The Federal Trade Commission (“FTC”) has announced updated filing thresholds and related filing fees under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). The new HSR Act thresholds will go into effect 30 days after publication in the Federal Register (likely effective late February 2024) and will apply to all transactions closing on or after that date. We will provide an update upon publication that provides the effective date of the new HSR Act thresholds.

The thresholds for interlocking directorates under Section 8 of the Clayton Act were also increased, and the new thresholds went into effect on January 22, 2024. Potentially unlawful interlocking directorates continue to be an enforcement priority.^[1]

Revised HSR Act Reportability Thresholds

Generally, HSR notifications are required for an acquisition of voting securities, non-corporate interests or assets when the transaction reaches a certain threshold (the “size of transaction” test), and the parties are of sufficient size (the “size of parties” test). The size of transaction test is adjusted annually based on changes in the gross national product for the preceding year. The new size of the transaction threshold will be $119.5 million, an increase from the current threshold of $111.4 million.

Once the new thresholds are implemented:

• Transactions valued up to and including $119.5 million are not reportable;
• Transactions valued at more than $119.5 million but not more than $478 million are reportable only if one party has assets or annual net sales of at least $23.9 million and the other party has assets or annual net sales of at least $239 million (unless an exemption applies); and
• Transactions valued at more than $478 million are reportable, regardless of the parties’ size (unless an exemption applies).

To determine HSR reportability for transactions that are likely to close on or around the new threshold effective date, parties must use the size of transaction threshold that will be in effect on the closing date.

The new thresholds will also be used to determine the applicability of certain exemptions under the HSR Act and rules.

Revised HSR Filing Fees

Additionally, as previewed in our client alert from June 30, 2023^[2], the antitrust agencies have proposed substantial changes to the HSR Form. While the exact date that the revised rules will go into effect, and their final form is currently unknown, we anticipate that it may be as early as the second quarter of 2024. While none of the proposed rule changes will impact the notification thresholds or filing fee amounts, they will certainly impact every filing and are expected to significantly increase the HSR burden for transacting parties.

Finally, the FTC also has revised the maximum civil penalty for HSR Act violations, effective as of January 10, 2024, from $50,120 per day to $51,744 per day. These new penalty levels apply to civil penalties assessed after January 10, 2024, including civil penalties whose associated violation predated the effective date. These adjustments do not retrospectively change previously assessed or enforced civil penalties that the FTC is actively collecting or has collected.

Revised Thresholds for Interlocking Directorates

The FTC also increased the dollar amount thresholds for evaluating interlocking directorates under Section 8 of the Clayton Act. Under certain circumstances, Section 8 prohibits one person from serving as a director or officer of two competing corporations if each corporation has capital, surplus and undivided profits aggregating more than $48,559,000 with an exception if the competitive sales of either corporation are less than a de minimis threshold of $4,855,900, the competitive sales of either corporation are less than 2% of that corporation’s total sales or the competitive sales of each corporation are less than 4% of that corporation’s total sales. The aggregate capital, surplus and undivided profits of each corporation at the end of its last full fiscal year controls for Section 8 purposes. These new Section 8 thresholds went into effect on January 22, 2024.

Footnotes

[1] Office of Public Affairs | Two Pinterest Directors Resign from Nextdoor Board of Directors in Response to Justice Department’s Ongoing Enforcement Efforts Against Interlocking Directorates | United States Department of Justice; See also Statement of FTC Chair Lina Khan August 16, 2023 https://www.ftc.gov/system/files/ftc_gov/pdf/2210212eqtqepkhanstatement.pdf

[2] See client alert Proposed Overhaul of HSR Form will Dramatically Increase Burden on Filers dated June 30, 2023 available at: https://www.shearman.com/en/perspectives/2023/06/proposed-overhaul-of-hsr-form-will-dramatically-increase-burden-on-filers

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