January 27, 2011

FTC Announces Revised Hart-Scott-Rodino Thresholds

Holland & Knight Alert
John R. Dierking

The Federal Trade Commission (FTC) has announced this year’s revisions to the thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR), which will apply to all transactions closing on or after February 24, 2011. Beginning in 2005, Congress required the FTC to revise the HSR thresholds annually, based on changes in the gross national product. Following last year’s first-ever decrease, the thresholds will increase this year.

Parties intending to merge, purchase or sell voting securities, non-corporate interests or assets, or engage in certain other acquisition transactions are required by HSR to 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.

Thresholds and Fees

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 24, 2011, the size-of-person threshold will generally be met if one party to the transaction has total assets or net sales of $131.9 million or more and the other party to the transaction has total assets or net sales of $13.2 million or more – provided that this threshold will not apply to transactions valued at $263.8 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 24, 2011, 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 $66.0 million, an increase from the current threshold of $63.4 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 24, 2011, the filing fee schedule will be as follows:

Value of Transaction Filing Fee
> $66.0 million but < $131.9 million $45,000
$131.9 million or more but < $659.5 million $125,000
$659.5 million or more $280,000








Penalties for Noncompliance

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. 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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