The Federal Trade Commission (FTC) has issued revised Hart-Scott-Rodino (HSR) Act jurisdictional thresholds for the upcoming year, the announcement of which was delayed due to the recent federal government shutdown. The FTC is required by law to revise the filing thresholds based upon changes in the gross national product. The new thresholds will become effective in mid-to-late March 2019 (30 days after the FTC publishes the new thresholds in the Federal Register) for transactions closing on or after that date.
Under the HSR Act, 15 U.S.C. §18a, transactions that exceed "size-of-transaction" and (in most cases) "size-of-person" thresholds must be reported to the FTC and the Department of Justice before they may be consummated (unless an exemption applies). The size of transaction is determined by the value of voting securities, noncorporate interests, or assets to be held by the acquiring person as a result of an acquisition. The size-of-person test looks to the size of both the acquiring and acquired persons, and is determined by their respective gross assets or annual net sales. Unless the transaction value is more than $359.9 million (see below), the size-of-transaction and size-of-person thresholds both must be met for the transaction to be subject to HSR.
HSR filings are required not only for initial purchases of voting securities valued in excess of $90 million (per these revisions), but also for subsequent purchases of voting securities that exceed incremental size-of-transaction thresholds. Thus, new HSR filings may be required for purchases of voting securities that result in the acquiring person's holdings crossing these higher, incremental thresholds, even if an HSR filing was made for previous purchases for a lower threshold. The FTC also adjusted these incremental size-of-transaction thresholds as follows:
Please note that if an acquiring person holds 50 percent of the voting securities of an issuer (having observed the applicable HSR-notification and waiting-period requirements for the purchases resulting in the 50 percent holding), any additional purchases are exempt, regardless of the transaction value of the additional purchases.
Finally, the new size-of-transaction thresholds also affect the points at which HSR's tiered filing fees apply: