As normally happens in late January every year, the Federal Trade Commission (FTC) has announced its revised Hart-Scott-Rodino (HSR) thresholds. The HSR Act requires parties to certain mergers, acquisitions, joint ventures, consolidations, and other transactions to file premerger notification and report forms with the FTC and the Antitrust Division of the U.S. Department of Justice and wait a specified time period (usually 30 days) before the transaction can close. The purpose of HSR is to give the federal antitrust authorities time to review transactions for potential antitrust concerns before transactions close, and if necessary, sue to stop potentially anticompetitive deals before they happen. HSR filing requirements are triggered by jurisdictional thresholds, known as size of person (SOP) and size of transaction (SOT). On Jan. 23, the FTC announced the 2023 thresholds, and these will take effect on Feb. 27.

With the notable exception of 2021’s decrease due to a decline in the gross national product, the HSR thresholds for SOP and SOT typically increase every year. 2023 continues the upward trend. What makes 2023’s announcement particularly noteworthy is the dramatic change to the HSR filing fees. Filing fees have been flat since 2001, even though transaction sizes have increased exponentially. In late December 2022, President Biden signed the Merger Filing Fee Modernization Act of 2022 (MFFMA), which was passed as part of the Consolidated Appropriations Act, 2023 (P.L. 117-164). For the most part, the MFFMA announced steep increases in filing fees. At the same time, however, the MFFMA dropped the minimum filing fee from $45,000 to $30,000, for deals valued below $161.5 million. The new fees were on hold until they were published in the Federal Register, which has now been done. Currently, the filing fees range from $45,000 to $280,000, depending on a deal’s value. Starting Feb. 27, filing fees will range between $30,000 on the low end to $2.25 million for multi-billion deals. The increased fees will enable the antitrust enforcement agencies to hire more staff to pursue investigations and litigation as part of the Biden Administration’s robust antitrust enforcement agenda.

In this post, we tell dealmakers what they need to know for 2023.

New Thresholds

For 2023, the new minimum SOT threshold is $111.4 million, increasing from the 2022 threshold of $101 million.

The new minimum SOP threshold is $22.3 million, increasing from the 2022 threshold of $20.2 million. The new larger size of person threshold is $222.7 million, increasing from $202 million.

For example, under the new thresholds, if a seller with total assets or if engaged in manufacturing, annual net sales greater than $22.3 million proposes to sell its business for $112 million to a buyer with total assets or annual net sales greater than $222.7 million, the parties may be required to file HSR and wait the required waiting period, unless the HSR Act or its rules exempt the transaction. 

For transactions valued at $445.5 million and above, the SOP test does not apply. This is an increase from 2022’s threshold of $403.9 million. Regardless of the SOP, transactions valued at $445.5 million and above may be required to file HSR, unless an exemption applies.

The applicable SOP and SOT are the ones in effect at the time a deal closes, not at the time the deal is signed.  For example, a deal signed on January 27, 2023 for $102 million (above the 2022 SOT threshold) by parties who meet the applicable 2022 SOP thresholds may not be required to file HSR if the deal closes on or after February 27, 2023, when the new 2023 threshold takes effect.  Parties are always well advised to check with experienced HSR counsel to confirm whether or not a filing is required.  Penalties for failing to file, if a filing is required, are now $50,120 per day.    

New Filing Fees

The Consolidated Appropriations Act, 2023 requires the FTC to revise the HSR filing fee thresholds. The new filing fee thresholds, which take effect on Feb. 27, are as follows:

On Jan. 24, the FTC’s Premerger Notification Office announced that it will issue additional guidance about the new thresholds and the filing fees in the near future.

Conclusion

HSR requirements are complex and require a thorough understanding of the Act, its regulations, and their nuances.