Revised Hart-Scott-Rodino Thresholds Effective February 20, 2015
Revised thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR) have been announced by the Federal Trade Commission (FTC), effective for transactions closing on or after Feb. 20, 2015. Section 7A of the Clayton Act requires revisions to the HSR thresholds annually based on changes in the gross national product. This year's changes represent an increase of approximately 1 percent over last year's thresholds.
HSR requires parties intending to merge, purchase or sell voting securities, non-corporate interests or assets or those that engage in certain other acquisition transactions 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. HSR stays the consummation of a covered transaction for the waiting period specified by law 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 Jurisdictional Thresholds
HSR filing requirements apply if both the size of the transaction and the size of person jurisdictional thresholds are met and when no exemption is available under the HSR regulations. Under the new thresholds, 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 $76.3 million – a slight increase from the current $75.9 million threshold.
Also as of Feb. 20, 2015, the size of person threshold will generally be met if one party to the transaction has total assets or net sales of $152.5 million or more and the other party to the transaction has total assets or net sales of $15.3 million or more, provided that this threshold will not apply to transactions valued at $305.1 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.
HSR requires that each buyer pays a filing fee in connection with any required filing. While the filing fee thresholds are revised annually, the filing fee amounts are not indexed and have not been adjusted in more than a decade. 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 Feb. 20, 2015, filing fees will be as follows:
> $76.3 million but < $152.5 million
$152.5 million or more but < $762.7 million
$762.7 million or more
Penalties for HSR Noncompliance
Noncompliance with any requirements under HSR may subject a 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 any 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.
Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.