On January 21, 2022, the Federal Trade Commission (FTC) announced revised thresholds for merger notifications under the Hart-Scott-Rodino (HSR) Act. Effective February 23, 2022, the lowest size-of-transaction filing threshold (also known as the "$50 million threshold") will increase from the current $92 million to $101 million. Parties to transactions that close on or after the effective date are subject to the revised thresholds.
The "$10 million" and "$100 million" size-of-person thresholds will increase to $20.2 million and $202 million, respectively. The size-of-person test applies to transactions valued at less than $200 million (as adjusted, $403.9 million) and is based on the total assets and annual net sales of the ultimate parent entities (UPEs) of the acquiring and acquired persons. In general, to be reportable, the UPE of one party to the transaction must have annual net sales or total assets of $10 million or more (as adjusted, $20.2 million) and the UPE of the other party must have annual net sales or total assets of $100 million or more (as adjusted, $202 million). There are, however, several nuances and exceptions to the size-of-person test that must be examined separately for each transaction.
The increased thresholds arise from amendments to the HSR Act in 2000 that require the FTC to adjust the thresholds annually to account for change in the gross national product. This year, the thresholds went up to reflect the increase in 2021 GNP. All the notification and exemption dollar thresholds in the HSR statute, regulations and reporting instructions that are subject to annual adjustments will also be adjusted upward. The new HSR dollar thresholds will be as follows:
|Original Thresholds||2021 Thresholds||2022 Thresholds|
|$10 million||$18.4 million||$20.2 million|
|$50 million||$92 million||$101 million|
|$100 million||$184 million||$202 million|
|$110 million||$202.4 million||$222.2 million|
|$200 million||$368 million||$403.9 million|
|$500 million||$919.9 million||$1.0098 billion|
|$1 billion||$1.8398 billion||$2.0196 billion|
The FTC has also announced that it will be adjusting both dollar thresholds for Section 8 of the Clayton Act to account for changes in the GNP. Section 8, in many circumstances, forbids a person from serving as an officer or director of two competing corporations if two thresholds are met. Under the revised thresholds, effective when published in the Federal Register, Section 8 may apply when each of the competing corporations has capital, surplus and undivided profits in aggregation of more than $41,034,000, and each corporation's competitive sales (i.e., sales derived from product(s) for which the two companies compete) are at least $4,103,400.
Lastly, earlier this year, the FTC increased the maximum civil penalty for HSR Act violations from $43,792 to $46,517 per day. This increased penalty is effective for all penalties assessed as of January 10, 2022, even if the underlying violation preceded that date.
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