Annual Adjustments to Hart-Scott-Rodino and Interlocking Directorates Thresholds

by Foley & Lardner LLP
Contact

The annually adjusted thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (15 U.S.C. § 18a) (HSR) and Section 8 of the Clayton Act (15 U.S.C. § 19) were published in the Federal Register on January 26, 2016.

For HSR purposes, the revised thresholds will apply for transactions that close on or after February 25, 2016. For Section 8 purposes, the revised thresholds are effective January 26, 2016.

SIZE-OF-THE-TRANSACTION TEST (ORIGINAL: $50 MILLION; NEW AS OF FEBRUARY 25, 2016: $78.2 MILLION)

The 2000 HSR amendments raised the size-of-the-transaction test to $50 million. This figure is currently $76.3 million based upon the 2015 annual adjustment. On February 25, 2016, it will increase to $78.2 million. Accordingly, for transactions that close on or after February 25, 2016, no HSR filing will be required unless the acquisition will result in the acquiring person holding an aggregate total amount of voting securities, non-corporate interests, and/or assets of the acquired person in excess of $78.2 million.

SIZE-OF-THE-PARTIES TEST
(ORIGINAL: $10 MILLION/$100 MILLION; NEW AS OF FEBRUARY 25, 2016: $15.6 MILLION/$156.3 MILLION)

Under the new adjustments, acquisitions valued above $312.6 million will be reportable regardless of the size of the parties, and acquisitions valued at greater than $78.2 million, but less than or equal to $312.6 million, will only be reportable if the size-of-the-parties test is met. The revised thresholds adjust the size-of-the-parties test so that it typically will be met if the acquiring or acquired person has annual net sales or total assets of $156.3 million or more, and the other person has annual net sales or total assets of $15.6 million or more.

NOTIFICATION THRESHOLDS

For acquisitions of voting securities, an acquiring person files for the highest applicable notification threshold among five choices. Acquiring 50 percent or greater of an issuer’s voting securities is the highest threshold; but below that level, there are four different tiers for reporting acquisitions of minority interests in voting securities. The notification threshold may determine, for example, whether a subsequent acquisition of additional voting securities in the same issuer will require another HSR filing. The new notification thresholds that will become effective with the forthcoming adjustments are, in ascending order:

  • An aggregate total amount of voting securities valued at greater than $78.2 million, but less than $156.3 million
  • An aggregate total amount of voting securities valued at $156.3 million or greater, but less than $781.5 million
  • An aggregate total amount of voting securities valued at $781.5 million or greater
  • Twenty-five percent of an issuer’s outstanding voting securities, if valued at greater than $1.563 billion
  • Fifty percent of an issuer’s outstanding voting securities, if valued at greater than $78.2 million

FILING FEE THRESHOLDS

The filing fee amounts are not changing; in fact, the HSR filing fee amounts have not been adjusted for inflation in more than a decade. However, the thresholds for the application of the fees are increasing.

  • For transactions where the aggregate amount of assets, non-corporate interests, and voting securities to be held as a result of the acquisition will be more than $78.2 million, but less than $156.3 million, the filing fee under the new notification thresholds will be $45,000
  • For transactions where the aggregate amount of assets, non-corporate interests, and voting securities to be held as a result of the acquisition will be $156.3 million or more, but less than $781.5 million, the filing fee under the new notification thresholds will be $125,000
  • For transactions where the aggregate amount of assets, non-corporate interests, and voting securities to be held as a result of the acquisition will be $781.5 million or more, the filing fee under the new notification thresholds will be $280,000

PREVIOUS SIZE-OF-THE-TRANSACTION THRESHOLDS

For purposes of disclosing past assets acquisitions for Item 8 of the HSR form, and for analyzing a potential past failure to file under HSR, it remains necessary to look at the thresholds that were in place at the time of the prior acquisition. The size-of-the-transaction thresholds since the 2000 HSR amendments have been:

  • $50 million as of February 1, 2001
  • $53.1 million as of March 2, 2005
  • $56.7 million as of February 17, 2006
  • $59.8 million as of February 21, 2007
  • $63.1 million as of February 28, 2008
  • $65.2 million as of February 12, 2009
  • $63.4 million as of February 22, 2010
  • $66.0 million as of February 24, 2011
  • $68.2 million as of February 27, 2012
  • $70.9 million as of February 11, 2013
  • $75.9 million as of February 24, 2014
  • $76.3 million as of February 20, 2015
  • $78.2 million as of February 25, 2016

Most, although not all, of the dollar amounts in the HSR rules will be adjusted upward based upon the threshold indexing discussed above. It remains important for parties to be very careful in determining if a threshold is met given that the process can be very complex, the rules are highly technical, and failure to comply with HSR can result in significant civil penalties.

INTERLOCKING DIRECTORATES THRESHOLD
(ORIGINAL: $10 MILLION; NEW AS OF JANUARY 26, 2016: $31,841,000)

Finally, in a separate Federal Register notice, the Federal Trade Commission updated the jurisdictional threshold for interlocking directorates under Section 8 of the Clayton Act. Section 8 prohibits, subject to certain exceptions, persons from serving as an officer or director of two competing corporations (a practice known as “interlocking”), provided that each corporation has “capital, surplus, and undivided profits” above the statutory threshold. The 1990 amendments to Section 8 set this threshold at $10 million, but based on the latest annual adjustment, the threshold has been increased to $31,841,000. Section 8 also has three safe harbor exceptions. One exception states that Section 8 does not apply if the competitive sales of either interlocked corporation are less than $1 million in 1989 dollars, as adjusted annually. This safe harbor has adjusted to $3,184,100 based on the new thresholds.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Foley & Lardner LLP | Attorney Advertising

Written by:

Foley & Lardner LLP
Contact
more
less

Foley & Lardner LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.