Federal law requires that mergers, acquisitions, and other transactions of a certain size be notified to the Federal Trade Commission and Department of Justice prior to consummation, pursuant to the Hart-Scott-Rodino Antitrust Improvements Act, 15 USC §18a (2001). The purpose of the HSR filing is to enable antitrust regulators to review the transaction and investigate and address potential antitrust violations prior to its consummation.
Each year, the FTC adjusts the dollar thresholds that trigger the obligation to make HSR filings based on changes in the gross national product. Last week, the FTC announced the new thresholds for this year. Effective February 24, 2011, the basic notification threshold will be adjusted upward from $63.4 million to $66.0 million.
Unless otherwise exempt, an entity that directly or indirectly acquires assets or voting securities (or similar interests in an unincorporated entity) in excess of $66 million may be required to file notification under the Act and to observe the applicable waiting period before consummating the transaction. In each instance where an acquiring person files under the Act, the acquired person is also required to submit a filing. Transactions involving the acquisition of subsequent interests are typically exempt from further notification under the Act unless a subsequent notification threshold is exceeded.
Transactions valued at $263.8 million or less ($253.7 million prior to February 24, 2011), however, are not subject to the HSR Act unless the parties also meet the size-of-person thresholds. Under the revised thresholds, the size-of-person threshold is met where a person with annual net sales or total assets of $131.9 million acquires a person with annual net sales or total assets of $13.2 million, or vice-versa.
The following charts provide a summary of the HSR Act’s threshold adjustments:
The dollar amount of the filing fees payable to the Federal Trade Commission with HSR Act filings are not subject to indexing; however, the thresholds applicable to the statutory filing fees do adjust with indexing. As of February 24, 2011, the schedule for filing fees will be as follows:
The antitrust agencies strictly apply the requirements of the HSR Act, and take failure to conform to those requirements very seriously. Correct application of the HSR Act can be complex and typically requires a detailed and careful analysis of a transaction.