The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (HSR Act), requires that transactions that meet certain thresholds be reported to the Antitrust Division of the Department of Justice and the Federal Trade Commission and observe a waiting period before closing. Mergers, acquisitions of assets (including certain exclusive licenses) or voting securities, and joint ventures may require each party to submit a notification to the agencies if the statutory thresholds are met. Whether a notification is required depends only on whether the thresholds are met, not whether the transaction will have any impact on competition or on the market shares of the parties.
The thresholds specified in the HSR Act (and other related portions of the Clayton Act) are indexed annually to reflect economic growth and to prevent unintended expansion in the Act’s coverage over time. Each year, the statutory thresholds are amended via FTC rulemaking to reflect the annual change in gross national product. The FTC announced that it has adopted the amended thresholds for 2013, which were published in the Federal Register on January 11, 2013. The revised thresholds will come into effect on February 11, 2013, 30 days after publication.
For transactions that will close on or after February 11, the minimum size of transaction that may require an HSR notification will be $70.9 million, a roughly 4 percent increase. Transactions that result in the acquiring party holding less than $70.9 million in assets, voting securities or non-corporate interests of the acquired person will not require an HSR notification.
The notice makes proportionate changes to other related thresholds as well. Transactions resulting in an acquisition valued at more than $283.6 million are not subject to a size of person test, up from $272.8 million, and will require a notification unless an exemption applies. Transactions valued at between $70.9 million and $283.6 million must also satisfy the size of person test to require an HSR notification. For transactions valued in that range, one party must have total assets or annual net sales in excess of $14.2 million with another having total assets or net sales of $141.8 million or more, up from $13.6 million and $136.4 million, respectively.
The revised thresholds may result in marginally fewer transactions requiring notification. Nonetheless, the HSR rules can be complex and determining the appropriate valuation for a transaction and/or whether an exemption applies requires careful expert analysis.