The basic filing threshold, currently $90 million, will increase to $94 million for transactions that close on or after February 27, 2020.
On January 28, 2020, the Federal Trade Commission (FTC) announced its annual change to the jurisdictional thresholds for premerger notification under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act. The FTC adjusts the thresholds annually, consistent with changes to gross national product. The announced changes, published in the Federal Register on January 28, 2020, apply to transactions closing on or after February 27, 2020.
The HSR Act requires acquiring and acquired persons to file notification forms including certain documents with the FTC and Antitrust Division of the United States 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, originally $50 million, will increase to $94 million for transactions that close on or after February 27, 2020.
Pursuant to the revised thresholds, transactions valued equal to or in excess of $94 million (up from the current threshold of $90 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 in excess of $188 million (up from $180 million) and another person in the transaction has total assets or annual sales in excess of $18.8 million (up from $18 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 $376 million (up from $359.9 million) will be subject to filing requirements absent exemption regardless whether the size-of-persons test is met.
Earlier, on January 13, 2020, the FTC announced that the maximum civil penalty amount for violations of the HSR Act increased from $42,530 to $43,280 per day. The new penalty levels, effective as of January 14, 2020, 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 usually requires 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. Noncompliance with the HSR Act carries serious penalties, and parties should seek experienced antitrust counsel to advise them on the applicability of the HSR Act.
For Further Information
If you have any questions about this Alert, please contact Edward G. Biester III, Sean P. McConnell, Sarah O'Laughlin Kulik, one of the attorneys in our Antitrust and Competition Group or the attorney in the firm with whom you are regularly in contact.
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