The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR) requires parties to transactions meeting certain size thresholds to make notification filings with the Federal Trade Commission (FTC) and the Antitrust Division of the U.S. Department of Justice and to observe a waiting period before closing. On January 22, 2024, the FTC announced revisions to the reporting thresholds under HSR. Adjustments to the HSR reporting and exemption thresholds are made each year based on annual changes in the Gross National Product.

The revised thresholds will become effective on March 6, 2024 (30 days after their publication in the Federal Register) and will apply to any transaction that will close on or after that date.

HSR applies to acquisitions of assets, voting securities and non-corporate interests (such as LLC membership interests) and also may apply to the formation of joint ventures, corporations and non-corporate entities (such as LLCs or limited partnerships). The FTC views certain grants of an exclusive license under intellectual property rights as an acquisition of assets that would be subject to the HSR filing requirements.

REVISED HSR REPORTING THRESHOLDS

Under the new thresholds:

• The basic HSR threshold applicable to most acquisitions is $119.5 million (up from $111.4 million).
• Transactions valued in excess of $119.5 million but not in excess of $478 million (up from $445.5 million) are reportable if the ultimate parent entity of one party to the transaction, together with all entities it controls, has sales or assets of at least $23.9 million (up from $22.3 million) and the ultimate parent entity of the other party, together with all entities it controls, has sales or assets of at least $239 million (up from $222.7 million). If the acquired person is not “engaged in manufacturing,” the threshold is not met unless that person has at least $23.9 million in total assets or $239 million in annual net sales.
• Transactions valued in excess of $478 million (up from $445.5 million) are reportable without regard to the size of the parties.

Even if a transaction is reportable based on these thresholds, it may qualify for an exemption from the HSR filing requirements, including exemptions available for certain acquisitions of non-US assets and voting securities.

HSR FILING FEES

Effective as of the same date as the new reporting thresholds, HSR filing fees will be as follows:

• $30,000 for transactions valued at or above $119.5 million but less than $173.3 million.
• $105,000 for transactions valued at or above $173.3 million but less than $536.5 million.
• $260,000 for transactions valued at or above $536.5 million but less than $1.073 billion.
• $415,000 for transactions valued at or above $1.073 billion but less than $2.146 billion.
• $830,000 for transactions valued at or above $2.146 billion but less than $5.365 billion.
• $2.335 million for transactions valued at or above $5.365 billion.

Filing fees are increased annually by an amount equal to the percentage increase, if any, in the consumer price index, as determined by the Department of Labor or its successor, for the year then ended over the level established for the year ending September 30, 2022. The FTC publishes annual adjusted amounts no later than January 31 of each year.

PENALTY FOR FAILURE TO MAKE AN HSR FILING

Companies and individuals considering transactions should seek legal advice to determine if an HSR filing will be required. Complex rules govern transaction valuation and the availability of exemptions under HSR. Failure to make a required HSR filing before closing is a violation of federal law and can subject parties to civil penalties that may be up to $51,744 (up from $50,120) per day for each day of noncompliance (penalties are adjusted for inflation in January of each year). Penalties can also be imposed on parties who submit incomplete filings (even if the filing was timely made). The new penalty amounts went into effect on January 10, 2024.