FTC: Lower HSR Thresholds for 2021

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The annual adjustment of the dollar thresholds for pre-acquisition filings under the Hart-Scott-Rodino Act will take effect on March 4, 2021. All transactions closing on or after the effective date will be governed by the new thresholds.

Under the new thresholds, the parties to a merger, consolidation or acquisition of voting securities or substantial assets will in most cases need to file pre-acquisition notifications with the Federal Trade Commission (FTC) and the U.S. Department of Justice and observe the act’s waiting periods before closing if the transaction will result in either of the following:

  • The acquiring person will hold more than $92 million worth of voting securities and assets of the acquired person and the parties meet the "size-of-person" requirements below; or
  • Regardless of the parties’ sizes, the acquiring person will hold more than $368 million worth of voting securities and assets of the acquired person.

Meeting any one of the following three subtests satisfies the "size-of-person" test:

  1. A person with $184 million or more of total assets (on its most recent regularly-prepared balance sheet) or annual net sales (from its most recently completed fiscal year) proposes to acquire voting securities or assets of a person engaged in manufacturing (note that software is not considered manufacturing) with $18.4 million or more of annual net sales or total assets;
  2. A person with $184 million or more of total assets or annual net sales proposes to acquire voting securities or assets of a person not engaged in manufacturing with $18.4 million or more of total assets (net sales test does not apply); or
  3. A person with $18.4 million or more of total assets or annual net sales proposes to acquire voting securities or assets of a person with $184 million or more of annual net sales or total assets.

For the purposes of applying the thresholds, "person" means the ultimate parent entity of the party engaged in the transaction.

Note that certain exemptions may apply depending on the nature of the transaction and the nature and location of the assets and entities involved. Consequently, additional analysis is often required before making a final determination regarding the need for a filing.

Filing fee thresholds also have been adjusted:

  • $45,000 for transactions below $184 million;
  • $125,000 for transactions of $184 million or more but below $919.9 million; and
  • $280,000 for transactions of $919.9 million or more.

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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