FTC announces increased HSR thresholds for 2017

FTC announces increased HSR thresholds for 2017

Publication January 2017

The Federal Trade Commission ("FTC") yesterday 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 likely will be in mid to late February (30 days after publication of the changes in the Federal Register).

Most importantly, the minimum "size-of-transaction" threshold will be raised from US$78.2 million to US$80.8 million. Acquisitions below this threshold will not be reportable.

2017 HSR dollar thresholds

The new HSR dollar thresholds for 2017 will be as follows:

Threshold 2017 adjusted threshold
Minimum size-of-transaction  US$80.8 million 
Size-of-persons test  US$16.2 million and US$161.5 million 
Size-of-transaction above which size-of-persons test does not apply  US$323 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:

2017 Size-of-Transaction Threshold Filing Fee 
Value of transaction greater than US$80.8 million, but less than US$161.5 million  US$45,000 
Value of transaction US$161.5 million or greater, but less than US$807.5 million  US$125,000 
Value of transaction US$807.5 million or greater  US$280,000 
25 percent of an issuer's voting securities if valued in excess of US$1,615 million  US$280,000 
50 percent of an issuer's voting securities if valued at greater than US$80.8 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 2018.

FTC announces adjustments to thresholds for interlocking directorates

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$31,841,000 and US$3,184,100 to US$32,914,000 and US$3,291,400, respectively. As a result of these adjustments, Section 8 will apply to corporations with capital, surplus, and undivided profits aggregating more than US$32,914,000, unless the competitive sales of either corporation are less than US$3,291,400; 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.

How we can help

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 guide clients through the reporting process and any government investigation that may follow an HSR filing.

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