Key Takeaways
- The Federal Trade Commission (FTC) announced the 2025 filing thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the HSR Act).
- Minimum reportable Size of Transaction increases to $126.4 million, and Size of Person thresholds increase to $25.3 million and $252.9 million.
- The FTC also announced the new HSR filing fees for 2025.
- The new thresholds will apply to all transactions closing 30 days after the date of forthcoming publication in the Federal Register. The new filing fees will apply to all HSR filings submitted 30 days or more after the date of publication in the Federal Register.
- The new HSR forms, currently set to come into effect on Feb. 10, are facing a new challenge to their legality.
- The FTC also announced new thresholds for the prohibition of interlocking directorates under Section 8 of the Clayton Act.
On Jan. 10, the FTC announced the 2025 filing thresholds under the HSR Act, as well as the 2025 filing fees.1 The new thresholds will be published in the Federal Register in the coming days and will apply to transactions closing 30 days or more after the date of publication; the new filing fees will apply to all HSR filings submitted 30 days or more after the Federal Register publication.
2025 Thresholds
Parties to transactions that exceed certain thresholds are required to submit an HSR filing and observe a 30-day waiting period before consummating the transaction. These thresholds are set by the HSR Act and are subject to annual adjustments for changes in the gross national product. Failure to submit a required HSR filing could result in significant civil penalties.2 Therefore, to avoid large penalties and transaction delays, it is critical to determine at the outset whether a transaction is HSR-reportable. To determine whether a transaction is reportable, practitioners must analyze both the Size of the Transaction (SOT) and the Size of the Persons (SOP) involved in the transaction.
SOT is the first step in any HSR reportability analysis. The HSR Act contains two thresholds for SOT. First, a $50 million, as adjusted, threshold is the baseline for reportability. Transactions that exceed this size, if the parties to the transaction are also large enough, are reportable. Second is the $200 million, as adjusted, threshold. Transactions that exceed this size are reportable regardless of the size of the parties to the transaction. For 2025, the $50 million, as adjusted, threshold is $126.4 million. For 2025, the $200 million, as adjusted, threshold is $505.8 million.
If the SOT exceeds $126.4 million but is less than $505.8 million, the next step is to analyze the SOP of the parties to the transaction. The SOP test is met when one party to the transaction has assets or net sales exceeding $10 million, as adjusted (the Smaller SOP),3 and the other has assets or net sales exceeding $100 million, as adjusted (the Larger SOP). For 2025, to meet the Smaller SOP, assets or net sales must exceed $25.3 million, and to meet the Larger SOP, assets or net sales must exceed $252.9 million. If the SOP test is not met, the transaction is not reportable.
Parties to potentially reportable transactions should consult experienced HSR counsel for guidance on reportability determinations.
2025 Filing Fees
Parties that submit HSR filings must pay a single filing fee. In 2023, the FTC debuted a six-tier filing fee structure pursuant to the Merger Filing Fee Modernization Act. The bounds of each filing fee tier are revised annually to reflect changes in gross national product, and the amount of the filing fee in each tier is revised annually to match increases in the Consumer Price Index. Beginning 30 days after the Federal Register publication, HSR filing fees will be as set forth below:
Transactions of at least $126.4 million but less than $179.4 million...................................$30,000
Transactions of at least $179.4 million but less than $555.5 million.................................$105,000
Transactions of at least $555.5 million but less than $1.111 billion...................................$265,000
Transactions of at least $1.111 billion but less than $2.222 billion....................................$425,000
Transactions of at least $2.222 billion but less than $5.555 billion....................................$850,000
Transactions of at least $5.555 billion.............................................................................$2,390,000
It is critical that the parties determine the proper filing fee and submit it to the FTC on or before the day the HSR filings are submitted. A late or insufficient payment could result in a delay in the commencement of the 30-day waiting period, potentially delaying the closing of the transaction.
New HSR Forms
We have previously written about the impending changes to the HSR notification form, which are currently slated to take effect on Feb. 10.4 However, the first Trump Administration imposed a 60-day regulatory freeze following the inauguration in 20175 – and is expected to impose a similar freeze in the days following the upcoming inauguration. This regulatory freeze may apply to the implementation of the new HSR forms. It also remains to be seen whether Congress will seek to disapprove of the new HSR forms by invoking the Congressional Review Act to nullify the final rule. And on Jan. 10, the Chamber of Commerce, along with several other industry groups, filed a complaint in the Eastern District of Texas seeking to enjoin the implementation of the new HSR forms.6 Stay tuned for developments concerning the new HSR forms over the coming weeks.
Interlocking Directorates
On Jan. 10, the FTC published the 2025 thresholds for the Clayton Act's prohibition of interlocking directorates.7 Interlocking directorates, whereby one individual serves on the boards of directors of two competing corporations, are prohibited, provided two thresholds are met. For the prohibition to apply, both corporations must have "capital, surplus, and undivided profits aggregating more than $10,000,000," as adjusted, and each corporation must have "competitive sales" of at least $1,000,000, as adjusted. For 2025, the $10,000,000, as adjusted, threshold is $51,380,000, and the $1,000,000, as adjusted, threshold is $5,138,000.
Corporations should keep apprised of their directors' multiple directorships to avoid an interlocking directorate problem. In-house counsel should take care to ensure that none of the corporation's directors sit on a competitor's board. Enforcement of the prohibition of interlocking directorates was a priority for the Department of Justice under the Biden Administration.8 It remains to be seen whether this will likewise be a policy priority of the incoming administration. However, if the new HSR forms are implemented, they will require acquiring persons to report the identities of their directors and the directors of all entities the acquiring person controls – along with disclosure of those individuals' directorships with any entity that derives revenues in a NAICS code common to the target. This could facilitate easier interlocking directorate enforcement for the agencies.
Consult antitrust counsel if you think you may face an interlocking directorate issue.
Footnotes
2 The maximum daily fine is currently $51,744 per day and is expected increase in early 2025, but that increase has not yet been announced.
3 The Smaller SOP testonly considers assets when the Acquired Person is not engaged in manufacturing.
6 https://www.uschamber.com/cases/antitrust-and-competition-law/chamber-v.-ftc
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.
