On 21 January 2011, the Federal Trade Commission (FTC) released the annual jurisdictional adjustments for premerger notification filings made pursuant to Section 7A of the Clayton Act, known as the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act), as well as for Section 8 of the Clayton Act. The new thresholds for HSR notification will become effective 30 days after publication in the Federal Register. The revisions to Section 8 will become effective upon publication in the Federal Register. Both changes should be effective before the end of February 2011.

HSR notification thesholds

Under the HSR Act, certain acquisitions of assets, voting securities, or interests in non-corporate entities are subject

to premerger notification filing and waiting period requirements if the applicable jurisdictional thresholds are satisfied and no exemption applies.

Each year the FTC adjusts the HSR jurisdictional threshold tests based on changes to the U.S. gross national product for the most recent fiscal year compared to the gross national product for the fiscal year ending 30 September 2003. The threshold changes do not affect the amount of the applicable HSR filing fees to be paid, but do not affect the theshold levels applicable to each of the filing fees.

The principal changes to the HSR jurisdictional thresholds will be as follows:

 

Current threshold

New threshold

effective

30 days after

Federal Register publication

Size-of-transaction

threshold test

Notification may be required if acquiring person will acquire and hold certain assets, voting securities, or interests in non-corporate entities valued at more than $63.4 million.

$66 million

Size-of-person threshold test

Generally one "person" to the transaction must have at least $126.9 million in total assets or annual net sales, and the other must have at least $12.7 million in total assets or annual net sales.

At least $131.9 million and $13.2 million in total assets or annual net sales
 

Transactions valued at more than $253.7 million are not subject to the size-of-person threshold test and are therefore reportable unless exempt.

$263.8 million

Filing fee threshold levels

HSR filing fee of $45,000 for transactions where the acquiring person will hold an aggregate total amount of assets, voting securities, or controlling non-corporate interests valued at more than $63.4 million but less than $126.9 million.

More than $66 million but less than $131.9 million

HSR filing fees remains unchanged.
 

HSR filing fee of $125,000 for transactions where the acquiring person will hold an aggregate total amount of assets, voting securities, or controlling non-corporate interests valued at $126.9 million or more but less than $634.4 million.

At $131.9 million or more but less than $659.5 million

HSR filing fee remains unchanged.
 

HSR filing fee of $280,000 for transactions where the acquiring person will hold an aggregate total amount of assets, voting securities, or controlling non-corporate interests valued at $634.4 million or more.

At $659.5 million or more

HSR filing fee remains unchanged.
 

When completing an HSR filing, the acquiring person in a voting securities acquisition must indicate which notification threshold it will cross – $63.4 million, $126.9 million, $634.4 million, 25% (if the value of the voting securities to be held is greater than $1,268.7 million) or 50%. These notification thresholds are also relevant to a certain HSR exemption.

The new notification thresholds are $66 million, $131.9 million, $659.5 million, 25% (if the value of the voting securities to be held is greater than $1,319 million), or 50%

Interlocking directorates threshold

Section 8 of the Clayton Act prohibits a person from serving as a director or officer of two competing corporations if certain thresholds are satisfied and no exemption applies. The FTC is required to adjust annually certain thresholds related to Section 8 based on changes to the gross national product compared to the gross national product for the fiscal year ending 30 September 1989.

Under the new thresholds that will be effective upon publication in the Federal Register, a person may not serve as a director or officer of competing corporations if each corporation has capital, surplus, and undivided profits aggregating more than $26,867,000, unless one of the corporations has competitive sales of less than $2,686,700. Previously, a person was prohibited from serving as a director or officer of competitive corporations if each corporation had capital, surplus, and undivided profits aggregating more than $25,841,000 unless one of the corporations had competitive sales of less than $2,584,100.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.