On February 15, 2019, the US Federal Trade Commission (FTC) announced its annual update to the Hart-Scott-Rodino (HSR) thresholds, which govern mergers or acquisitions that must be reported to the FTC and the Department of Justice prior to being consummated.
When effective, which likely will be in mid-to-late March, a transaction will be reportable if:
- The transaction is valued at greater than $359.9 million (previously $337.6 million); OR
- (a) The transaction is valued at greater than $90 million (previously $84.4 million), and (b) one party has net sales or total assets of $18 million or more (previously $16.9 million), and (c) a second party has net sales or total assets of $180 million or more (previously $168.8 million).
The dollar increases in each threshold are the largest since 2005, when the HSR threshold increases were instituted. The thresholds also have increased roughly 6.5%, which is the largest percentage increase in thresholds since 2014, when the thresholds increased roughly 7%. Because the US economy currently is doing well and because thresholds are tied to gross domestic product, it was expected that the FTC would implement a more substantial increase to the HSR thresholds than in prior years.
In addition to amendments to the HSR thresholds, the HSR filing fee tiers also will be updated. The HSR filing fee is pegged to the value of the transaction. The new filing fee tiers are as follows:
- Filing fee of $45,000 will apply to transactions valued at $90 million or more but less than $180 million (previously more than $84.4 million but less than $168.8 million).
- Filing fee of $125,000 will apply to transactions valued at $180 million or more but less than $899.8 million (previously more than $168.8 million but less than $843.9 million).
- Filing fee of $280,000 will apply to transactions valued at $899.8 million or more (previously $843.9 million or more).
Thresholds relating to certain exemptions and Interlocking Directorates under Section 8 of the Clayton Act and the daily penalty for HSR violations also have been updated.
All of these new thresholds will apply to any transactions closed 30 days or more after the amounts are published in the Federal Register.
To help navigate the complex HSR Act rules, Mayer Brown has created an interactive presentation that provides quick and practical HSR guidance. Based on current 2019 FTC thresholds, this presentation allows you to choose the criteria that best apply to your organization or transaction and then takes you through a basic analysis of whether an HSR Act filing is necessary.
The FTC’s Federal Register notice and a complete list of all HSR threshold adjustments can be found on the FTC’s website.