Size of Transaction Threshold is lowered for the first time to $63.4 million

The FTC has announced new reporting notification thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act” or the “Act”), which will be effective 30 days after the revised thresholds are published in the Federal Register.1 The FTC has yet to publish the Federal Register notice, but based on prior practice, the new thresholds will likely become effective by late February 2010. Until the effective date, the current thresholds will apply. Of particular note, the size-of-transaction threshold will decrease from $65.2 million to $63.4 million, which means that a transaction that is not currently reportable (e.g., a transaction valued between $63.4 million and $65.2 million) could require an HSR filing if it is not consummated before the new threshold goes into effect.2

The principal changes to the notification thresholds, which will apply to all transactions that are consummated on or after the effective date, are as follows:

  • The initial size-of-transaction threshold will decrease from $65.2 million to $63.4 million.3
  • The size-of-person thresholds, currently $130.3 million and $13.0 million, will decrease to $126.9 million and $12.7 million, respectively.
    • The size-of-person test is only applicable to transactions now valued at $253.7 million or less (currently $260.7 million).
  • The notification thresholds – for stock transactions, the highest threshold that will be crossed as a result of the transaction – will also be decreased as follows:
    • The $65.2 million notification threshold will decrease to $63.4 million.
    • The $130.3 million notification threshold will decrease to $126.9 million.
    • The $651.7 million notification threshold will decrease to $634.4 million.
    • The 25 percent notification threshold, currently applicable to acquisitions of stock valued in excess of $1.3034 billion, will now apply to acquisitions of stock valued in excess of $1.2687 billion.
    • The 50 percent notification threshold remains unchanged.
  • The foreign commerce exemption thresholds, currently $65.2 million and $143.4 million, will decrease to $63.4 million and $139.6 million, respectively. Under the revised thresholds,
    • Acquisitions of voting securities of a foreign issuer by a U.S. person are exempt unless the foreign issuer either: (i) holds assets in the United States valued in excess of $63.4 million (currently $65.2 million), or (ii) made sales in or into the United States in excess of $63.4 million (currently $65.2 million) in the last fiscal year.
    • Acquisitions of voting securities by a foreign person are exempt unless the transaction confers control over the issuer and the foregoing thresholds are met.  
    • Acquisitions of foreign assets are exempt if the assets did not generate sales in or into the United States in excess of $63.4 million (currently $65.2 million) in the last fiscal year.
    • Acquisitions by a foreign person of either (a) voting securities of a foreign issuer where control is conferred, or (b) foreign assets, are also exempt if: (i) the aggregate total sales of both the acquiring person and the acquired person in or into the United States are less than $139.6 million (currently $143.4 million) in the last fiscal year; (ii) the aggregate total assets of the acquiring person and acquired person in the United States are less than $139.6 million (currently $143.4 million); and (iii) the value of the transaction does not exceed $253.7 million (currently $260.7 million).
  • The filing fee thresholds, currently $65.2 million, $130.3 million and $651.7 million, will decrease to $63.4 million, $126.9 million, and $634.4 million, respectively. The filing fees themselves – of $45,000, $125,000, and $280,000 – will not change.