FTC Announces Decreased Hart-Scott-Rodino Thresholds Effective March 4, 2021

The Federal Trade Commission (FTC) has announced its annual 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 March 4, 2021. The FTC is required under the Clayton Act to revise the HSR thresholds annually based on changes in the gross national product and this year's changes reflect an approximately 2.1 percent decrease from the current thresholds, the first decrease since 2010.

HSR requires parties intending to merge, purchase or sell voting securities, non-corporate interests or assets, or engage in certain other acquisition transactions to provide both the FTC and the Antitrust Division of the U.S. 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.

Revised Thresholds

HSR filings are required if both the size of transaction threshold and the size of person jurisdictional threshold (to the extent applicable) are met and no exemption is available under the HSR regulations. As of March 4, 2021, 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 $92 million, a decrease from the current threshold of $94 million.

The size of person threshold will generally be met as of March 4, 2021, if one party to the transaction has total assets or net sales of $184 million or more (down from the current $188 million) and the other party to the transaction has total assets or net sales of $18.4 million or more (down from $18.8 million) – provided that this threshold does not apply to transactions valued at $368 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 Filing Fee

Each buyer is required to pay a filing fee in connection with any required filing under HSR. While the filing fee thresholds are revised annually, the filing fees themselves are not changing. 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 March 4, 2021, the filing fee schedule will be as follows:

Increased Penalties for Noncompliance with HSR Requirements

In addition to changes to the HSR thresholds, the FTC also recently announced adjustments to the maximum civil penalty amounts for HSR violations. Under the new adjustment which became effective on Jan. 13, 2021, 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 $43,792 for each day of violation, an increase from the prior rate of $42,350 per day. Unlike the HSR thresholds, civil penalty amounts are adjusted annually for inflation rather than based on changes in the gross national product.

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.

For more information regarding the HSR thresholds and the penalties for noncompliance, contact Holland & Knight Partner John Dierking.

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, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.