Under revised thresholds, transactions valued in excess of $92 million are reportable under the HSR Act, absent exemption, if the “size-of-persons” test is met.
On February 2, 2021, the Federal Trade Commission (FTC) published its annual change to the jurisdictional thresholds for premerger notification under the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act). The FTC revises the thresholds to stay consistent with changes to gross national product (GNP), and this year’s thresholds are lower than last year. The changes apply to transactions closing on or after March 4, 2021.
The HSR Act requires both acquiring and acquired persons to file notification forms including certain documents with the FTC and Antitrust Division of the U.S. Department of Justice, and observe certain waiting periods before consummating a covered transaction. This process allows these agencies to screen transactions for potential anticompetitive effects and to determine whether to challenge such transactions under the antitrust laws. The basic filing threshold, $94 million in 2020, will fall slightly to $92 million, taking into account last year’s lower GNP.
Under revised thresholds, transactions valued in excess of $92 million are reportable under the HSR Act, absent exemption, if the “size-of-persons” test is met. In most transactions, the size-of-persons test is met if one person in a transaction has total assets or annual sales of $184 million or more (down from $188 million) and another person in the transaction has total assets or annual sales of $18.4 million or more (down from $18.8 million). A “person” includes an acquired or acquiring entity, its ultimate parent entity and all entities controlled by the ultimate parent entity. Transactions valued in excess of $368 million (down from $376 million) will be subject to filing requirements absent exemption regardless of whether the size-of-persons test is met.
Earlier, on January 13, 2021, the FTC announced that the maximum civil penalty amount for violations of the HSR Act increased from $43,280 per day to $43,792. The new penalty levels, effective the same day the rule was issued, apply to civil penalties assessed after the effective date, even if the associated violation predated the effective date.
The question of whether a business transaction meets the jurisdictional thresholds for premerger notification under the HSR Act depends on the facts and circumstances in each case and may require careful analysis. The outcome of that question can have significant consequences for the parties to the transaction. Some types of transactions have special size-of-person rules, and determining who is an acquiring person and an acquired person may depend on the type of transaction as well. Additional matters must be considered in analyzing any potential exemptions.
For More Information
If you have any questions about this Alert, please contact Edward G. Biester III, Sean P. McConnell, Sarah O'Laughlin Kulik, Nathan B. Reeder, any of the attorneys in our Antitrust and Competition Group or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.