United States: 2023 Revised Hart-Scott-Rodino Thresholds And Filing Fees

On January 23, 2023, the Federal Trade Commission (FTC) announced its annual adjustments to the filing thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). Because of this year's adjustments, transactions valued at more than $111.4 million and closing on or after February 27, 2023 may trigger an HSR filing.^{[ 1]} The expected closing date—not the date of an agreement—determines whether the new thresholds will apply. Failure to file an HSR Notification and Report Form is subject to a statutory penalty of up to $50,120 per day of noncompliance.

The HSR Act generally requires parties to file notifications, including a filing fee, with the FTC and Department of Justice when a proposed transaction—such as a merger, joint venture, stock or asset acquisition, or exclusive license—meets specified dollar thresholds and no exemptions apply. If a notification is required, the transaction cannot close while the statutory waiting period runs (generally 30 days) and the federal antitrust agencies review the transaction. Most commonly, a filing is required if the parties meet both the "size-of-person" and "size-of-transaction" tests, which will be modified by the adjusted thresholds as follows:

• 2023 Size-of-Transaction Test: Met if, as a result of the transaction, the buyer will acquire or hold voting securities or assets of the seller valued in excess of $111.4 million. Furthermore, if the value of the transaction exceeds a significantly higher level—now set at $445.5 million—a filing may be required even if the size-of-person test is not satisfied.
• 2023 Size-of-Person Test: Met if one party to the transaction has $222.7 million or more in annual net sales or total assets and the other has $22.3 million or more in annual net sales or total assets.

In addition to the revised thresholds, the HSR filing fees are changing for the first time since 2001. Pursuant to the 2022 Merger Filing Fee Modernization Act (MFFMA), which was signed into law at the end of last year, filing fees will increase for transactions valued at $500 million or more and decrease for most transactions valued at less than $500 million. Additionally, under the MFFMA, the filing fees and associated transaction value thresholds will be adjusted annually based on changes in the consumer price index.

The chart below provides a summary of the changes, which are also set to take effect on February 27, 2023:

The HSR thresholds are only one part of the analysis to determine whether an HSR filing is required for a given transaction. Even though thresholds are met, certain types of transactions may be exempt from the HSR notification requirements (e.g., ordinary course of business acquisitions, certain acquisitions of real property, passive investments). Moreover, an HSR filing obligation may arise in situations beyond the traditional stock purchase or company merger—including, notably, investor acquisitions of a minority interest in a company. Because application of the HSR rules and exemptions can be highly technical, it is important to seek guidance from experienced HSR counsel in connection with any transaction where it appears the HSR thresholds might be met.

Footnote

1. For transactions closing before February 27, 2023, the 2022 filing thresholds still apply. The 2022 size-of-transaction threshold is $101 million.

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.