On January 28, 2020, the Federal Trade Commission (FTC) announced revised thresholds for merger notifications under the Hart-Scott-Rodino (HSR) Act. Parties to transactions that close on or after February 27, 2020 are subject to the revised thresholds.

The lowest size-of-transaction filing threshold (also known as the “$50 million threshold”) will increase from the current $90 million to $94 million. The “$10 million” and “$100 million” size-of-person thresholds will increase to $18.8 million and $188 million, respectively. The size-of-person test applies to transactions valued at less than $200 million (as adjusted, $376 million) and is based on the total assets and annual net sales of the ultimate parent entities (UPEs) of the acquiring and acquired persons. In general, to be reportable, the UPE of one party to the transaction must have annual net sales or total assets of $10 million or more (as adjusted, $18.8 million), and the UPE of the other party must have annual net sales or total assets of $100 million or more (as adjusted, $188 million). There are, however, several nuances and exceptions to the size-of-person test that must be examined separately for each transaction.

The increased thresholds arise from amendments to the HSR Act in 2000 that require the FTC to adjust the thresholds annually to account for changes in the gross national product. All of the notification and exemption dollar thresholds in the HSR statute, regulations and reporting instructions that are subject to annual adjustments will also be adjusted. The new HSR dollar thresholds will be as follows:

The FTC also announced that it adjusted both dollar thresholds for Section 8 of the Clayton Act to account for changes in the gross national product. Section 8, in many circumstances, forbids a person from serving as an officer or director of two competing corporations if two thresholds are met. Under the revised thresholds, effective as of January 21, 2020, Section 8 may apply when each of the competing corporations has capital, surplus and undivided profits of more than $38,204,000 in the aggregate, and each corporation's competitive sales (e.g., sales derived from product(s) for which the two companies compete) are at least $3,820,400.