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FTC Revises Thresholds for Hart-Scott-Rodino Act and Corporate Interlock Statute

Client Updates

On February 1, 2021, the Federal Trade Commission announced new jurisdictional thresholds for the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”) and Section 8 of the Clayton Act (“Corporate Interlock Statute”). The FTC is required to adjust the thresholds annually, based on changes in the gross national product.  While the thresholds typically increase, this year’s thresholds have decreased due to the economic impact of the COVID-19 pandemic. Under the revised thresholds, the “size-of-transaction” has decreased from $94.0 million to $92.0 million. The new HSR thresholds will become effective on March 4, 2021, 30 days after publication in the Federal Register. The revisions to the corporate interlock thresholds became effective on January 21, 2021, upon publication in the Federal Register. The FTC also revised the maximum civil penalty for HSR Act violations from $43,280 to $43,792 per day, effective January 13, 2021.


REVISED HSR THRESHOLDS

Under the revised thresholds, unless covered by an exemption, HSR filings and waiting periods are required for transactions valued in excess of the $92.0 million "size-of-transaction" threshold (previously $94.0 million) involving parties with annual net sales or total assets meeting the "size-of-persons" threshold of $18.4 million or more (previously $18.8 million) and $184.0 million or more (previously $188.0 million). In addition, if the size-of-transaction will exceed $368.0 million (previously $376.0 million), HSR filings are required regardless of the size-of-persons. 


A complete list of the revised thresholds is set out below.

 

ORIGINAL THRESHOLDS

ADJUSTED THRESHOLDS

Size of Transaction1

$50 million
$200 million

$92.0 million
$368.0 million

Size of Persons2

$10 million
$100 million

$18.4 million
$184.0 million

Notification Thresholds3

$50 million
$100 million
$500 million
25% of stock over $1 billion
50% of stock over $50 million

$92.0 million
$184.0 million
$919.9 million
$1,839.8 million

$92.0 million


The HSR filing fees remain unchanged and apply to the revised thresholds as follows.

TRANSACTION VALUES

FILING FEE

In excess of $92.0 million but less than $184.0 million

$45,000

$184.0 million or greater but less than $919.9 million

$125,000

$919.9 million or more

$280,000


1 Size-of-Transaction: HSR notifications may be required if an acquiring person, as a result of an acquisition, will hold assets, voting securities, and/or non-corporate interests valued at more than $50 million, as adjusted.
2 Size-of-Persons: Generally, one “person” to the transaction must have at least $10 million, as adjusted, in annual net sales or total assets, and the other “person” must have at least $100 million, as adjusted, in annual net sales or total assets. Transactions valued in excess of $200 million, as adjusted, are not subject to the size-of-persons threshold and are reportable unless exempt.
3 Notification Thresholds: HSR notifications are generally required for transactions that will exceed a notification threshold where the size-of-persons threshold is met or does not apply, unless exempt.

REVISED CIVIL PENATLY

On January 11, 2021, the FTC announced an increase in the maximum civil penalty for HSR Act violations from $43,280 to $43,792 per day. The new penalties became effective January 13, 2021. The FTC adjusts the civil penalty annually for inflation. The increased maximum penalty will apply to civil penalties assessed after the effective date of the adjustment, including for violations that predated the effective date.

CORPORATE INTERLOCK THRESHOLDS

Under the revised thresholds, one person may not serve simultaneously as an officer or director of competing corporations if each “interlocked” corporation has capital, surplus, and undivided profits aggregating more than $37,382,000 (originally, $10,000,000).  The threshold amount applicable to the statutory “safe harbor” based on the dollar value of “competitive sales” has also been revised: a corporate interlock does not violate the statute if the “competitive sales” of either interlocked corporation are less than $3,738,200 (originally $1,000,000).  The statutory safe harbors based on ratios of “competitive sales” to total sales remain unchanged.

 

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