The Federal Trade Commission (FTC) has announced that it will raise the Hart-Scott-Rodino Act (HSR Act) jurisdictional and filing fee thresholds. The new thresholds are expected to become effective February 21, 2011. The new rules include an increase in the “size-of-transaction” test from greater than $63.4 million to greater than $66 million—which means that under the new threshold, acquisitions valued for HSR Act purposes at $66 million or less will not require preclosing filing and approval.
New Jurisdictional Thresholds
As a general rule, the HSR Act requires both Acquiring and Acquired Persons to file notifications if the following postadjustment jurisdictional thresholds are met:
- One person has net sales or total assets of at least $131.9 million.
- The other person has net sales or total assets of at least $13.2 million.
- As a result of the transaction, the Acquiring Person will hold an aggregate amount of stock and assets of the Acquired Person valued at more than $66 million.
- As a result of the transaction, the Acquiring Person will hold an aggregate amount of stock and assets of the Acquired Person valued at more than $263.8 million, regardless of the sales or assets of the Acquiring and Acquired Persons.
Conditions 1 and 2 are generally referred to as the “size-of-person” test, while conditions 3 and 4 are commonly described as the “size-of-transaction” test. Any transaction closing as of February 21, 2011 (or, if different, the effective date, which will be within a few days before or after February 21) will be subject to the revised thresholds.
The HSR Act rules relating to acquisitions of partnership interests and membership interests in a limited liability company (LLC) remain the same. Only acquisitions of economic control in an LLC or partnership may be reportable. “Control” is defined as having a right to 50% or more of the profits of a partnership or LLC or 50% or more of the assets upon the dissolution of such entity.
New Filing Fee Thresholds
Filing fees are also determined by a threshold test relating to the size of the transaction. While the valuation thresholds have changed, the fees themselves have not been adjusted:
Please click here for table
The figures above represent the new “as adjusted” threshold figures. The table below illustrates the changes.
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These changes are being implemented pursuant to the 2000 amendments to Section 7A of the Clayton Act. Section 7A(a)(2) of the Clayton Act requires the FTC to revise the jurisdictional thresholds annually, based on the change in gross national product, in accordance with Section 8(a)(5). The revised thresholds will apply to all transactions that close on or after the effective date.