Increased Hart-Scott-Rodino Thresholds Set to Take Effect Feb. 23, 2022

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 Feb. 23, 2022. The FTC is required under the Clayton Act to revise the HSR thresholds annually based on changes in the gross national product. The announced revisions reflect an increase of approximately 9.8 percent over the current thresholds and represent a significant shift from last year's approximate 2.1 percent decrease in threshold amounts.

HSR generally requires parties intending to merge, purchase or sell voting securities or noncorporate 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) information regarding their operations and the proposed transaction if certain minimum jurisdictional thresholds are met. An HSR filing 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 anticompetitive effects of a transaction.

HSR Jurisdictional Thresholds

HSR filings by the buyer and seller are generally required if both the size of transaction and size of person jurisdictional thresholds are met and no exemption is available under the HSR regulations. As of Feb. 23, 2022, the size of transaction threshold will be met if, as a result of the transaction, the buyer will hold voting securities, assets and/or noncorporate interests of the seller valued in excess of $101 million, up from the current threshold of $92 million.

Under the newly announced values, the size of person threshold will generally be met as of Feb. 23, 2022, if one party to the transaction has total assets or net sales of $202 million or more and the other party to the transaction has total assets or net sales of $20.2 million or more – provided that this threshold will not apply to transactions valued at $403.9 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.

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 fee amounts are not indexed and have not been adjusted for inflation in well over a decade. The applicable filing fee varies based on the value of the voting securities, assets and/or noncorporate interests to be held as a result of the transaction. As of Feb. 23, 2022, the filing fee schedule will be as follows:

Penalties for HSR Noncompliance

Noncompliance with HSR requirements may subject a person – or any officer, director or partner of such person – to civil penalties of up to $46,517 per day for each day of violation based on a recently announced adjustment to the penalty that took effect on Jan. 10, 2022. 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 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.