The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) requires that filings be made with the Federal Trade Commission (the “FTC”) and the Antitrust Division of the Department of Justice in connection with acquisitions, mergers and joint venture formations that exceed certain thresholds. Where a filing is required, a waiting period (usually 30 days, unless terminated earlier by the agencies) must be observed before the transaction can be consummated. The filing thresholds are subject to annual indexing based on changes in the U.S. gross national product. On January 21, 2016 the FTC announced the annual revision of the notification thresholds. The revised thresholds apply to all covered transactions that close on or after February 25, 2016.
The revisions increase the “size of transaction” and “size of persons” tests for premerger notification under the HSR Act. The lowest size of transaction threshold under the HSR Act is increased from $76.3 million to $78.2 million. An acquisition that results in the acquiring person holding an aggregate total amount of voting securities, non-corporate interests and/or assets of the acquired person in excess of $78.2 million may be subject to HSR notification. The size of persons test, which will apply only if the size of transaction does not exceed $312.6 million, will now be satisfied if either the acquiring or acquired person has at least $156.3 million in annual net sales or total assets, and the other party has at least $15.6 million.
The notification thresholds for incremental acquisitions of voting securities of the same issuer have also been increased, such that notifications may be required for acquisitions resulting in the acquiring person’s holdings crossing any of the following thresholds: $78.2 million, $156.3 million, $781.5 million, 25% of the voting securities if valued greater than $1,563.0 million, and 50% of the voting securities.
The filing fees for HSR notifications have not changed, but the thresholds underlying the fee structure have similarly been increased. A filing fee of $45,000 will be required for transactions valued above $78.2 million but less than $156.3 million, $125,000 for transactions valued at or above $156.3 million but less than $781.5 million and $280,000 for transactions valued at or above $781.5 million. The statutory obligation to pay the filing fee remains on the acquiring person, but the ultimate burden may be shifted contractually to the seller.
The dollar amounts that determine applicability of certain HSR Act exemptions (for example, the foreign target exemptions under Sections 802.50 and 802.51 of the HSR rules) have also been revised upward.
Application of the HSR thresholds and the numerous exemptions potentially available under the HSR Act depend on the structure of the specific transaction and the type of entities and businesses involved.