Author:
United States | Publication | January 2020
The Federal Trade Commission (FTC) today announced increased reporting thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the HSR Act).
These reporting thresholds are revised annually based on changes in the US gross national product. The increases will apply to all transactions that close after the effective date, which is February 27, 2020 (30 days after publication of the changes in the Federal Register).
Most importantly, the minimum "size-of-transaction" threshold will be raised from US$90 million to US$94 million. Acquisitions below this threshold will not be reportable.
| Threshold | 2020 Adjusted Threshold |
|---|---|
| Minimum Size-of-Transaction | US$94 million |
| Size-of-Persons Test | US$18.8 million and US$188 million |
| Size-of-Transaction above which Size-of-Persons Test Does Not Apply | US$376 million |
The adjustments also apply to certain other HSR Act thresholds and exemptions, such as the exemptions for acquisitions of foreign assets and voting securities.
While the HSR filing fee amounts have not changed in more than a decade, the size-of-transaction thresholds, upon which the filing fee is based, will be increased. The filing fee for each of the new thresholds will be:
| 2020 Size-of-Transaction Threshold | Filing Fee |
|---|---|
| Value of transaction greater than US$94 million, but less than US$188 million | US$45,000 |
| Value of transaction US$188 million or greater, but less than US$940.1 million | US$125,000 |
| Value of transaction US$940.1 million or greater | US$280,000 |
| 25 percent of an issuer's voting securities if valued in excess of US$1,880.2 million | US$280,000 |
| 50 percent of an issuer's voting securities if valued at greater than US$94 million | US$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 a lawyer experienced in HSR matters to determine whether a transaction is reportable.
The new thresholds will remain in effect until the next annual adjustment, expected in January or February 2021.
In a related development, the FTC also announced adjustments to the thresholds for interlocking directorates under 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 US$36,564,000 and US$3,656,400 to US$38,204,000 and US$3,820,400, respectively. As a result of these adjustments, Section 8 will apply to corporations with capital, surplus, and undivided profits aggregating more than US$38,204,000, unless the competitive sales of either corporation are less than US$3,820,400; the competitive sales of either corporation are less than two percent of that corporation's total sales; or the competitive sales of each corporation are less than four percent 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.
Norton Rose Fulbright lawyers 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 to guide clients through the reporting process and any government investigation that may follow an HSR filing.
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The US Supreme Court has ruled that a “pure omission” under Item 303 of Securities and Exchange Commission Regulation S–K cannot give rise to a private action for securities fraud under Section 10(b) and Rule 10b-5(b) of the Securities Exchange Act of 1934.
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