/>iThe Federal Trade Commission (FTC) announced Friday increased jurisdictional thresholds for (1) notifications under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the HSR Act), (2) the HSR Act filing fee schedule, and (3) the interlocking directorate thresholds under Section 8 of the Clayton Act.
Revised HSR Thresholds
The FTC revises these thresholds annually based on changes in the gross national product. The new thresholds will be effective 30 days after publication in the Federal Register and will apply to all transactions closing on or after that date.
The HSR Act requires parties engaged in certain transactions (including mergers, joint ventures, exclusive licenses, and acquisitions of voting securities, assets, or non-corporate interests) to file an HSR notification and report form with the FTC and the Antitrust Division of the Department of Justice — and to observe the statutorily prescribed waiting period (usually 30 days, or 15 days in the case of cash tender offers and bankruptcy) prior to closing — if the parties meet “Size of Transaction” and “Size of Person” thresholds (absent any applicable exemptions).
A transaction is reportable if:
| Size of Transaction Threshold |
The acquiring person will hold, as a result of the transaction, an aggregate total amount of voting securities and assets of the acquired person valued in excess of $505.8 million; Or The acquiring person will hold, as a result of the transaction, an aggregate total amount of voting securities and assets of the acquired person valued in excess of $126.4 million, AND the Size of Person thresholds below are met. |
| Size of Person Threshold | Either the acquiring or the acquired person has at least $252.9 million in total assets (or annual net sales if that party is engaged in manufacturing), and the other party has at least $25.3 million in total assets or annual net sales. |
Revised Filing Fee Schedule
| Size of Transaction (transaction value) | New Filing Fee |
| Less than $179.4 million | $30,000 |
| Not less than $179.4 million but less than $555.5 million | $105,000 |
| Not less than $555.5 million but less than $1.111 billion | $265,000 |
| Not less than $1.111 billion but less than $2.222 billion | $425,000 |
| Not less than $2.222 billion but less than $5.555 billion | $850,000 |
| $5.555 billion or more | $2,390,000 |
Revised Interlocking Directorate Thresholds
The FTC also approved revised jurisdictional thresholds under Section 8 of the Clayton Act, which become effective upon publication in the Federal Register. Section 8 prohibits an officer or director of one firm from simultaneously serving as an officer or director of a competing firm if each firm has capital, surplus, and undivided profits of more than $51,380,000 unless one of the following de minimus exemptions is met:
- The competitive sales of either corporation are less than $5,138,000.
- The competitive sales of either corporation are less than 2% of its total sales.
- The competitive sales of each corporation are less than 4% of its total sales.
The FTC’s upcoming changes to the HSR Rules,[1] effective February 10, place an emphasis on gathering additional information as part of the merger filing process to better inform the agencies of potential Section 8 violations. In addition, the agencies have evidenced an increased scrutiny of interlocking directorates through numerous policy statements and actions.[2]
It is therefore especially important in the current antitrust enforcement environment to monitor roles of a company’s officers and directors at other organizations.
Endnotes
[1] Bruce D. Sokler, Robert G. Kidwell, Kristina Van Horn, Payton T. Thornton, Federal Trade Commission Finalizes HSR Changes, Mintz (Oct. 11, 2024), available at: https://natlawreview.com/article/federal-trade-commission-finalizes-hsr-changes.
[2] See, e.g., Karen S. Lovitch, Bruce D. Sokler, Joseph M. Miller, Raj Gambhir, FTC Hosts Panel and Launches Public Inquiry with DOJ and HHS on Private Equity and Health Care, Mintz (Mar. 6, 2024), available at: https://natlawreview.com/article/ftc-hosts-panel-and-launches-public-inquiry-doj-and-hhs-private-equity-and-health; Bruce D. Sokler, Robert G. Kidwell, Payton T. Thornton, FTC Proposed Settlement Requires Private Equity Firm to Divest Shares, Relinquish Potential Board Seat, and Other Expansive Remedies, Mintz (Aug. 21, 2023), available at: https://natlawreview.com/article/ftc-proposed-settlement-requires-private-equity-firm-to-divest-shares-relinquish; Bruce D. Sokler, Joseph M. Miller, Payton T. Thornton, A Dose of Steroids: Chair Khan's FTC Releases Expansive Policy Statement on Unfair Methods of Competition, Mintz (Nov. 14, 2022), available at https://natlawreview.com/article/dose-steroids-chair-khan-s-ftc-releases-expansive-policy-statement-unfair-methods.
