United States: FTC Revises HSR Thresholds; Minimum Size For Reportable Transactions Increases To $101 Million (January 2022)

Key Points

• The HSR Act requires parties that meet certain transaction size and other tests to file premerger notification forms for mergers and other transactions with both the Federal Trade Commission and Department of Justice Antitrust Division.
• The minimum transaction size test is reviewed annually and has increased this year from $92 million to $101 million. The new size thresholds will apply to transactions entered into on or after February 23, 2022.¹
• There are many exemptions and exceptions to the HSR filing requirement, and parties contemplating merger and acquisition activity, as well as investments meeting the HSR transaction size threshold, are strongly encouraged to consult antitrust counsel to determine whether HSR notification is required.
  

On January 24, 2021, the Federal Trade Commission (FTC) published in the Federal Register the latest annual revision to the size thresholds governing premerger notification requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, Section 7A of the Clayton Act, 15 U.S.C. § 18a (the "HSR Act"). The HSR Act requires all parties to transactions that meet certain transaction size and other tests to file premerger notification forms for mergers and other transactions with both the FTC and the Department of Justice Antitrust Division. The HSR Act also requires those parties to observe a mandatory waiting period prior to closing while the agencies consider the competitive effects (if any) of the transaction. The new thresholds will apply to transactions consummated on or after the effective date of February 23, 2022.²

The Size-of-Transaction Threshold

The size-of-transaction threshold is reviewed every year, and for 2022 the minimum transaction size test has increased from $92 million to $101 million (an approximate 10 percent increase). Thus, under the revised thresholds, HSR Act filings will be required (unless otherwise exempted) for a transaction that results in the acquiring person holding more than $101 million of the acquired person's voting securities, non-corporate interests or assets (assuming the size-of-person thresholds are also met).

The Size-of-Person Thresholds

The size-of-person thresholds have increased by a similar percentage. While the HSR Act size-of-person rules are complex, under the new thresholds an HSR Act filing is generally not required for transactions valued at more than $101 million but less than $403.9 million, unless  one party to the transaction has $202 million in annual net sales or total assets and the other party has $20.2 million in annual net sales or total assets. The potential exemption afforded by the size-of-person test is inapplicable to transactions valued at more than $403.9 million; as a result, transactions valued at more than $403.9 million will be reportable under the HSR Act regardless of the size of the parties to the transaction (unless otherwise exempted).

HSR Act Filing Fee Thresholds

The FTC has also adjusted the tiered filing fee structure as follows:

Parties contemplating merger, joint venture or acquisition activity are strongly encouraged to consult antitrust counsel to determine whether premerger notification is required. The rules governing the calculation of the relevant filing thresholds and the applicability of particular exemptions to all or part of a transaction are very complex.

Persons who fail to file and observe the waiting period when required to do so face civil penalties of up to $46,517 per day.³

Footnotes

¹ Revised Jurisdictional Thresholds for Section 7A of the Clayton Act, available here.

² In addition to the size thresholds highlighted in this alert, most other HSR Act thresholds (for example, relating to various exemptions) have increased as well. For instance, the interlocking directorate thresholds under Section 8 of the Clayton Act, which prohibits an individual from serving as an officer or director of two competing corporations provided both corporations have capital, surplus and undivided profits in excess of an annually set threshold or neither company has competitive sales below a different threshold. The new thresholds, which are effective immediately, are $41,034,000 for the former and $4,103,400 for the latter.

³ The FTC also announced that the maximum daily civil penalty has been adjusted for inflation to $46,517, effective January 10, 2022. Click here for more detail.

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