FTC Lowers Hart­-Scott­-Rodino Thresholds

Morgan Lewis
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Morgan Lewis

The Federal Trade Commission (FTC) announced on February 1 that it will lower the Hart­-Scott-­Rodino Act (HSR Act) jurisdictional and filing fee thresholds. Any transaction closing on or after March 4, 2021 will be subject to the revised thresholds.

The new rules include a decrease in the “size of transaction” test from transactions valued at more than $94 million to transactions valued at more than $92 million—which means that, under the new threshold, acquisitions valued for HSR Act purposes at more than $92 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:

  1. One person has net sales or total assets of at least $18.4 million;
  2. The other person has net sales or total assets of at least $184 million; and
  3. As a result of the transaction, the Acquiring Person will hold stock and/or assets of the Acquired Person valued at more than $92 million;

    or

  4. As a result of the transaction, the Acquiring Person will hold stock and/or assets of the Acquired Person valued at more than $368 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.

NEW FILING FEE THRESHOLDS

Filing fees are also determined by a threshold test relating to the size of the transaction. While the valuation thresholds have changed, the fees themselves have not been adjusted:

Valuation of Transaction

Filing Fee

In excess of $92 million, but less than $184 million

$45,000

$184 million or more, but less than $919.9 million

$125,000

$919.9 million or more

$280,000

The figures above represent the new “as adjusted” threshold figures. The table below illustrates the changes.

Current Threshold (in millions)

“As Adjusted” Threshold (in millions)

$18.8

$18.4

$94

$92

$188

$184

$376

$368

$940.1

$919.9

These 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 March 4, 2021.

[View source.]

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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