HSR Thresholds Rise Again With Rise in GNP

January 26, 2012 Authors: Neely B. Agin, David M. Foster, Daniel L. Wellington

The Federal Trade Commission ("FTC") just announced increases to the reporting thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"). These changes result from amendments to the HSR Act enacted in 2000 that require the FTC to revise the reporting thresholds annually based on changes in the U.S. gross national product. The increases will apply to all transactions that close after the effective date, which likely will be in late February (30 days after publication of the changes in the Federal Register).

Most significantly, the minimum "size-of-transaction" threshold will be raised from $66.0 to $68.2 million. Acquisitions below this threshold will not be reportable.

The new HSR dollar thresholds for 2012 will be as follows:

Threshold2012 Adjusted Threshold
Minimum Size-of-Transaction$68.2 million
Size-of-Persons Test$13.6 million and $136.4 million
Size-of-Transaction above which
Size-of-Persons Test Does Not Apply
$272.8 million

The adjustments also apply to certain other HSR Act thresholds and exemptions.

While the HSR filing fee amounts have not changed, the size-of-transaction thresholds, upon which the filing fee is based, increased. Under the new thresholds, the filing fee will be:

 

2012 Size-of-Transaction ThresholdFiling Fee
Value of transaction greater than
$68.2 million, but less than $136.4 million
$45,000
Value of transaction $136.4 million or greater, but less than $682.1 million$125,000
Value of transaction $682.1 million
or greater
$280,000
25% of an issuer's voting securities if
valued in excess of $1,364.1 million
$280,000
50% of an issuer's voting securities if
valued at greater than $68.2 million
$45,000

Even if a transaction is reportable based on the above thresholds, it may qualify for an HSR Act exemption. Complex rules apply to the valuation and exemptions under the HSR Act and you should consult an attorney versed in HSR matters to determine whether a transaction is reportable.

The new thresholds will remain in effect until the next annual adjustment, expected in the first quarter of 2013.

In a related development, the FTC also announced adjustments to the thresholds for Section 8 of the Clayton Act, which prohibits a person from serving as a director or officer in two competing corporations. The jurisdictional thresholds under Section 8(a)(1) and 8(a)(2)(A) are revised from $26,867,000 and $2,686,700 to $27,784,000 and $2,778,400, respectively. As a result of these adjustments, Section 8 will apply to corporations with capital, surplus, and undivided profits aggregating more than $27,784,000, unless the competitive sales of either corporation are less than $2,778,400; the competitive sales of either corporation are less than 2 percent of that corporation's total sales; or the competitive sales of each corporation are less than 4 per cent of that corporation's total sales. The notice announcing these revisions will be published shortly in the Federal Register and will be effective upon publication.

Fulbright attorneys are well versed in the HSR Act and its reporting requirements and are available to advise parties regarding the reportability of transactions, as well as guide clients through the reporting process and any government investigation that may follow an HSR filing.

This article was prepared by Neely B. Agin (nagin@fulbright.com or 202 662 4723), David M. Foster (dfoster@fulbright.com or 202 662 4517), Daniel L. Wellington (dwellington@fulbright.com or 202 662 4574) from Fulbright's Antitrust and Competition Practice Group.