As it does every year at this time, the Federal Trade Commission (FTC) has issued revised Hart-Scott-Rodino Act (HSR) jurisdictional thresholds for the upcoming year. The FTC is required by law to revise the filing thresholds based upon changes in the gross national product. The new thresholds will become effective on February 27, 2020, for transactions closing on or after that date.
Under the HSR Act, 15 U.S.C. §18a, transactions that exceed "size-of-transaction" and (in most cases) "size-of-person" thresholds must be reported to the FTC and the Department of Justice before they may be consummated (unless an exemption applies). The size of transaction is determined by the value of voting securities, noncorporate interests, or assets to be held by the acquiring person as a result of an acquisition. The size-of-person test looks to the size of both the acquiring and acquired persons, and is determined by their respective total assets or annual net sales. Unless the transaction value is more than $376 million (see below), the size-of-transaction and size-of-person thresholds both must be met for the transaction to be subject to HSR.
- The new "size-of-transaction" threshold will be greater than $94 million (up from $90 million).
- The new "size-of-person" thresholds will be $188 million in total assets or annual net sales (up from $180 million) for one person (acquiring or acquired), and $18.8 million in total assets or annual net sales (up from $18 million) for the other person.
- If the transaction value exceeds $376 million (up from $359.9 million), the size-of-person threshold no longer applies, and a transaction is subject to HSR solely on the basis of the value of voting securities or assets to be held as a result of the acquisition.
HSR filings are required not only for initial purchases of voting securities valued in excess of $94 million (per these revisions), but also for subsequent purchases of voting securities that exceed incremental size-of-transaction thresholds. Thus, new HSR filings may be required for purchases of voting securities that result in the acquiring person's holdings crossing these higher, incremental thresholds, even if an HSR filing was made for previous purchases for a lower threshold. The FTC also adjusted these incremental size-of-transaction thresholds as follows:
- $188 million (up from $180 million)
- $940.1 million (up from $899.8 million)
- 25 percent of voting securities if the 25 percent is valued at more than $1,880.2 million (up from $1,799.5 million)
Please note that if an acquiring person holds 50 percent of the voting securities of an issuer (having observed the applicable HSR-notification and waiting-period requirements for the purchases resulting in the 50 percent holding), any additional purchases are exempt, regardless of the transaction value of the additional purchases.
Finally, the new size-of-transaction thresholds also affect the points at which HSR's tiered filing fees apply:
- Transaction values in excess of $94 million but less than $188 million: $45,000
- Transaction values of $188 million or more but less than $940.1 million: $125,000
- Transaction values equal to or more than $940.1 million: $280,000