Key Takeaways

• On Jan. 22, the Federal Trade Commission (FTC) announced the 2024 filing thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the HSR Act). A forthcoming notice in the Federal Register is expected in the coming days.
• Minimum reportable Size of Transaction increases to $119.5 million, and Size of Person thresholds increase to $23.9 million and $239 million.
• The FTC also announced the new HSR filing fees for 2024.
• The new thresholds will apply to all transactions closing 30 days after the date of publication in the Federal Register. The new filing fees will apply to all HSR filings submitted 30 days or more after the date of publication in the Federal Register.
• On Jan. 12, the FTC announced new thresholds for the prohibition of interlocking directorates under Section 8 of the Clayton Act.

On Jan. 22, the FTC announced the 2024 filing thresholds under the HSR Act, as well as the 2024 filing fees.[1] The new thresholds will be published in the Federal Register in the coming days. The new thresholds will apply to transactions closing 30 days or more after the date of the Federal Register publication, and the new filing fees will apply to all HSR filings submitted 30 days or more after the Federal Register publication.

2024 Thresholds

Parties to transactions that exceed certain thresholds are required to submit an HSR filing and observe a 30-day waiting period before consummating the transaction. These thresholds are set by the HSR Act and are subject to annual adjustments for changes in the gross national product. Failure to submit a required HSR filing could result in civil penalties of $51,744 per day.[2] Therefore, to avoid large penalties and transaction delays, it is critical to determine at the outset whether a transaction is HSR reportable. To determine whether a transaction is reportable, practitioners must analyze both the size of the transaction (Size of Transaction) and the size of the persons (Size of Persons) involved in the transaction.

Size of Transaction is the first step in any HSR reportability analysis. The HSR Act contains two thresholds for Size of Transaction. First, a $50 million, as adjusted, threshold is the baseline for reportability. Transactions that exceed this size, if the parties to the transaction are also large enough, are reportable. Second is the $200 million, as adjusted, threshold. Transactions that exceed this size are reportable regardless of the size of the parties to the transaction. For 2024, the $50 million, as adjusted, threshold is $119.5 million. For 2024, the $200 million, as adjusted, threshold is $478 million.

Assuming the Size of Transaction exceeds $119.5 million but is less than $478 million, the next step is to analyze the Size of Persons who are parties to the transaction. With certain exceptions and nuances, the Size of Person test is met where one party to the transaction has assets or net sales exceeding $10 million, as adjusted (the Smaller Size of Person), and the other has assets or net sales exceeding $100 million, as adjusted (the Larger Size of Person). For 2024, the Smaller Size of Person assets or net sales must exceed $23.9 million, and the Larger Size of Person assets or net sales must exceed $239 million. If the Size of Person test is not met, the transaction is not reportable.

Parties to potentially reportable transactions should consult experienced HSR counsel for guidance on reportability determinations.

2024 Filing Fees

Parties that submit HSR filings must pay a single filing fee. Last year, the FTC debuted a six-tier filing fee structure pursuant to the Merger Filing Fee Modernization Act. The bounds of each filing fee tier are revised annually to reflect changes in gross national product, and the amount of the filing fee in each tier is revised annually to match increases in the Consumer Price Index. Beginning 30 days after the Federal Register publication, HSR filing fees will be as set forth below:

Transactions of at least $119.5 million but less than $173.3 million......................................$30,000

Transactions of at least $173.3 million but less than $536.5 million....................................$105,000

Transactions of at least $536.5 million but less than $1.073 billion.....................................$260,000

Transactions of at least $1.073 billion but less than $2.146 billion......................................$415,000

Transactions of at least $2.146 billion but less than $5.365 billion......................................$830,000

Transactions of at least $5.365 billion..............................................................................$2,335,000

It is critical that the parties determine the proper filing fee and submit it to the FTC on or before the day the HSR filings are submitted. A late or insufficient payment could result in a delay in the commencement of the 30-day waiting period, further delaying the consummation of the transaction.

Interlocking Directorates

On Jan. 12, the FTC published the 2024 thresholds for the Clayton Act’s prohibition of interlocking directorates.[3] Interlocking directorates, whereby one individual serves on the board of directors of two competing corporations, are prohibited, provided two thresholds are met. For the prohibition to apply, both corporations must have “capital, surplus, and undivided profits aggregating more than $10,000,000,” as adjusted, and each corporation must have “competitive sales” of at least $1,000,000, as adjusted. For 2024, the $10,000,000, as adjusted, threshold is $48,559,000, and the $1,000,000, as adjusted, threshold is $4,855,900.

Corporations should keep apprised of their directors’ multiple directorships to avoid an interlocking directorate problem. In-house counsel should take care to ensure that none of the corporation’s directors sit on a competitor’s board. Enforcement of the prohibition of interlocking directorates remains a priority for the Department of Justice.[4] Consult antitrust counsel if you think you face an interlocking directorate problem.

[1] https://www.ftc.gov/news-events/news/press-releases/2024/01/ftc-announces-2024-update-size-transaction-thresholds-premerger-notification-filings

[2] https://www.federalregister.gov/documents/2024/01/10/2024-00301/adjustments-to-civil-penalty-amounts

[3] https://www.ftc.gov/news-events/news/press-releases/2024/01/ftc-announces-2024-jurisdictional-threshold-updates-interlocking-directorates

[4] https://www.justice.gov/opa/pr/justice-department-s-ongoing-section-8-enforcement-prevents-more-potentially-illegal

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