The Federal Trade Commission (FTC) has announced this year's revisions to the thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR), which will apply to all transactions closing on or after April 3, 2019. The FTC is required under the Clayton Act to revise the HSR thresholds annually based on changes in the gross national product. This year's revisions represent an increase of approximately 6.6 percent over the current thresholds.
HSR requires parties intending to merge, purchase or sell voting securities, non-corporate interests or assets, or engage in certain other acquisition transactions to provide both the FTC and the Antitrust Division of the Department of Justice (DOJ) with information regarding their operations and the proposed transaction if certain minimum jurisdictional thresholds are met. HSR stays the consummation of a covered transaction for the waiting period specified by law based on HSR's purpose to allow the FTC and DOJ time to detect and potentially address any perceived anti-competitive effects of a transaction.
HSR filings are generally required if both the size of transaction and size of person jurisdictional thresholds are met and no exemption is available under the HSR regulations. As of April 3, 2019, the size of transaction threshold will be met if, as a result of the transaction, the buyer will hold voting securities, assets and/or non-corporate interests of the seller valued in excess of $90 million, up from the current threshold of $84.4 million.
The size of person threshold will generally be met as of April 3, 2019, if one party to the transaction has total assets or net sales of $180 million or more and the other party to the transaction has total assets or net sales of $18 million or more – provided that this threshold will not apply to transactions valued at $359.9 million or more. The size of person threshold is measured at the ultimate parent entity level of each party and includes all entities controlled by each such ultimate parent entity.
Each buyer is required to pay a filing fee in connection with any required filing under HSR. While the filing fee thresholds are revised annually, the filing fee amounts are not indexed and have not been adjusted for inflation in well over a decade. The applicable filing fee varies based on the value of the voting securities, assets and/or non-corporate interests to be held as a result of the transaction. As of April 3, 2019, the filing fee schedule will be as follows:
> $90 million but < $180 million
$180 million or more but < $899.8 million
$899.8 million or more
Noncompliance with HSR requirements may subject a person, or any officer, director or partner of such person, to civil penalties of up to $42,530 per day for each day of violation. In addition to any monetary penalties, courts may also order compliance with HSR requirements and an extension of the HSR waiting period until substantial compliance has occurred. Courts may also grant certain other equitable relief for any failure by a person to substantially comply with either the HSR premerger notification requirements or with a request by the regulators for additional information once an HSR filing has been made.