FTC Announces Revised HSR Thresholds, Interlocking Directorates Thresholds

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The Hart-Scott-Rodino (HSR) Act requires parties to transactions that meet certain thresholds to notify the Department of Justice (DOJ) and Federal Trade Commission (FTC) and observe a waiting period prior to closing unless certain exemptions apply. These thresholds are adjusted annually.

On January 28, 2020, the FTC announced revised HSR thresholds, which will be effective on February 27, 2020.

The revised thresholds are as follows:

Size-of-Transaction Test: The threshold used in the size-of-transaction test will increase from $90 million to $94 million.

Size-of-Persons Test: The sales and assets thresholds used in the size-of-persons test will increase from $18 million to $18.8 million and $180 million to $188 million, respectively. The size-of-transaction threshold above which the size-of-persons test no longer applies will increase from $359.9 million to $376 million.

Greater Notification Thresholds: These thresholds, which apply to subsequent acquisitions of voting securities made within five years after expiration or termination of the waiting period of a previous HSR filing for an acquisition of voting securities from the same issuer, were revised as follows:

Previous Threshold Revised Threshold
$180 million $188 million
$899.8 million $940.1 million
25% of voting securities if valued at greater than $1,799.5 million 25% of voting securities if valued at greater than $1,880.2 million
50% of voting securities if valued at greater than $90 million 50% of voting securities if valued at greater than $94 million

Filing Fee Thresholds: Filing fee thresholds based upon the value of assets or voting securities being acquired will be revised as follows:

Value of Transaction Filing Fee
$94 million to $188 million $45,00
$188 million to $940.1 million $125,000
$940.1 million or more $280,000

Penalty for HSR Violations: The penalty for HSR violations is also annually adjusted. On January 13, 2020, the FTC announced that the maximum daily civil penalty for HSR violations increased from $42,530 to $43,280.

FTC Revises Clayton Act Section 8 Thresholds for Interlocking Directorates

The FTC also announced revised thresholds used for determining whether corporations are subject to the prohibition on interlocking directorates found in Section 8 of the Clayton Act. Section 8 prohibits, with certain exceptions, a person from serving as a director or officer of two competing corporations if those corporations exceed certain thresholds regarding capital, surplus, and undivided profit and competitive sales. As a result of this year’s adjustments, which became effective immediately upon publication on January 28, 2020, Section 8 now applies to corporations with capital, surplus, and undivided profits aggregating more than $38,204,000, unless the competitive sales of either corporation are less than $3,820,400; 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.

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.

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