LawFlash
FTC Raises Hart-Scott-Rodino Thresholds 2016
January 22, 2016Transactions that close toward the end of February will be subject to increased HSR Act jurisdictional and filing-fee thresholds.
On January 21, the US Federal Trade Commission (FTC) announced that it will raise the HartScottRodino Antitrust Improvements Act of 1976 (HSR Act) jurisdictional and filing-fee thresholds.[1] Any transaction that closes on or after the notice’s effective date (30 days after the pending publication in the Federal Register) will be subject to the revised thresholds. The new rules include an increase in the “size of transaction” test from transactions valued at greater than $76.3 million to transactions valued at greater than $78.2 million—which means that, under the new threshold, acquisitions valued for the HSR Act purposes at $78.2 million or less will not require preclosing filing and approval.
New Jurisdictional Thresholds
As a general rule, the HSR Act requires both “Acquiring Persons” and “Acquired Persons” (as defined in the HSR Act) to file notifications if the following postadjustment jurisdictional thresholds are met:
- One person has net sales or total assets of at least $15.6 million.
- The other person has net sales or total assets of at least $156.3 million.
- As a result of the transaction, the Acquiring Person will hold stock and/or assets[2] of the Acquired Person valued at more than $78.2 million.
or - As a result of the transaction, the Acquiring Person will hold stock and/or assets of the Acquired Person valued at more than $312.6 million, regardless of the sales or assets of the Acquiring and Acquired Persons.
Conditions 1 and 2 are generally referred to as the “size of person” test, and conditions 3 and 4 are commonly described as the “size of transaction” test.
The HSR Act rules relating to acquisitions of partnership interests and membership interests in a limited liability company (LLC) remain the same. Only acquisitions of economic control in an LLC or partnership may be reportable. “Control” is defined as having a right to 50% or more of a partnership’s or LLC’s profits or 50% or more of the assets after such an entity’s dissolution.
New Filing-Fee Thresholds
Filing fees are also determined by a threshold test relating to transaction size. Although the valuation thresholds have changed, the fees themselves have not been adjusted:
New “As Adjusted” Thresholds
|
Valuation of Transaction |
Filing Fee |
|
In excess of $78.2 million or greater, but less than $156.3 million |
$45,000 |
|
$156.3 million or greater, but less than $781.5 million |
$125,000 |
|
$781.5 million or greater |
$280,000 |
Changes in Thresholds
|
Current Threshold (in millions) |
“As Adjusted” Threshold (in millions) |
|
$15.3 |
$15.6 |
|
$76.3 |
$78.2 |
|
$152.5 |
$156.3 |
|
$305.1 |
$312.6 |
|
$762.7 |
$781.5 |
These changes are being implemented pursuant to the 2000 amendments to section 7A of the Clayton Antitrust Act. Section 7A(a)(2) of the Clayton Antitrust Act requires the FTC to revise the jurisdictional thresholds annually, based on the change in gross national product, in accordance with section 8(a)(5). The revised thresholds will apply to all transactions that close on or after the effective date.
Contacts
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Boston
Thane D. Scott
Daniel S. Savrin
New York
Stacey Anne Mahoney
Harry T. Robins
Martin d’Halluin
Maria Luisa Di Lauro
Washington, DC
J. Clayton “Clay” Everett, Jr.
Jonathan M. Rich
Scott A. Stempel
Willard K. Tom
David R. Brenneman
Greta L. Burkholder
Zarema A. Jaramillo
