On January 23, 2023, the Federal Trade Commission (FTC) announced revised thresholds for merger notifications under the Hart-Scott-Rodino (HSR) Act. Effective on February 27, 2023, the lowest size-of-transaction filing threshold (also known as the “$50 million threshold”) will increase from the current $101 million to $111.4 million. Parties to transactions that close on or after the effective date are subject to the revised thresholds.
The “$10 million” and “$100 million” size-of-person thresholds will increase to $22.3 million and $222.7 million, respectively. The size-of-person test applies to transactions valued at less than $200 million (as adjusted, $445.5 million) and is based on the total assets and annual net sales of the ultimate parent entities (UPEs) of the acquiring and acquired persons. In general, to be reportable, the UPE of one party to the transaction must have annual net sales or total assets of $10 million or more (as adjusted, $22.3 million) and the UPE of the other party must have annual net sales or total assets of $100 million or more (as adjusted, $222.7 million). There are, however, several nuances and exceptions to the size-of-person test that must be examined separately for each transaction.
The increased thresholds arise from amendments to the HSR Act in 2000 that require the FTC to adjust the thresholds annually for change in the gross national product (GNP). This year, the thresholds went up to reflect the increase in 2022 GNP. All the notification and exemption dollar thresholds in the HSR statute, regulations, and reporting instructions that are subject to annual adjustments will also be adjusted upward. The new HSR dollar thresholds will be as follows:
As discussed in a previous post, “Antitrust Update: New Law Increases HSR Filing Fees for Large Deals, Imposes Foreign Subsidy Disclosure Requirement and Broadens State AG Powers,” the Consolidated Appropriations Act of 2023 has modified the HSR filing fee structure. The new filing fee tiers, which are also expected to go into effect on February 27, 2023 (30 days after the official publication date in the Federal Register), are as follows:
The FTC has also announced that it will be adjusting both dollar thresholds for Section 8 of the Clayton Act to account for changes in the GNP. Section 8, in many circumstances, forbids a person from serving as an officer or director of two competing corporations if two thresholds are met. Under the revised thresholds, effective when published in the Federal Register, Section 8 may apply when each of the competing corporations has capital, surplus and undivided profits aggregating more than $45,257,000 and each corporation’s competitive sales (e.g., sales derived from product(s) on which the two companies compete) are at least $4,525,700. There has been increasing enforcement under Section 8 of the Clayton Act recently, as discussed in this previous post.
Finally, earlier this year, the FTC increased the maximum civil penalty for HSR Act violations from $46,517 to $50,120 per day. This increased penalty is effective for all penalties assessed as of January 11, 2023, even if the underlying violation preceded that date.
