United States: FTC Announces Annual Increases To HSR Thresholds, HSR Filing Fees, Interlocking Directorates Safe Harbor, And Maximum Civil Penalties

Key Takeaways:

• The 2024 adjusted HSR threshold is $119.5 million and goes into effect on March 6, 2024. All transactions valued below that amount will be exempt from the HSR filing requirement.
• The 2024 adjusted Size of Party thresholds for transactions valued below $478 million are $23.9 million and $239 million.
• The FTC also revised the HSR filing fee schedule as required by the Consolidated Appropriations Act of 2023.

On January 22, 2024, 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). The revisions account for changes in the level of the U.S. gross national product. The FTC significantly increased the thresholds again for 2024. The FTC also announced increases in the HSR filing fee schedule; 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 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 the 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 March 6, 2024, and represent an almost 7.3% increase from 2023 thresholds. The key adjusted thresholds are summarized below:

Last year, 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 FTC is now required to revise the HSR filing fee schedule annually based on changes to the gross national product and the consumer price index. Just like the filing thresholds, the adjusted filing fees go into effect for all filings for transactions closing on or after March 6, 2024.

The adjusted filing fee schedule is follows:

The regulations governing the methodology for calculating the size of party and the 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 prohibit 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 $48,559,000 (up from $45,257,000 last year), and each corporation's competitive sales are at least $4,855,900 (up from $4,525,700 last year), unless an exception applies. The new thresholds became effective upon publication in the Federal Register on January 22, 2024.

Maximum Civil Penalty Amounts

Finally, 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 $50,120 to $51,744 per day. The new maximum civil penalties became effective on January 10, 2024. 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.

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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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