January 22, 2009

Federal Trade Commission Announces Increases to Both Hart-Scott-Rodino Thresholds and Civil Penalties for Noncompliance

Holland & Knight Alert
John R. Dierking

The Federal Trade Commission (FTC) has announced this year’s increases in the thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR) which will apply to all transactions closing on or after February 12, 2009. Beginning in 2005, Congress required that the FTC increase the HSR thresholds annually based on changes in the gross national product. The FTC also announced a 45 percent increase in civil penalties effective February 9, 2009, for HSR premerger notification violations, such as a failure to make a required filing. This adjustment is based on increases in the Consumer Price Index from the date of the last adjustment to such penalties in 1996.

HSR requires that parties intending to merge, purchase or sell voting securities, non-corporate interests or assets, or engage in certain other acquisition transactions provide both the FTC and the Antitrust Division of the Department of Justice (DOJ) with information regarding their operations and the proposed transaction if certain minimum jurisdictional thresholds are met.

Based on HSR’s purpose to allow the FTC and DOJ time to detect and potentially address any perceived anti-competitive effects of a transaction, HSR stays the consummation of a covered transaction for the waiting period specified by law.

HSR filings are required if both the size of person and size of transaction jurisdictional thresholds are met and no exemption is available under the HSR regulations. As of February 12, 2009, the size of person threshold will generally be met if one party to the transaction has total assets or net sales of $130.3 million or more, and the other party to the transaction has total assets or net sales of $13.0 million or more (provided that this threshold will not apply to transactions valued at $260.7 million or more). The size of person threshold is measured at the ultimate parent entity level of each party and includes all entities controlled by each such ultimate parent entity. Also, as of February 12, 2009, the size of transaction threshold will be met if, as a result of the transaction, the buyer will hold voting securities, assets and/or non-corporate interests of the seller valued in excess of $65.2 million, an increase from the current threshold of $63.1 million.

Under HSR, each buyer is required to pay a filing fee in connection with any required filing. The applicable filing fee varies based on the value of the voting securities, assets and/or non-corporate interests to be held as a result of the transaction. As of February 12, 2009, the filing fee schedule will be as follows: 

Value of Transaction

Filing Fee

> $65.2 million but < $130.3 million


$130.3 million or more but < $651.7 million


$651.7 million or more


Effective February 9, 2009, failure by a person to comply with any requirements under HSR may subject such person, or any officer, director or partner of such person to civil penalties of up to $16,000 per day for each day of violation. This is a significant increase from the current penalty amount of $11,000 per day. In addition to monetary penalties, courts may also order compliance with HSR requirements and an extension of the HSR waiting period until substantial compliance has occurred. Courts may also grant certain other equitable relief for any failure by a person to substantially comply with either the HSR premerger notification requirements or with a request by the regulators for additional information once an HSR filing has been made.

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