Noncompliance with the HSR Act will carry serious penalties, and parties should seek experienced antitrust counsel to advise them on the applicability of the HSR Act.
On February 14, 2019, the Federal Trade Commission (FTC) announced increases to the jurisdictional thresholds for premerger notification under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act. The FTC adjusts the thresholds annually, consistent with changes to gross national product. The announcement came later in the year than usual, likely due to reduced FTC staffing during the partial government shutdown. The announced changes will take effect 30 days after the changes are published in the Federal Register, which is scheduled for March 4, 2019. Assuming the changes are published on March 4, the revised thresholds will apply to transactions closing on or after April 3, 2019.
Pursuant to the revised thresholds, transactions valued equal to or in excess of $90 million (up from $84.4 million) are reportable under the HSR Act, absent exemption, if the “size-of-persons” test is met. In most transactions, the size-of-persons test is met if one person in a transaction has total assets or annual sales in excess of $180 million (up from $168.8 million), and another person in the transaction has total assets or annual sales in excess of $18 million (up from $16.9 million). A “person” includes an acquired or acquiring entity, its ultimate parent entity and all entities controlled by the ultimate parent entity. Transactions valued in excess of $359.9 million (up from $337.6 million) will be subject to filing requirements absent exemption regardless whether the size-of-persons test is met.
The FTC also separately announced on February 14 that the maximum civil penalty amount for violations of the HSR Act will increase from $41,484 to $42,530 per day, also effective upon publication in the Federal Register. The new penalty levels apply to civil penalties assessed after the effective date of the adjustment, including civil penalties whose associated violation predated the effective date.
The question of whether a business transaction meets the jurisdictional thresholds for premerger notification under the HSR Act depends on the facts and circumstances in each case and usually requires careful analysis. The outcome of that question can have significant consequences for the parties to the transaction. Noncompliance with the HSR Act will carry serious penalties, and parties should seek experienced antitrust counsel to advise them on the applicability of the HSR Act.