On January 24, 2022 the Federal Trade Commission (“FTC”) published in the Federal Register its annual adjustment for notification thresholds regarding proposed mergers and acquisitions under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”). The adjustments will go effective 30 days after being published in the Federal Register.
These threshold adjustments are based on the annual change in the U.S. gross national product. Due to the rebound of the U.S. economy in 2021 from the drop in 2020, the HSR Act thresholds have significantly increased.
Summary of Adjustments
An HSR Filing May Be Necessary If:
- As a result of the transaction, the acquirer will hold voting securities, assets, or non-corporate interests of the acquired valued in the aggregate at more than $101 million but not more than $403.9 million, and the “size-of-person” test is also met. To meet the “size-of-person” threshold test, one party must have annual net sales or total assets of at least $202 million and the other party must have annual net sales or total assets of at least $20.2 million.
- As a result of the transaction, the acquirer will hold voting securities, assets, or non-corporate interests of the acquired valued in the aggregate at greater than $403.9 million (the size-of-person test is not applied), unless another exemption applies.
In a separate release, the FTC announced the annual inflation-based change in the daily maximum civil penalty for violations of the HSR Act, from $43,792 to $46,517.
Also on January 24, 2022 the FTC published adjustments to the thresholds under Section 8 of the Clayton Act that trigger the prohibition on “interlocking directorates” - where one person serves as a director or officer of two competing corporations (subject to certain exceptions). Now the prohibition may apply when (1) each corporation has capital, surplus, and undivided profits aggregating more than $41,034,000, and (2) each corporation’s competitive sales are at least $4,103,400.
