The Federal Trade Commission (“FTC”) announced its annual revision to the thresholds for the premerger reporting of proposed acquisitions to the United States antitrust authorities under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”).1 The HSR thresholds are adjusted annually, based on the change in gross national product. The minimum size-of-transaction threshold will be $84.4 million, effective February 28, 2018.2
Under the new thresholds, transactions that will result in one person holding more than $84.4 million (originally $50 million) of another person’s assets, voting securities or non-corporate interests may be subject to the HSR Act’s premerger reporting requirements.
The HSR Act requires all persons contemplating mergers or acquisitions of voting securities or assets that satisfy the size-of-transaction and size-of-person thresholds in the Act, to notify the FTC and the Antitrust Division of the Department of Justice, pay a filing fee of $45,000 to $280,000 (depending on the size of the transaction) and observe a waiting period before completing those transactions. Once the agencies receive the required HSR forms and the filing fee, a 30-day waiting period commences (in most cases) and the transaction cannot close until the expiration or early termination of the waiting period—or, in the event the waiting period is extended by issuance of a “Second Request” for additional materials when significant antitrust concerns exist, expiration of an additional 30-day waiting period or a negotiated schedule following substantial compliance with the Second Request.
The HSR rules are complex. They include many exemptions and exceptions and at times require the aggregation of pre-acquisition holdings and reporting of subsequent acquisitions when a secondary threshold is crossed. The HSR Act and rules may require notification for acquisitions of minority holdings of voting securities, and the antitrust agencies may fine investors who do not make required notifications.3 Therefore, the rules should be carefully reviewed with respect to any particular transaction.
The FTC also revised thresholds for restrictions on interlocking directorates under Section 8 of the Clayton Antitrust Act of 1914, as amended, which prohibits the same person from serving as a director or officer of two competing corporations whose combined sales exceed certain thresholds. Competing corporations are covered if each one has capital, surplus and undivided profits in aggregate of more than $34,395,000 (originally $10,000,000), with the exception that no corporation is covered if the competitive sales of either corporation are less than $3,439,500 (originally $1,000,000).5