On January 26, 2023, the Federal Trade Commission (FTC) published in the Federal Register its annual adjustment for notification thresholds regarding proposed mergers and acquisitions under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). The adjustments went into effect 30 days after being published in the Federal Register on February 27, 2023. These threshold adjustments are based on the annual change in the U.S. gross national product.

Summary of Adjustments

An HSR Filing May Be Necessary if, as a Result of the Transaction:

• The acquirer will hold voting securities, assets, or non-corporate interests of the acquired valued in the aggregate at more than $111.4 million but not more than $445.5 million, and the “size-of-person” thresholds are also met. To meet the “size-of-person” test, one party must have annual net sales or total assets of at least $222.7 million and the other party must have annual net sales or total assets of at least $22.3 million; or

• The acquirer will hold voting securities, assets, or non-corporate interests of the acquired valued in the aggregate at greater than $445.5 million (the size-of-person test is not applied), unless another exemption applies.

In a separate release, the FTC announced the annual inflation-based change in the daily maximum civil penalty for violations of the HSR Act, from $46,517 to $50,120.

Merger Filing Fee Modernization Act

In late 2022, the Merger Filing Fee Modernization Act of 2022 (the Act) was passed as part of the Consolidated Appropriations Act of 2023. Prior to this year, HSR Act filing fees had not changed since 2000. The Act was passed to update the filing fee amounts, change the tiering of the filing fees, and provide that the filing fees will be increased annually according to the Consumer Price Index (CPI), if the CPI increases by more than 1% over such period. The new tiering and filing fee amounts were published in the Federal Register on January 30, 2023. The changes took effect on February 27, 2023. For small transactions, the filing fee amount has decreased, while for the largest transactions, the filing fee has significantly increased.

Additionally, the Act requires FTC rulemaking to add new disclosures in HSR filings concerning subsidies a filer may receive from countries or entities that are a “strategic or economic threat to United States interests.” The findings of the Act specifically note the efforts of China in subsidizing mergers and acquisitions activity overseas.

Interlocking Directorates

On January 20, 2023, the FTC published adjustments (effective immediately) to the dollar thresholds under Section 8 of the Clayton Act that trigger the prohibition on “interlocking directorates” — where one person serves as a director or officer of two competing corporations (subject to certain exceptions). As a result of these adjustments, the prohibition may apply when (1) each corporation has capital, surplus, and undivided profits aggregating more than $45,257,000, and (2) each corporation’s competitive sales are at least $4,525,700.