Changes to Hart-Scott-Rodino Notification Thresholds
January 30, 2009
The Federal Trade Commission (FTC) recently announced new jurisdictional thresholds for pre-merger notification filings made pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The new thresholds will apply to all transactions that close on or after February 12, 2009.
Under the Hart-Scott-Rodino Act (HSR), certain acquisitions of assets, voting securities and/or interests in non-corporate entities are subject to pre-merger notification filing and waiting period requirements if the applicable jurisdictional threshold tests are satisfied and no exemption applies.
The FTC’s recent changes to the jurisdictional thresholds were prompted by a 2000 HSR amendment which requires the FTC to adjust on an annual basis the size-of-transaction threshold tests, and the size-of-person threshold tests, based on changes to the US gross national product for each fiscal year compared to the gross national product for the fiscal year ending September 30 2003. 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 fees.
The principal changes to the jurisdictional thresholds are set out in the table below.
|
Current Threshold |
New Threshold |
Size-of-transaction threshold test |
Notification may be required if the acquiring person will acquire and hold certain assets, voting securities and/or interests in non-corporate entities valued at more than $63.1 million. |
$65.2 million. |
Size-of-person threshold test |
Generally one person to the transaction must have at least $126.2 million in total assets or annual net sales, and the other must have at least $12.6 million in total assets or annual net sales. |
At least $130.3 million and $13 million in total assets or annual net sales. |
|
Transactions valued at more than $252.3 million are not subject to the size-of-person threshold test and are therefore reportable unless exempt. |
$260.7 million. |
Filing fee threshold levels |
HSR filing fee of $45,000 for transactions where the acquiring person will hold an aggregate total amount of assets, voting securities and/or controlling non-corporate interests valued at more than $63.1 million but less than $126.2 million. |
More than $65.2 million but less than $130.3 million. |
|
HSR filing fee of $125,000 for transactions where the acquiring person will hold an aggregate total amount of assets, voting securities and/or controlling non-corporate interests valued at $126.2 million or more but less than $630.8 million. |
At $130.3 million or more, but less than $651.7 million. |
|
HSR filing fee of $280,000 for transactions where the acquiring person will hold an aggregate total amount of assets, voting securities and/or controlling non-corporate interests valued at $630.8 million or more. |
At $651.7 million or more. |
Voting security acquisition notification levels |
When completing a HSR filing, the acquiring person in a voting securities acquisition must indicate which notification threshold it will cross - $63.1 million, $126.2 million, $630.8 million, 25% (if the value of the voting securities to be held is greater than $1.2616 billion) or 50%. |
The new notification thresholds are $65.2 million, $130.3 million, $651.7 million, 25% (if the value of the voting securities to be held is greater than $1.3034 billion) or 50%. |
Finally, the penalties for HSR violations will also increase from $11,000/day to $16,000/day.
Takeaway
It must be emphasized that the HSR Act does not preclude the agencies from challenging a merger that is not subject to the HSR notification requirements. Correct application of the HSR Act can be complex and typically requires a detailed and careful analysis of the transaction. If you have any questions about the changes to HSR notification thresholds, or the application of the Act to a particular transaction, please contact Richard J. Wegener.