On January 26, 2018, the Federal Trade Commission (FTC) announced an increase in the thresholds that determine whether companies are required to 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 FTC is required by law to revise these jurisdictional HSR Act thresholds annually based upon the change in gross national product. The HSR Act requires companies of a certain size involved in a transaction that exceeds the filing thresholds to file a pre-merger notification with the FTC and Department of Justice and observe a waiting period unless an HSR Act exemption applies.
The HSR “size of transaction” threshold will increase from $80.8 million to $84.4 million. Transactions in which the acquiring party will hold voting securities, non-corporate interests, or assets valued above 84.4 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 $168.8 million or more (up from $161.5 million), and that the other party have annual net sales or total assets of $16.9 million or more (up from $16.2 million). For transactions valued at more than $84.4 million, but less than $337.6 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 $337.6 million or more (up from $323.0 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.
While the new thresholds announced by the FTC do not affect the HSR Act filing fees, the applicable filing fee for a transaction will be based on new thresholds, and are as follows: a $45,000 filing fee for transactions valued at $84.4 million or more but less than $168.8 million; a $125,000 filing fee for transactions valued at $168.8 million or more but less than $843.9 million; and a $280,000 filing fee for transactions valued at $843.9 million or more.
Certain thresholds relevant to exemptions under the HSR Act will also increase. The new thresholds will be effective as of February 28, 2018, so transactions closing on or after that date will be subject to the revised thresholds. This advisory is a publication of Davis Wright Tremaine LLP. Our purpose in publishing this advisory is to inform our clients and friends of recent legal developments. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may only be given in response to inquiries regarding particular situations.