United States: FTC Revises HSR Thresholds And Section 8 Thresholds – Significant Increase

The Federal Trade Commission (the "FTC") has announced revised thresholds for merger notifications under the HartScott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"). As statutorily mandated, the various thresholds incorporated into the HSR Act and its rules and regulations are revised annually based on the change in the U.S. gross national product. In addition, the FTC has revised the thresholds relating to the application of Section 8 of the Clayton Act, which prohibits certain interlocking directorates and officerships. The Federal Register has now published the revisions. The notice concerning the HSR Act thresholds can be accessed here, and the notice concerning Section 8 of the Clayton Act can be accessed here.

HSR Act Thresholds

The new HSR Act thresholds will become effective for any transaction that closes on or after February 23, 2022. Most importantly, the minimum notification threshold under the HSR Act will increase significantly from $92 million to $101 million. Thus, an acquisition may trigger an HSR reporting obligation only if, as a result of an acquisition, an acquirer would hold voting securities, noncorporate interests (but only where "control" of a noncorporate entity would pass to the acquiring person as a result of the acquisition), and/or assets of an acquired person, that are valued in excess of $101 million. The following table sets forth the principal threshold adjustments applicable to the HSR Act.

Any monetary or limitation value included in a rule or regulation promulgated under the HSR Act that includes the term "(as adjusted)" (for example, the exemption that may be available for certain acquisitions of foreign assets or stock of foreign issuers where the exemption is dependent upon the nexus to U.S. commerce) has also been adjusted and will become effective on February 23, 2022.

Section 8 Thresholds

Section 8 of the Clayton Act prohibits a person from serving as a director or officer of competing corporations if certain thresholds are met and an exemption does not apply. Pursuant to the new thresholds, effective January 24, 2022, competing corporations are covered by Section 8 if each corporation's capital, surplus, and undivided profits exceed in the aggregate $41,034,000, unless one or more of the following exemptions apply: (i) one of the corporations has competitive sales of less than $4,103,400; (ii) the competitive sales of either corporation are less than 2% of that corporation's total sales; or (iii) the competitive sales of each corporation are less than 4% of that corporation's total sales.

Footnote

1. Generally speaking, the "size of person test" is based on annual net sales and total assets of the relevant "acquiring" and "acquired" persons as stated on ordinary course financial statements.

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.