The U.S. antitrust agencies – the Federal Trade Commission (FTC) and Department of Justice Antitrust Division (DOJ) – recently issued several updates that will affect dealmakers. These include:
- Updated 2024 filing thresholds and related fees under the Hart-Scott-Rodino Act (HSR Act)
- New merger guidelines
- Proposed new HSR filing rules
1. 2024 HSR Filing Thresholds and Fees
The HSR Act requires that parties to certain mergers, acquisitions and other transactions notify the FTC and DOJ of the deal and then wait a specified period before closing (usually 30 days) so that the agencies can evaluate whether the transaction may substantially lessen competition. The FTC is required by law to revise the jurisdictional thresholds annually, based on the change in gross national product. On Feb. 5, 2024, the FTC, which is tasked with administering pre-merger notification requirements under the HSR Act, published increased notification thresholds for 2024 in the Federal Register. The new thresholds will take effect for all transactions that will close on or after Wednesday, March 6, 2024.
Transactions resulting in aggregate holdings of voting securities, non-corporate interests or assets exceeding the size-of-transaction and size-of-person thresholds set forth below may be reportable to the U.S. antitrust authorities, unless otherwise exempt.
| 2023 Threshold | New 2024 Threshold | |
| Size-of-Transaction Threshold Where Size-of-Person Thresholds Met | $111.4 million | $119.5 million |
| Size-of-Transaction Where Size-of-Person Thresholds Not Required | $445.5 million | $478 million |
| Size-of-Person Thresholds |
$22.3 million $222.7 million |
$23.9 million $239 million |
Transactions valued at more than $119.5 million but less than $478
million must meet the "size of person" test to be
reportable. Transactions valued at more than $478 million will be
reportable regardless of the size of person unless an exemption
applies. The size of person test will be satisfied where the
ultimate parent entity (UPE) of one party to the transaction has
total assets or annual net sales of $239 million or more and the
UPE of the other party has total assets or annual net sales of
$23.9 million or more.
In 2023, the FTC revised the HSR filing fee thresholds to include six tiers of fees based on transaction value, which resulted in substantially increased filing fees for large transactions (particularly those in excess of $1 billion) but decreased the fees for smaller transactions. The filing fee tiers also are adjusted annually based on the change in gross national product, while the fees are updated based on an annual change in the consumer price index. The new filing fees will take effect on Wednesday, March 6, 2024.
| Transaction Value | Filing Fee |
| Greater than $119.5 million but less than $173.3 million | $30,000 |
| $173.3 million and higher but less than $536.5 million | $105,000 |
| $536.5 million and higher but less than $1.073 billion | $260,000 |
| $1.073 billion and higher but less than $2.146 billion | $415,000 |
| $2.146 billion and higher but less than $5.365 billion | $830,000 |
| $5.365 billion and greater | $2,335,000 |
Noncompliance with the HSR Act can result in significant penalties.
Any person, including any officer, director or principal thereof,
who fails to comply with any provision of the HSR Act now may be
subject to a revised civil penalty of up to $51,744 for each day in
violation.
2. New Merger Guidelines
On Dec. 18, 2023, the FTC and DOJ jointly released new Merger Guidelines (Guidelines) that warn against transactions that could "significantly increase concentration," eliminate potential entrants in concentrated markets, further a trend toward concentration, or lessen competition for workers. The Guidelines signal the agencies' intention to aggressively review proposed transactions by applying novel theories of competitive harm. For the first time, the proposed guidelines combine policies for reviewing both horizontal and vertical mergers. These new guidelines threaten to bring a whole new swath of deals under regulatory scrutiny and consequently dampen M&A activity. To learn more about the Guidelines, please see our article here.
3. Proposed New HSR Filing Rules
Finally, we expect that the FTC and DOJ will release new HSR filing rules that will require substantially more information to be provided when submitting an HSR filing, likely resulting in significantly increased burdens on merging parties in the form of additional time and cost. Last summer, the agencies published proposed rules for public comment; you can learn more about the draft here. The public comment period closed on Sept. 27, 2023, and the agencies received over 750 comments. The proposed new rules would apply to all mergers under the HSR Act, even those that do not raise competitive concerns. We are monitoring this critical change and will provide updates as soon as they become available.
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.
