR Act pre-merger notification will be required if the "ultimate parent entities" of one or both parties to the transaction do not satisfy these "size of parties" thresholds.

Transactions valued at $376 million or more (up from $359.9 million) will be subject to pre-merger notification requirements under the HSR Act without regard to any "size of parties" thresholds, unless an HSR Act exemption applies. Certain thresholds relevant to exemptions under the HSR Act will also increase.

The new HSR Act thresholds will apply to all transactions closing on or after the effective date, which is expected to be in approximately late February (or 30 days after the new thresholds are published in the Federal Register).

Applicable Transaction Filing Fees

While the new reportability thresholds do not change the amount of the HSR Act filing fees, the applicable filing fee for a transaction will be based on the new thresholds, and are as follows:

  • A $45,000 filing fee for transactions valued at $94 million or more but less than $188 million;
  • A $125,000 filing fee for transactions valued at $188 million or more but less than $940.1 million; and
  • A $280,000 filing fee for transactions valued at $940.1 million or more.