Notification thresholds
Interlocking directorates threshold


On January 19 2010 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 30 days after publication in the Federal Register. The revisions to Section 8 will become effective on publication in the Federal Register. It is anticipated that both changes will be effective before the end of February 2010.

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.

Every year the FTC adjusts the Hart-Scott-Rodino jurisdictional threshold tests based on changes to the US gross national product for each fiscal year compared to the gross national product for the fiscal year ending September 30 2003. This year, due to the economic downturn, the thresholds have decreased. The threshold changes do not affect the amount of the applicable 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 are shown in the table below.

  Current threshold New threshold effective 30 days after Federal Register publication
Size-of-transaction threshold test Notification may be required if acquiring person will acquire and hold certain assets, voting securities or interests in non-corporate entities valued at more than $65.2 million $63.4 million
Size-of-person threshold test Generally one 'person' to the transaction must have at least $130.3 million in total assets or annual net sales, and the other must have at least $13 million in total assets or annual net sales At least $126.9 million and $12.7 million in total assets or annual net sales
  Transactions valued at more than $260.7 million are not subject to the size-of-person threshold test and are therefore reportable unless exempt $253.7 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 $65.2 million but less than $130.3 million

More than $63.4 million but less than $126.9 million

Hart-Scott-Rodino filing fee 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 $130.3 million or more but less than $651.7 million

$126.9 million or more but less than $634.4 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 $651.7 million or more

At $634.4 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 – $65.2 million, $130.3 million, $651.7 million, 25% (if the value of the voting securities to be held is greater than $1,303.4 million) or 50%. These notification thresholds are also relevant to a certain Hart-Scott-Rodino exemption The new notification thresholds are $63.4 million, $126.9 million, $634.4 million, 25% (if the value of the voting securities to be held is greater than $1,268.7 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's recent announcement was prompted by a 1990 amendment to Section 8 of the Clayton Act, which requires the FTC to adjust on an annual basis the thresholds that trigger the prohibition based on changes to the US gross national product for each fiscal year compared to the gross national product for the fiscal year ending September 30 1989. As with the Hart-Scott-Rodino thresholds, due to the economic downturn the adjustment this year will result in lower thresholds.

Under the new thresholds that will be effective upon 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 $25,841,000 unless one of the corporations has competitive sales of less than $2,584,100. 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 $26,161,000 unless one of the corporations had competitive sales of less than $2,616,100.

 

For further information on this topic please contact Michele S Harrington at Hogan & Hartson LLP's McLean office by telephone (+1 703 610 6100), fax (+1 703 610 6200) or email (msharrington@hhlaw.com). Alternatively, contact Joseph G Krauss or Michaelynn R Ware at Hogan & Hartson's Washington DC office by telephone (+1 202 637 5600), fax (+1 202 637 5910) or email (jgkrauss@hhlaw.com or mrware@hhlaw.com).

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