The U.S. Federal Trade Commission (FTC) recently announced revised thresholds for the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976 as well as revised thresholds for determining whether competing corporations may have interlocking directors.

Notification Threshold Adjustments

Pursuant to the amendments passed by the U.S. Congress in 2000, the FTC announced the revised thresholds for HSR pre-merger notifications on January 16, 2007, and it will publish these adjusted thresholds in the Federal Register shortly. These revised thresholds will become effective 30 days after the date they are published in the Federal Register. HSR pre-merger notifications filed on or after this effective date must comply with these new thresholds.

As required, the FTC adjusted the notification thresholds for inflation, and the thresholds will increase relative to the increase in the gross national product for the fiscal year ending September 30, 2006. Most notably, the base filing threshold of $50 million, which frequently determines whether filing an HSR notification is required, will increase to $59.8 million following this revision. The changes also will affect other dollar-amount thresholds:

  • The alternative statutory size-of-transaction test, which captures all transactions valued above $200 million regardless of the "size-of-persons," will be adjusted to $239.2 million.
  • The statutory size-of-person thresholds (applicable to transactions now valued at less than $239.2 million) will increase from $10 million to $12 million and from $100 million to $119.6 million.


The adjustments will affect parties contemplating HSR notifications in various ways. Parties may be relieved from the obligation to file a notification for transactions that fall below the adjusted base threshold. For example, a transaction resulting in the acquiring person holding voting securities or assets valued less than $59.8 million would not be reportable on or after the effective date. The adjustments will also affect various exemptions under the HSR rules. For example, acquisitions of foreign assets and foreign issuers will now be exempt unless they generated U.S. sales in excess of $59.8 million.

Parties may also realize a benefit of lower notification filing fees for transactions that just cross current thresholds. While filing fees for HSR-reportable transactions will remain unchanged, the applicable filing fee tiers will shift upward as a result of the inflation indexing adjustments.

  • Transactions valued between $59.8 million and $119.6 million require parties to pay a $45,000 filing fee.
  • Transactions valued between $119.6 million and $597.9 million require parties to pay a $125,000 filing fee.
  • Transactions valued above $597.9 million require parties to pay a $280,000 filing fee.


Interlocking Directorate Thresholds Adjustment

On January 16, 2007, the FTC also announced revised thresholds for interlocking directorates, which are effective immediately upon publication in the Federal Register. The FTC also must revise these thresholds annually according to the change in gross national product. Section 8 of the Clayton Act prohibits a person from serving as a director or officer of two competing corporations if certain thresholds are met. The prohibition against interlocking directors applies if a corporation has more than $10 million (as adjusted) in capital, surplus and undivided profits; however, if either corporation has less than $1 million (as adjusted) in competitive sales, then the prohibition does not apply. According to the recently revised thresholds, Section 8 of the Clayton Act applies to corporations with more than $24,001,000 in capital, surplus and undivided profits, while it does not apply to corporations with less than $2,400,100 in competitive sales.

McDermott’s Antitrust & Competition Group regularly provides guidance to clients regarding pre-merger reporting, the scope of permissible pre-merger activities and defending transactions before the U.S. and international competition authorities.