The Federal Trade Commission (FTC) announced on January 22, 2024 that it will increase the Hart-ScottRodino Act (HSR Act) jurisdictional filing thresholds and fees, which will go into effect 30 days after the pending publication in the Federal Register in the upcoming days.
The new rules include an increase in the “size of transaction” test from transactions valued at more than $111.4 million to transactions valued at more than $119.5 million—which means that, under the new threshold, acquisitions valued for HSR Act purposes at more than $119.5 million may require preclosing filing and approval.
NEW JURISDICTIONAL THRESHOLDS
As a general rule, the HSR Act requires both “Acquiring Persons” and “Acquired Persons” (as defined in the HSR Act) to file notifications if the following post-adjustment jurisdictional thresholds are met:
- One person has net sales or total assets of at least $23.9 million;
- The other person has net sales or total assets of at least $239 million; and
- As a result of the transaction, the Acquiring Person will hold stock and/or assets of the Acquired Person valued at more than $119.5 million; or
- As a result of the transaction, the Acquiring Person will hold stock and/or assets of the Acquired Person valued at more than $478 million, regardless of the sales or assets of the Acquiring and Acquired Persons.
Conditions 1 and 2 are generally referred to as the “size of person” test, while conditions 3 and 4 are commonly described as the “size of transaction” test.
The HSR Act rules relating to acquisitions of partnership interests and membership interests in a limited liability company (LLC) remain the same. Only acquisitions of economic control in an LLC or partnership may be reportable. “Control” is defined as having a right to 50% or more of the profits of a partnership or LLC or 50% or more of the assets upon the dissolution of such entity.
The figures below represent the new “as adjusted” size of person and size of transaction thresholds, illustrating the year-over-year changes.
The size of person and size of transaction threshold changes are being implemented pursuant to the 2000 amendments to Section 7A of the Clayton Antitrust Act. Section 7A(a)(2) of the Clayton Antitrust Act requires the FTC to revise the jurisdictional thresholds annually, based on the change in gross national product, in accordance with Section 8(a)(5). The revised thresholds will apply to all transactions that close on or after the effective date of the notice (30 days after the pending publication in the Federal Register).
FILING FEE THRESHOLDS
The figures below represent the new base filing fee tiers. Each fiscal year, these fees will increase based on the percentage increase, if any, in the Consumer Price Index as determined by the US Department of Labor. These new filing fee thresholds will apply to all filings made on or after the effective date of the notice (30 days after the pending publication in the Federal Register).
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