United States: FTC Announces Increased HSR Thresholds And New Filing Fee Schedule

Key Takeaways:

• The adjusted HSR threshold is $111.4 million and goes into effect on February 27, 2023. All transactions valued below that amount will be exempt from the HSR filing requirement.
• The adjusted size of party thresholds for transactions valued below $445.5 million are $22.3 million and $222.7 million.
• The HSR filing fee schedule has changed substantially (with decreases for some transactions and dramatic increases for others). The new filing fee schedule will take effect for all filings made on or after February 27, 2023.

On January 23, 2023, the Federal Trade Commission (FTC) announced its annual adjustment of the jurisdictional thresholds for pre-merger notification filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). The revisions account for changes in the level of the U.S. gross national product. After decreasing the HSR thresholds two years ago, the FTC significantly increased the thresholds again this year. The FTC also announced increases in thresholds for interlocking directorates under Section 8 of the Clayton Act and an increase to the maximum civil monetary penalties for violations of 16 statutory provisions that the FTC enforces.

HSR Act Pre-Merger Notification Thresholds

The HSR Act requires companies contemplating mergers or acquisitions of voting securities, non-corporate interests or assets that meet or exceed certain monetary thresholds to file notification forms with the FTC and U.S. Department of Justice (DOJ) and to wait a designated period of time before consummating the contemplated transaction. The new thresholds will go into effect for transactions closing on or after February 27, 2023, and represent an almost 10.3% increase from last year's thresholds. The key adjusted thresholds are summarized below:

On December 29, 2022, President Biden signed into law the Consolidated Appropriations Act of 2023, which included substantial changes to the HSR filing fee schedule (with decreases for some transactions and dramatic increases for others).

The new filing fee schedule, which will also take effect on February 27, 2023, is as follows:

• $30,000 for transactions valued at more than $111.4 million, but less than $161.5 million;
• $100,000 for transactions valued at $161.5 million or more, but less than $500 million;
• $250,000 for transactions valued at $500 million or more, but less than $1 billion;
• $400,000 for transactions valued at $1 billion or more, but less than $2 billion;
• $800,000 for transactions valued at $2 billion or more, but less than $5 billion; and
• $2.25 million for transactions valued at $5 billion or more.

Going forward, the Act requires that the filing fees be increased by an amount equal to the percentage increase, if any, in the consumer price index, as determined by the Department of Labor or its successor, for the year then ended over the level so established for the year ending September 30, 2022. The FTC will be obligated to publish the adjusted fee amounts as soon as practicable, but no later than January 31 of each year.

The regulations governing the methodology for calculating the size of party and size of transaction tests, as well as exemptions from the HSR Act, remain unchanged.

Interlocking Directorates

In addition, the FTC revised the Section 8 thresholds, which prohibits a person from serving as a director or officer of two competing corporations (known as an interlocking directorate or interlock). The prohibition is now triggered if each corporation has capital, surplus, and undivided profits aggregating more than $45,257,000 (up from $41,034,000 last year), and each corporation's competitive sales are at least $4,525,700 (up from $4,103,400 last year), unless an exception applies. The new thresholds became effective upon publication in the Federal Register on January 26, 2023.

Inflation-Adjusted Civil Penalty Amounts

Finally, on January 6, 2023, the FTC announced adjustments to various maximum civil penalty levels for certain laws it enforces, including failure to file an HSR notification. The action was required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, which significantly increased penalty levels in 2016 and required annual indexing of those levels for inflation.

Of most interest, the maximum civil monetary penalty for violations of the HSR Act and Section 5 of the FTC Act (concerning unfair methods of competition and unfair or deceptive acts or practices) increased from $46,517 to $50,120 per day. The new maximum civil penalties became effective on January 11, 2023. The new penalty levels apply to civil penalties assessed after they went into effect, including civil penalties imposed for violations that predated the increased penalty levels.

All of the revised thresholds will remain in effect until the next adjustment issued by the FTC, which generally occurs in the first quarter of each year.

It is important to keep in mind that a transaction will not escape antitrust scrutiny simply because the HSR Act's thresholds are not satisfied or because the HSR waiting period has expired. Indeed, the DOJ and FTC each regularly file suits seeking to unwind previously consummated mergers, including small transactions with purchase prices well below the thresholds, in situations where they believe the transactions are anticompetitive.

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