Answer ... The US antitrust laws are not limited to certain industries or transactions. Under Section 7 of the Clayton Act, any transaction that has the potential to substantially lessen competition is reviewable by the agencies. Therefore, all kinds of transactions are potentially subject to merger review. Transactions that are typically challenged include stock and asset acquisitions, mergers, joint ventures, minority investments, and incremental investments. Additionally, the Hart-Scott-Rodino Act contains size-of-transaction and size-of-person thresholds that, if met, trigger mandatory reporting requirements to the agencies.

Answer ... US antitrust laws do not require acquisition of ‘control’ for a transaction to be reviewable by the agencies. The agencies have the authority to review any transaction with the potential to result in a substantial lessening of competition, so long as that transaction impacts on commerce in the United States.

However, ‘control’ is defined in the Hart-Scott-Rodino Act because it is central to determining which companies should be considered part of the acquiring or acquired person, and because the acquisition of control triggers filing requirements in transactions involving non-corporate interests, such as partnerships or limited liability companies. The Hart-Scott-Rodino Act defines ‘control’ as follows:

Answer ... Generally, for-profit joint ventures are covered by the US merger control regime. Not-for-profit joint ventures are usually exempt, but these transactions may be reviewable if one of the Hart-Scott-Rodino Act thresholds is met. In cases where parties are contributing to a new joint venture and receiving voting securities in exchange, the transaction is treated as an acquisition of the new joint venture by the contributing parties and may face Hart-Scott-Rodino filing requirements. The same is true of an outright acquisition of a joint venture entity or the acquisition of an existing interest in a joint venture. If the joint venture is purely the product of a contractual relationship between parties (no actual contribution to a joint venture entity), the transaction is typically not subject to merger review, though it will still be generally subject to antitrust law, such as Section 1 of the Sherman Act, which prohibits any combination that unreasonably restrains trade.

Answer ... Generally, foreign-to-foreign transactions trigger Hart-Scott-Rodino filing requirements only if they have a sufficient nexus with the United States, with the extent of the nexus primarily determined by the value of relevant sales into the United States or the value of relevant assets in the United States.

In transactions involving the acquisition of voting securities, the transaction is exempt from the Hart-Scott-Rodino Act unless the issuer, along with its controlled entities, either:

• holds US-based assets over $90 million; or
• made sales in or into the United States exceeding $90 million.

If the voting securities of a foreign issuer are acquired by a foreign person, the transaction is exempt unless:

• the person acquires 50% or more of the voting stock of the company; and

the target enjoys sales in or into the United States above $90 million or holds assets in the United States valued above the same threshold.

In transactions involving foreign assets, the transaction is exempt from the Hart-Scott-Rodino Act unless the relevant foreign assets generated sales in or into the United States exceeding $90 million. However, even in transactions with relevant sales above this threshold, the transaction will be exempt if it meets certain qualifications.

Answer ... The Hart-Scott-Rodino Act includes three standard thresholds or tests, which are as follows:

• The commerce test requires that one of the parties be involved in “interstate United States commerce”. The terms are broadly construed under the Hart-Scott-Rodino Act and this threshold is almost always met if the other thresholds are met.
• The size-of transaction test requires that the acquiring entity would hold voting securities, assets and/or non-corporate interests in the acquired entity valued at above $90 million. The thresholds are set and adjusted every year by the Federal Trade Commission based on a formula set by the Hart-Scott-Rodino Act. For acquisitions of non-corporate interests, the acquiring party must also acquire ‘control’, which is defined in this case as the right to 50% or more of the profits or a right to 50% or more of the assets upon dissolution.
• The size-of-persons test applies in the event the transaction is valued between $90 million and $359.9 million. In that case, at least one of the parties involved to the transaction must have annual net sales or total assets of $180 million and the other must have annual net sales or total assets of $18 million or more. Care must be taken in analysing the relevant assets and sales, which should include those of the ‘ultimate parent entity’ and all its controlled subsidiaries, using the test for ‘control’ as described in question 2.2.

Answer ... Substantively, Section 7 of the Clayton Act and other US antitrust laws reach all transactions, as long as they the parties to the transaction are “in commerce or in any activity affecting [US] commerce ”.

Procedurally, the Hart-Scott-Rodino Act has many exemptions to its filing requirements, including:

• acquisitions of goods and reality in the ordinary course of business ;
• transactions involving certain classes of real property ;
• acquisitions of 10% or less of an issuer made solely for purposes of investment ;
• acquisitions of 15% or less of an issuer by certain types of institutional investors; and

acquisitions of non-US issuers that do not have sufficient sales or assets in or into the United States.