Transactions that close on or after February 27, 2020, will be subject to revised thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (HSR Act). The threshold adjustments are the result of the 2000 Amendments to the HSR Act, which require the Federal Trade Commission (FTC) to adjust the thresholds annually based on the percentage change in the gross national product from the previous year.
The HSR Act governs the reporting of acquisitions and mergers in the United States. Under the HSR Act, and the statutes and rules implementing it, every non-exempt acquisition of assets or voting securities that exceed certain thresholds under the Size of Transaction and Size of Parties tests must be reported to the FTC and the Department of Justice (DOJ), and cannot be consummated until after the expiration of a defined waiting period during which the FTC or DOJ will examine the competitive merits of the transaction and determine whether or not to challenge the consummation of the transaction.
Size of Transaction Test
Under the current Size of Transaction Test, no HSR filing is required unless the acquisition results in an acquiring person holding an aggregate total amount of voting securities and/or assets of the acquired person in excess of $90 million. The new threshold will be $94 million.
Size of the Parties Test
Under the current thresholds, acquisitions valued above $359.9 million are reportable regardless of the size of the parties. The new threshold will be $376 million.
Under the current thresholds, acquisitions valued at greater than $90 million (to become $94 million) but less than or equal to $359.9 million (to become $376 million) are reportable only if the Size of Parties is met. The current Size of Parties Test is met if the acquiring or acquired person has annual net sales or total assets of $180 million or more and another party to the transaction has annual net sales or total assets of $18 million or more. The new thresholds will be $188 million and $18.8 million respectively.
Filing Fee Thresholds
The thresholds at which the three levels of filing fees attach will be similarly increased, although the filing fees themselves will remain the same. The new thresholds for determining the applicable filing fee will be as follows:
The revised thresholds will also result in corresponding increases to the thresholds used for determining the applicability of many exemptions under the HSR Act, including those govern foreign acquisitions.
Parties that fail to file and observe the waiting period before closing in accordance with the HSR Act may be required to pay civil penalties up to $43,280 per day, retroactive to the date of the violation.