On January 29, 2008, the Federal Trade Commission’s updated dollar thresholds to the Hart Scott Rodino Antitrust Improvements Act were published in the Federal Register. These thresholds will apply to all transactions closing on or after February 28, 2008. Attached to this alert is a chart of all the statutory provisions and the adjusted dollar thresholds.
The Hart Scott Rodino Antitrust Improvements Act established a number of criteria for determining whether a transaction must be reported to the FTC or Department of Justice before it is consummated: (1) the In Commerce Test; (2) the Size-of-Transaction Test; and (3) the Size-of-Parties Test. If a transaction satisfies these criteria, the parties must report the transaction and observe a waiting period to enable the government to analyze the deal’s competitive effects. On an annual basis, the FTC makes an inflation adjustment to two of the criteria – the size-of-transaction test and the size-of-parties test.
Size-of-Transaction Test. Under the size-of-transaction test, parties must report a transaction if, through the transaction, a party would obtain voting securities or assets of another party with a value exceeding the reporting threshold. The minimum transaction reporting threshold has increased from $59.8 million to $63.1 million. Under this test parties are not required to report a transaction if its value is equal to or less than the reporting threshold.
Size-of-Person Test. The size-of-person test also applies to any transaction valued at or below $252.3 million. A transaction will satisfy this test if one of the parties to the transaction has annual net sales or total assets equal to or exceeding $12.6 million, and the other party to the transaction has annual net sales or total assets equal to or exceeding $126.2 million. In calculating whether a transaction must be reported under this test, the annual net sales and total sales will be based on a party’s most recent regularly prepared balance sheet. The size-of-person test does not apply to a transaction with a value exceeding $252.3 million.
Filing Fees: The FTC updated the HSR filing fee thresholds. A transaction with a value exceeding $63.1 million but below $126.2 million will require a $45,000 filing fee. A transaction with a value at or above $126.2 million but below $630.8 million will require a $125,000 filing fee. And a transaction valued at $630.8 million or greater will require a $280,000 filing fee.
Interlocking Directorates: The FTC also announced revised dollar thresholds for evaluating interlocking directorates under section 8 of the Clayton Act. The new thresholds are $25,319,000 for Section 8(a)(1) and $2,531,900 for Section 8(a)(2)(A).
Because of the complex rules governing transaction valuation, threshold calculation, and the applicability of exemptions, an individual or company should consult with counsel before closing a new transaction.