On January 24, 2022, the Federal Trade Commission (FTC) published new, higher notification thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”). The HSR Act requires the FTC to adjust the thresholds annually to reflect changes in U.S. gross national product. The new reporting thresholds will go into effect on February 23, 2022.

Under the new thresholds, the minimum “size of transaction” threshold will become $101 million, up from $92 million, representing an increase of 9.78% over 2021. Transactions resulting in aggregate holdings of voting securities, assets, or non-corporate interests exceeding this threshold will be reportable to the U.S. antitrust authorities, unless otherwise exempt. The new thresholds are as follows: 

The new thresholds will not affect the amount of filing fees due under the HSR Act. However, applicable fees will be based on the new thresholds, as follows:

HSR Notification Thresholds Overview

The HSR Act requires premerger notification of transactions that satisfy the “size of transaction” and “size of person” tests and are not otherwise exempt. The thresholds are adjusted annually to reflect changes in U.S. gross national product. The new thresholds will become effective on February 23, 2022, and be applicable through the next annual adjustment expected in Q1 2023.

Size of Transaction Test

Under the new thresholds, the size of transaction test will be met if, as a result of a transaction, the acquiring person at the ultimate parent entity (UPE) level will hold aggregate voting securities, assets, or non-corporate interests of the acquired person valued at more than $101 million. For transactions valued at more than $101 million but $403.9 million or less, the parties must also meet the size of person test. Transactions valued at more than $403.9 million will be reportable regardless of the size of the parties, unless an exemption applies.

Size of Person Test

Under the new thresholds, where it applies, the size of person test will be satisfied where one party to the transaction at the UPE level has total assets or annual net sales of $202 million or more and the UPE of the other party has total assets or annual net sales of $20.2 million or more.

Revised Thresholds for Interlocking Directorates

The FTC also announced revised thresholds relating to Section 8 of the Clayton Act. Section 8 prohibits interlocking directorates in which one “person” serves simultaneously as an officer or director of two or more competing corporations, subject to certain exceptions. Under the revised thresholds, Section 8 may apply when each of the competing corporations has capital, surplus, and undivided profits aggregating more than $41,034,000 and each corporation’s competitive sales are at least $4,103,400.

Penalties for Noncompliance with the HSR Act

Noncompliance with the HSR Act can result in significant penalties. Specifically, any person (including any officer, director or partner thereof) that fails to comply with any provision of the HSR Act may be subject to a civil penalty of up to $46,517 (effective January 10, 2022) for each day during which such person is in violation.

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