New HSR and interlocking directorate thresholds announced for 2021

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On 2 February 2021 the Federal Trade Commission (FTC) published the annual jurisdictional adjustments for premerger notification filings made pursuant to Section 7A of the Clayton Act, known as the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act), in the Federal Register. The new filing thresholds for HSR notification will become effective 30 days after publication on 4 March 2021.  In addition, on 21 January 2021 the FTC’s revisions to the interlocking directorate thresholds pursuant to Section 8 of the Clayton Act became effective.

Civil penalties for violations of the HSR Act, which are assessed per day for each violation, increased to US$43,792 effective 13 January 2021. 

HSR notification thresholds

Under the HSR Act, certain acquisitions of assets, voting securities, or interests in noncorporate entities (such as partnerships or limited liability companies) are subject to preclosing filing (with the U.S. antitrust agencies) and waiting period requirements if the applicable jurisdictional thresholds are satisfied and no exemption applies.

Each year the FTC adjusts the HSR jurisdictional threshold tests based on changes to the U.S. gross national product. The threshold changes do not affect the amount of the applicable HSR filing fees to be paid, but do affect the threshold levels applicable to each of the filing fee levels.

The principal changes to the HSR jurisdictional thresholds will be as follows:

 


Current threshold

New threshold effective March 4, 2021

Size-of-transaction threshold test

Notification may be required if acquiring person will acquire and hold certain assets, voting securities, or interests in noncorporate entities valued at more than US$94 million.

US$92 million

Size-of-person threshold test  

Generally, one "person" to the transaction must have at least US$188 million in total assets or annual net sales, and the other must have at least US$18.8 million in total assets or annual net sales.

At least US$184 million and US$18.4 million in total assets or annual net sales.

Transactions valued at more than US$376 million are not subject to the size-of-person threshold test and are therefore reportable unless exempt.

US$368 million

Filing fee threshold levels

HSR filing fee of US$45,000 for transactions where the acquiring person will hold an aggregate total amount of assets, voting securities, or controlling non-corporate interests valued at more than US$94 million but less than US$188 million.  

More than US$92 million but less than US$184 million.

 

HSR filing fees remain unchanged.

HSR filing fee of US$125,000 for transactions where the acquiring person will hold an aggregate total amount of assets, voting securities, or controlling noncorporate interests valued at US$188 million or more but less than US$940.1 million.  

US$184 million or more but less than US$919.9 million.

 

HSR filing fee remains unchanged.

HSR filing fee of US$280,000 for transactions where the acquiring person will hold an aggregate total amount of assets, voting securities, or controlling noncorporate interests valued at US$940.1 million or more. 

US$919.9 million or more.

 

HSR filing fee remains unchanged.

Notification thresholds

When completing an HSR filing, the acquiring person in a voting securities acquisition must indicate which notification threshold it will cross –US$94 million, US$188 million, US$940.1 million, 25 percent (if the value of the voting securities to be held is greater than US$1,880.2 million), or 50 percent. These notification thresholds are also relevant to a certain HSR exemption.

The new notification thresholds are US$92 million, US$184 million, US$919.9 million, 25 percent (if the value of the voting securities to be held is greater than US$1,839.8 million), or 50 percent.

Interlocking directorates threshold

Section 8 of the Clayton Act prohibits a person from serving as a director or officer of two competing corporations if certain thresholds are satisfied and no exemption applies. The FTC is required to adjust annually certain thresholds related to Section 8 based on changes to the gross national product.

Under the new threshold, which became effective 21 January 2021 upon publication in the Federal Register, a person may not serve as a director or officer of competing corporations if each corporation has capital, surplus, and undivided profits aggregating more than US$37,382,000, unless one of the corporations has competitive sales of less than US$3,738,200. Previously, a person was prohibited from serving as a director or officer of competing corporations if each corporation had capital, surplus, and undivided profits aggregating more than US$38,204,000 unless one of the corporations had competitive sales of less than US$3,820,400.

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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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