FTC Increases Thresholds for HSR Filings and Interlocking Directorates: Nearly $1 Billion Impact for HSR Notifications

Tuesday, January 27, 2015 - 15:02

On January 15, 2015, the U.S. Federal Trade Commission (FTC) announced revisions to the jurisdictional thresholds for the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act), which will become effective on February 20, 2015, and apply to transactions consummated on or after that date. The HSR Act requires the FTC to revise the thresholds annually based on changes in the gross national product.

Under the revisions, the size of transaction threshold has been increased from $75.9 million to $76.3 million. Consequently, the HSR Act notification and waiting requirements will now apply to acquisitions resulting in the acquiring person holding assets and/or voting securities of the acquired person valued in excess of $76.3 million. The HSR Act requirements also will apply to purchases of partnership interests and membership interests of a limited liability company provided that (i) the acquiring person obtains control and (ii) the interests held by the acquiring person are valued in excess of $76.3 million.

Acquisitions that do not exceed $305.1 million in value (previously $303.4 million) also have to meet the size of person threshold to trigger the HSR Act requirements. Under the revisions, the size of person threshold generally will be met if one of the parties has total assets or annual net sales of $152.5 million or more (previously $151.7 million) and the other party has total assets or annual net sales of $15.3 million or more (previously $15.2 million).

In addition, acquisitions that result in the ownership of less than 50 percent of the outstanding voting securities of a corporation require HSR notification when certain dollar thresholds are reached. Under the revisions, premerger filing is now required for such acquisitions when the value of the total voting securities acquired and held reaches each of the following dollar thresholds: (a) $76.3 million, (b) $152.5 million, (c) $762.7 million and/or (d) 25 percent of an issuer’s outstanding voting securities if valued in excess of $1.5253 billion.

Summary of threshold changes:

Original threshold

2015 Adjusted threshold

$10 million

$15.3 million

$50 million

$76.3 million

$100 million

$152.5 million

$200 million

$305.1 million

$500 million

$762.7 million

$1 billion

$1.5253 billion

 

The HSR Act filing fee thresholds also have been revised as shown in the following chart.
 

Transaction valued at:

HSR Act Filing Fee

More than $76.3 million but less than $152.5 million

$45,000

$152.5 million but less than $762.7 million

$125,000

$762.7 million or more

$280,000

 
Revisions in Thresholds for Section 8 of the Clayton Act

The FTC also has revised the thresholds for interlocking directorates prohibited by Section 8 of the Clayton Act. The FTC is required to revise the Section 8 thresholds annually based on changes in the gross national product.

Section 8 of the Clayton Act prohibits, with certain exceptions, one person serving as a director or officer of two competing corporations if certain thresholds are met. As revised, Section 8 now covers situations where each corporation has capital, surplus and undivided profits aggregating $31,084,000 or more, unless either corporation has competitive sales of less than $3,108,400.

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This article is one in a series of antitrust alerts authored by attorneys from Weil’s Antitrust team to be published in The Metropolitan Corporate Counsel. Currently, two additional articles are planned, one covering trade association compliance programs in light of recent case law, and the other on the FTC’s recent challenge of Verisk Analytics’ acquisition of Eagle View Technology. For continuous updates, please visit Weil’s Antitrust/Competition Perspectives

Vadim Brusser is counsel in the Antitrust/Competition practice at Weil, Gotshal & Manges. John Sipple is counsel in the firm's Washington, D.C. office and is recognized as the world’s foremost authority in the Hart-Scott-Rodino premerger notification regime. Laura Wilkinson is an antitrust partner, also  in the Washington, D.C. office, with a practice focusing on mergers and acquisitions.

Please email the authors at vadim.brusser@weil.comjohn.sipple@weil.com or laura.wilkinson@weil.com with questions about this article.