FTC Revises Hart-Scott-Rodino Act Premerger Notification Thresholds

The Federal Trade Commission (FTC) has approved new thresholds for premerger notification under the Hart-Scott-Rodino (HSR) Act. The statute requires the FTC to revise the thresholds annually based on changes in gross national product. The newly-revised thresholds apply to transactions that close on or after February 27, 2017.

With the changes just approved, the minimum “size-of-transaction” threshold for any acquisition of voting securities, non-corporate interests, or assets not exempt from HSR notification requirements will increase from $78.2 million to $80.8 million.

Currently, acquisitions resulting in holdings valued at more than $78.2 million, but not more than $312.6 million, are potentially reportable only if the size-of-person test described below is met, and acquisitions resulting in holdings greater than $312.6 million are potentially reportable regardless of whether the size-of-person test is met. These thresholds will increase, respectively, to $80.8 million and $323 million.

The size-of-person test currently provides generally that at least one “person” involved in the transaction must have annual net sales or total assets of at least $156.3 million and the other must have annual net sales or total assets of at least $15.6 million. These thresholds will increase, respectively, to $161.5 million and $16.2 million.

With the revisions, the five thresholds for acquisitions of voting securities (which specify whether a filing, or successive filing, is necessary) will potentially require notification where the acquisition results in:

  • Aggregate holdings of an issuer’s voting securities valued at greater than $80.8 million, but less than $161.5 million.
  • Aggregate holdings of an issuer’s voting securities valued at $161.5 million or greater, but less than $807.5 million.
  • Aggregate holdings of an issuer’s voting securities valued at $807.5 million or greater.
  • 25 percent of the outstanding voting securities of an issuer if the holdings are valued at greater than $1.615 billion.
  • 50 percent of the outstanding voting securities of an issuer if the holdings are valued at greater than $80.8 million.

The graduated HSR filing fee schedule will shift as follows:

Size (Value) of Transaction Fee
Greater than $80.8 million but less than $161.5 million $45,000
$161.5 million or greater but less than $807.5 million $125,000
$807.5 million or greater $280,000

The text of the Federal Register notice can be found here.

FTC Revises Clayton Act Section 8 Thresholds for Interlocking Directorates

The FTC also announced revised thresholds for interlocking directorates under Section 8 of the Clayton Act. Section 8 prohibits, with certain exceptions, a person from serving as a director or officer of two competing corporations if two thresholds are met. Section 8 as enacted applies if each competitor corporation has capital, surplus, and undivided profits of more than $10,000,000, though not if the competitive sales of either corporation are less than $1,000,000. These amounts are subject to annual revision; following last year’s revision, they were $31,841,000 and $3,184,100, respectively. The new thresholds, which took effect on January 26, 2017, are $32,914,000 and $3,291,400, respectively.

The text of the Federal Register notice can be found here.