Most mergers and acquisitions valued above $63.4 million will have to be reported to antitrust authorities in Washington, D.C., after February 20.
Every January the Federal Trade Commission announces new filing thresholds under the Hart-Scott-Rodino Antitrust Improvements Act for the antitrust agencies’ premerger review of sizeable transactions. The annual adjustment is driven by changes in the Gross National Product and in recent years has resulted in incremental increases in the “size of parties” and “size of transaction” thresholds, as well as other HSR triggers related to exemptions or the payment of filing fees.
This year, for the first time, recession-driven changes in the GNP resulted in a decrease in the HSR jurisdictional thresholds and triggers. As a result, a deal that would have been too small to require notification in 2009 (because the parties or the size of the deal did not exceed an HSR threshold) may require a mandatory filing in 2010. The effective date for the newly announced thresholds is February 20, 2010.
The HSR Act is designed to give the FTC and the Department of Justice an opportunity to review certain acquisitions of assets or equity interests in advance of closing, by requiring companies and investors to notify the agencies and to divulge information about the parties and the terms of the transaction notified. A waiting period follows the notification, during which the reviewing agencies examine the impact of a proposed transaction and determine whether it might result in a violation of federal antitrust law. A transaction is reportable whether or not it presents antitrust concerns, but only if it meets certain jurisdictional tests.
Beginning next month, the “size of parties” tests generally will be satisfied if at least one party (together with all affiliates under common control) has total assets or annual sales of at least $126.9 million (down from $130.3 million), and another party has total assets or annual sales of at least $12.7 million (down from $13 million). The “size of transaction” test will be satisfied if the acquiring party will hold assets and voting securities valued at more than $63.4 million as a result of the transaction (down from the current threshold of $65.2 million).
The thresholds for incremental acquisitions of voting securities that must be reported also have been adjusted downward, to $126.9 million, $634.4 million, 25 percent if valued greater than $1,268.7 million, and 50 percent if valued greater than $63.4 million. Similarly, certain exemptions to the HSR filing rules refer to dollar thresholds “as adjusted” and the new thresholds will decrease (slightly) the scope of those exemptions. A summary of the new thresholds and comparison with original thresholds and current thresholds follows.
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HSR filing fees are based on the size of the transaction being notified. The amounts of the filing fees will not change, but the deal size at which each of the three filing fee tiers becomes applicable will decrease as follows:
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