/>iFor the first time since 2010, the Federal Trade Commission (“FTC”) has decreased the dollar jurisdictional thresholds necessary to trigger the reporting requirements in the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”); the revised thresholds were published in the Federal Register on February 2, 2021, and will become effective on March 4, 2021. Earlier, the FTC also decreased the thresholds for interlocking directorates under Section 8 of the Clayton Act, effective as of January 21, 2021. On the other hand, the maximum civil penalty dollar amounts for HSR violations were increased, effective January 13, 2021.
Revised HSR Thresholds
Under the HSR Act, parties involved in proposed mergers, acquisitions of voting securities, unincorporated interests or assets, or other business combinations (e.g., joint ventures, exclusive license deals) that meet certain thresholds must report the contemplated transactions to the FTC and the Antitrust Division of the U.S. Department of Justice (“DOJ”) unless an exemption applies. The parties to a proposed transaction that requires notification under the HSR Act must observe a statutorily prescribed waiting period (generally 30 days) before closing. Under the revised thresholds, transactions valued at $92 million or less are not reportable under the HSR Act.
A transaction closing on or after the date the revised thresholds become effective may be reportable if it meets the following revised criteria:
|
Size-of-Transaction Test |
The acquiring person will hold, as a result of the transaction, an aggregate total amount of voting securities, unincorporated interests, or assets of the acquired person valued in excess of $368 million;
or
The acquiring person will hold, as a result of the transaction, an aggregate total amount of voting securities, unincorporated interests, or assets of the acquired person valued in excess of $92 million but not more than $368 million, and the Size-of-Person thresholds below are met. |
|
Size-of-Person |
One party (including the party’s ultimate parent entity and its controlled subsidiaries) has at least $184 million in total assets or annual sales, and the other has at least $18.4 million in total assets or annual sales. If the acquired party is not “engaged in manufacturing,” and is not controlled by an entity that is, the test applied to the acquired side is annual sales of $184 million or total assets of $18.4 million. |
The full list of the revised thresholds is as follows:
|
Original Threshold |
2020 Threshold |
2021 Revised Threshold |
|
$10 million |
$18.8 million |
$18.4 million |
|
$50 million |
$94 million |
$92 million |
|
$100 million |
$188 million |
$184 million |
|
$110 million |
$206.8 million |
$202.4 million |
|
$200 million |
$376 million |
$368 million |
|
$500 million |
$940.1 million |
$919.9 million |
|
$1 billion |
$1,880.2 million |
$1,839.8 million |
The filing fees for reportable transactions have not changed, but the transaction value ranges to which they apply have been adjusted as follows:
|
Filing Fee |
Revised Size-of-Transaction Thresholds |
|
$45,000 |
For transactions valued in excess of $92 million but less than $184 million |
|
$125,000 |
For transactions valued at $184 million or greater but less than $919.9 million |
|
$280,000 |
For transactions valued at $919.9 million or more |
Note that the HSR dollar thresholds are only part of the analysis to determine whether a particular transaction must be reported to the FTC and DOJ. Failure to notify the FTC and DOJ under the HSR Act remains subject to a statutory penalty of up to $43,792 per day of noncompliance (up from $43,280 per day).
Revised Thresholds for Interlocking Directorates
Section 8 of the Clayton Act prohibits one person from simultaneously serving as an officer or director of two corporations if: (1) the “interlocked” corporations each have combined capital, surplus, and undivided profits of more than $37,382,000 (down from $38,204,000); (2) each corporation is engaged in whole or in part in commerce; and (3) the corporations are “by virtue of their business and location of operation, competitors, so that the elimination of competition by agreement between them would constitute a violation of any of the antitrust laws.”1
Section 8 provides several exemptions from the prohibition on interlocks for arrangements where the competitive overlaps “are too small to have competitive significance in the vast majority of situations.”2 After the revised thresholds take effect, a corporate interlock does not violate the statute if: (1) the competitive sales of either corporation are less than $3,738,200 (down from $3,820,400); (2) the competitive sales of either corporation are less than 2 percent of that corporation’s total sales; or (3) the competitive sales of each corporation are less than 4 percent of that corporation’s total sales.
1 15 U.S.C. § 19(a)(1)(B).
2 S. Rep. No. 101-286, at 5-6 (1990), reprinted in 1990 U.S.C.C.A.N. 4100, 4103-04.
