Hart-Scott-Rodino Act Annual Adjustments Announced

By Robin Sampson

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Authors: Joanne C. Lewers , Robin Sampson , Kenneth M. Vorrasi

On Thursday, January 10, the Federal Trade Commission published new filing thresholds for pre-transaction notification of many larger transactions. The Hart-Scott-Rodino Antitrust Improvements Act (HSR ACT) requires companies and investors to make confidential filings with respect to proposed acquisitions and other transactions exceeding specified size thresholds with the FTC and the Antitrust Division of the Department of Justice so that the agencies can assess the competitive impact of them before consummation.

If a transaction meets the jurisdictional tests of the HSR Act the parties to the transaction must file, unless the HSR Act or rules exempt the filings. Thursday’s announcement reflects the annual adjustment to the jurisdictional thresholds and is based on the year-over-year change in the GNP. Beginning in mid-February the “size of parties” test will be satisfied if at least one party (together with each affiliate under common control) has total assets or annual sales of at least $141.8 million, and another party (with its affiliates) has total assets or annual sales of at least $14.2 million. The “size of transaction” test will be satisfied if the acquiring party will hold assets and/or equity interests valued at more than $70.9 million as a result of the transaction (this may include the current value of assets or equity acquired by the buyer from the seller in earlier deals).

The new filing thresholds will apply 30 days after publication in the Federal Register, and so will be in effect for deals that close after mid-February. Incremental filing thresholds for certain follow-on acquisitions are also indexed and are also adjusted, as are certain exemption thresholds.

HSR Act or Rule Provision	New Thresholds
$50 million “size of transaction” test	$70.9 million
$10 million “size of person” test	$14.2 million
$100 million “size of person” test	$141.8 million
$200 million “size of transaction” test (applicable if size of person tests are not met)	$283.6 million
$50 million notification threshold	$70.9 million
$100 million notification threshold	$141.8 million
$500 million notification threshold	$709.1 million
25 percent of stock threshold (if worth at least $1 billion)	25 percent of stock (if worth at least $1,418.1 million)
50 percent notification of threshold (if over $50 million)	50 percent (if over $70.9 million)

HSR filing fees are based on the size of the transaction being notified. The filing fees have not changed (despite some recent legislative threats to do so – expect more on this in the months ahead), but the deal size at which each of the three filing fee tiers becomes applicable will increase as follows:

Size of Transaction	Filing Fee
Greater than $70.9 million but less than $141.8 million	$45,000
$141.8 million or greater but less than $709.1 million	$125,000
$709.1 million or greater	$280,000

For more information, please contact the author of this Alert, one of the Antitrust Team members listed above, or your regular Drinker Biddle contact.