Federal law requires that mergers, acquisitions, and other
transactions of a certain size be notified to the Federal Trade
Commission and Department of Justice prior to consummation,
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act, 15
USC §18a (2001). The purpose of the HSR filing is to enable
antitrust regulators to review the transaction and investigate and
address potential antitrust violations prior to its
consummation.
Each year, the FTC adjusts the dollar thresholds that trigger the
obligation to make HSR filings based on changes in the gross
national product. Last week, the FTC announced the new thresholds
for this year. Effective February 24, 2011, the basic notification
threshold will be adjusted upward from $63.4 million to
$66.0 million.
Unless otherwise exempt, an entity that directly or indirectly
acquires assets or voting securities (or similar interests in an
unincorporated entity) in excess of $66 million may be required to
file notification under the Act and to observe the applicable
waiting period before consummating the transaction. In each
instance where an acquiring person files under the Act, the
acquired person is also required to submit a filing. Transactions
involving the acquisition of subsequent interests are typically
exempt from further notification under the Act unless a subsequent
notification threshold is exceeded.
Transactions valued at $263.8 million or less
($253.7 million prior to February 24, 2011), however, are not
subject to the HSR Act unless the parties also meet the
size-of-person thresholds. Under the revised thresholds, the
size-of-person threshold is met where a person with annual net
sales or total assets of $131.9 million acquires a
person with annual net sales or total assets of $13.2
million, or vice-versa.
The following charts provide a summary of the HSR Act's
threshold adjustments:
SIZE-OF-TRANSACTION |
Old Threshold |
New Threshold |
|
Jurisdictional Threshold |
Basic Notification Threshold |
$63.4 Million | $66.0 Million |
$126.9 Million | $131.9 Million | ||
Subsequent Notification Thresholds |
$634.4 Million | $659.5 Million | |
25% (if value exceeds $1.2687 billion) | 25% (if value exceeds $1.319 billion) | ||
50% (where value exceeds $63.4 million) | 50% (where value exceeds $66.0 million) |
SIZE-OF-PERSON |
Old Threshold | New Threshold (Effective February 24, 2011) |
|
Jurisdictional Threshold | Size-of-Person Thresholds | $12.7 Million | $13.2 Million |
$126.9 Million | $131.9 Million | ||
Size-of-Person Inapplicable Where Transaction Exceeds | $253.7 Million | $263.8 Million |
The dollar amount of the filing fees payable to the Federal Trade Commission with HSR Act filings are not subject to indexing; however, the thresholds applicable to the statutory filing fees do adjust with indexing. As of February 24, 2011, the schedule for filing fees will be as follows:
Transaction
Size |
Filing Fee |
Greater than $66.0 million but less than $131.9 million | $45,000 |
$131.9 million or greater but less than $659.5 million | $125,000 |
$659.5 million or greater | $280,000 |
The antitrust agencies strictly apply the requirements of the HSR Act, and take failure to conform to those requirements very seriously. Correct application of the HSR Act can be complex and typically requires a detailed and careful analysis of a transaction. Proskauer's HSR team has extensive experience with the issues presented under the HSR Act. If you have any questions concerning a potential HSR filing requirement, please contact one of the lawyers identified in this publication.
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.