The Hart-Scott-Rodino thresholds announced previously by the Federal Trade Commission (FTC) became effective on February 24, 2011. The Hart-Scott-Rodino Antitrust Improvements Act (the HSR Act) is designed to permit the U.S. antitrust enforcement agencies to evaluate the potential competitive effects of a transaction before it is consummated, and to obtain early and effective preliminary relief against anticompetitive mergers.
Under the HSR Act, transactions involving larger firms and that are over a certain size, based on the dollar value or purchase price, are reportable to the FTC and the Antitrust Division of the Department of Justice (DOJ). The filing of premerger notification forms with the FTC and the DOJ, including the payment of the applicable fee, triggers certain waiting periods. Any party that fails to comply with the HSR Act’s notification and waiting period requirements is liable for a civil penalty of up to $16,000 for each day the violation continues.
The thresholds, known as the size-of-person and size-of-transaction tests, are important for those contemplating an acquisition. The HSR thresholds are adjusted annually based on the gross national product. The minimum HSR threshold was raised to $66 million from $63.4 million, making transactions valued at $66 million or less not reportable.
Using these new thresholds and without taking into account the many exemptions that might be available, a transaction valued in excess of $263.8 million is reportable regardless of the size of the parties. A transaction valued between $263.8 million and $66 million would only be reportable if the parties also meet the size-of-person test – either the acquiring or acquired person has annual net sales or total assets in excess of $131.9 million and the other party has annual net sales or total assets in excess of $13.2 million. If the acquired person does not satisfy the $131.9 million test, it must have assets in excess of $13.2 million (the net sales test is inapplicable).
Although these thresholds are important, HSR counsel will need to review all potentially available exemptions before making a final determination on whether a filing is required.