FTC Issues Increased Hart-Scott-Rodino Filing Thresholds
ANTITRUST & TRADE REGULATION BULLETIN 12-1
By: RICHARD J. WEGENER
January 30, 2012
The Hart-Scott-Rodino Antitrust Improvements Act of 1976, also known as the HSR Act, is the primary U.S. premerger notification statute. In general, the HSR Act requires that acquiring parties and target companies in certain mergers and acquisitions (including the acquisition of certain exclusive licenses), as well as participants in the formation of joint ventures, notify both the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice of a contemplated transaction before the transaction is consummated. Notification gives the agencies the opportunity to evaluate whether to challenge the transaction on the grounds that it will injure competition.
Whether an HSR filing is required depends solely on the value of the proposed transaction and, in some cases, the size of the parties involved; the businesses of the parties are not material to the filing requirement. Certain transactions – such as most acquisitions of real property and most outsourcing transactions – are exempt.
Increased Filing Thresholds Make Marginally Less Transactions Reportable
On January 24, 2012, the Federal Trade Commission announced slight increases in the HSR filing thresholds of approximately 3% from current levels. These increases have occurred because the filing thresholds are adjusted each year based on the change in the U.S. gross domestic product (“GDP”) which grew slightly last year.
The basic filing threshold, which is generally the transaction value above which a filing may be required, will increase from $66 million to $68.2 million. A transaction valued at more than $68.2 million but less than $272.8 million (increased from the current threshold of $263.8 million) will require a filing if the transaction satisfied the “size-of-the-persons” test. The “size-of-the-persons” test will be met under the new thresholds in most cases if one party has annual net sales or total assets of $13.6 million or more (increased from the current threshold of $13.2 million) and the other party has net sales or total assets of $136.4 million or more (increased from $131.9 million). All transactions valued at more than $272.8 million require an HRS filing, unless an exemption applies.
Changes in the HSR Filing Fee Schedule
The HSR filing fee schedule will also change, as follows:
Transaction Value
Filing Fee
$68.2 - $136.4 million
$ 45,000
$136.4 - $682.1 million
$ 125,000
$682.1 million +
$ 280,000
Acquisition Planning for Early 2012
Acquisitions that close on February 23, 2012 (or if different, the effective date may be a few days after February 23, 2012), will be subject to the new filing thresholds.
HSR Complexity Continues
The HSR rules remain very complex. They include many exemptions and exceptions and at times require the aggregation of pre-acquisition holdings and reporting of subsequent acquisitions when a secondary threshold is reached. Penalties for HSR filing violations remain $16,000 per day. Accordingly, each potential transaction should be carefully reviewed for HSR compliance.