Hart-Scott-Rodino notification thresholds
Interlocking directorates threshold


On January 17 2014 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 thresholds for Hart-Scott-Rodino notification will become effective on February 24 2014. The revisions to Section 8 became effective on January 23 2014.

Hart-Scott-Rodino notification thresholds

Under the Hart-Scott-Rodino Act, certain acquisitions of assets, voting securities or interests in non-corporate entities are subject to pre-merger notification filing 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 by comparing changes to the US gross national product for the most recent fiscal year to the gross national product for the fiscal year ending September 30 2003. The threshold changes do not affect the amount of 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.

 

Current threshold

New threshold effective February 24 2014

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 $70.9 million.

$75.9 million

Size-of-person threshold test

Generally one person in the transaction must have at least $141.8 million in total assets or annual net sales and the other must have at least $14.2 million in total assets or annual net sales.

At least $151.7 million and $15.2 million in total assets or annual net sales

Transactions valued at more than $283.6 million are not subject to the size-of-person threshold test and are therefore reportable unless exempt.

$303.4 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 $70.9 million but less than $141.8 million.

More than $75.9 million but less than $151.7 million

Hart-Scott-Rodino filing fees 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 $141.8 million, or more, but less than $709.1 million.

$151.7 million, or more, but less than $758.6 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 $709.1 million or more.

$758.6 million or more

Hart-Scott-Rodino filing fee remains unchanged.

When completing a Hart-Scott-Rodino filing, the acquiring person in a voting securities acquisition must indicate which notification threshold it will cross:

  • $70.9 million;
  • $141.8 million;
  • $709.1 million;
  • 25% (if the value of the voting securities to be held is greater than $1,418.1 million); or
  • 50%.

These notification thresholds are also relevant to a certain Hart-Scott-Rodino exemption.

The new notification thresholds are:

  • $75.9 million;
  • $151.7 million;
  • $758.6 million;
  • 25% (if the value of the voting securities to be held is greater than $1,517.1 million); or
  • 50%.

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 exemption applies. The FTC is required to adjust annually certain thresholds related to Section 8 based on changes to the gross national product compared to the gross national product for the fiscal year ending September 30 1989.

Under the new thresholds that will be 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 $29.945 million unless one of the corporations has competitive sales of less than $2,994,500. 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 $28.883 million unless one of the corporations had competitive sales of less than $2,888,300.

For further information on this topic please contact Joseph G Krauss or Charles E Dickinson at Hogan Lovells US LLP's Washington DC office by telephone (+1 202 637 5600), fax (+1 202 637 5910) or email (joseph.krauss@hoganlovells.com or charles.dickinson@hoganlovells.com). Alternatively, contact Michele S Harrington at Hogan Lovells US LLP's McLean office by telephone (+1 703 610 6100), fax (+1 703 610 6200) or email (michele.harrington@hoganlovells.com). The Hogan Lovells website can be accessed at www.hoganlovells.com.