/>iIn the wake of robust merger and acquisition activity and the resulting unprecedented numbers of reported transactions, the Federal Trade Commission (“FTC”) has announced significant increases to the Hart-Scott-Rodino (“HSR”) premerger notification thresholds for 2022.[1] The FTC updates the premerger merger notification thresholds each year based upon the change in the gross national product. The premerger notification thresholds provide the minimum numbers that must be met for the size of transaction and, where applicable, size of persons for a proposed transaction to be reportable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”). The size of transaction is the value of voting securities or assets that will be acquired after the value of exempt assets such as mortgage-backed securities, cash, and hotels are excluded. The size of person is determined by the value of the assets or, for entities engaged in manufacturing at the lower threshold and all entities at the higher threshold, annual net sales.
The new thresholds, published in the Federal Register on January 24, 2022,[2] will go into effect on Wednesday, February 23, 2022. If you are working on a transaction that is closing before February 23, your transaction will be under the current, lower thresholds. Transactions closing on or after February 23 will be under the new, higher thresholds. HSR filing fees, which are based on the size of transaction, have not been increased, and the existing three-tiered filing fee structure remains in place for 2022. Generally, and unless an exemption applies, HSR will apply to transactions where the size of transaction and size of person tests below are met, although for larger transactions, only the size of transaction test applies. The chart below summarizes the changes:
|
Test |
2021 Threshold (effective March 4, 2021 through February 22, 2022)(in USD) |
2022 Threshold (effective February 23, 2022)(in USD) |
|---|---|---|
|
Minimum Size of Transaction for Filing Where the Size of Person is Met |
$92 million |
$101 million |
|
Smaller Size of Person Threshold (must be met by one party) |
$18.4 million in assets or, if engaged in manufacturing , annual net sales |
$20.2 million in assets or, if engaged in manufacturing , annual net sales |
|
Larger Size of Person Threshold (must be met by one party) |
$184 million in assets or annual net sales (regardless of engagement in manufacturing) |
$202 million in assets or annual net sales (regardless of engagement in manufacturing) |
|
Size of Transaction Where Size of Person Test Does not Appl |
$368 million |
$403.9 million |
|
Filing Fee $45,000 |
Transaction value: more than $92 million but less than $184 million |
Transaction value: more than $101 million but less than $202 million |
|
Filing Fee $125,000 |
Transaction value: more than $184 million but less than $919.9 million |
Transaction value: more than $202 million but less than $1.0098 billion |
|
Filing Fee $280,000 |
Transaction value: more than $919.9 million |
Transaction value: more than $1.0098 billion |
In a separate notice published in the Federal Register on January 10, 2022, the FTC adjusted the HSR civil penalties to account for inflation. The HSR penalties were increased from a daily penalty of $43,792 to $46,517 effective January 10, 2022.[3]
[1] https://www.ftc.gov/news-events/press-releases/2022/01/ftc-announces-annual-update-size-transaction-thresholds-premerger
[2] https://www.federalregister.gov/documents/2022/01/24/2022-01214/revised-jurisdictional-thresholds-for-section-7a-of-the-clayton-act
[3] https://www.federalregister.gov/documents/2022/01/10/2022-00213/adjustments-to-civil-penalty-amounts
