This week the Federal Trade Commission (FTC) published the new notification thresholds under the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act). This antitrust law requires parties to certain kinds of transactions to notify the FTC and the Department of Justice Antitrust Division in advance, and allow a waiting period (usually 30 days) to elapse before the parties are permitted to complete their transaction.
The HSR notification provisions apply not only to for-profit M&A activity, but also to nonprofit affiliations, joint venture formations, minority investments and certain follow-on investments. Only larger deals are notified — the new “size of transaction” threshold will be $76.3 million (up from the current threshold of $75.9 million), but certain follow-on investments, even small ones, may require a notification if the new investment would push the investor’s aggregate investment over a notification threshold.
The FTC adjusts the notification thresholds each year to reflect the change in the GNP during the preceding year. In addition to the “size of transaction” threshold, the FTC has adjusted the “size of person” thresholds, as well as the notification thresholds for certain incremental acquisitions of voting securities that are above the minimum “size of transaction.” The HSR Act and rules offer a number of exceptions to the notification provisions, but in very general terms:
- Transactions valued at more than $305.1 million must be reported without regard to the size of the parties; and
- Transactions valued at more than $76.3 million must be reported if one party has assets or sales greater than $152.5 million, and the other party has assets or annual sales greater than $15.3 million.
Certain of the original thresholds, the current (2014) thresholds and the new (2015) thresholds are set forth below. The 2015 thresholds will be effective in mid-February, 30 days after publication of the FTC’s notice in the Federal Register.
Each notified transaction comes with a filing fee based on the notification threshold:
- $280,000 for transactions above the highest threshold (soon to be $762.7 million);
- $125,000 for transactions at or below the highest threshold but higher than the “$100 million” (soon to be $152.5 million) threshold; and
- $45,000 for transactions at or below $152.5 million but above the minimum size of reportable transaction (soon to be $76.3 million).
The FTC’s notice may be signaling an eventual increase in HSR filing fees (an idea that has been discussed by legislators in the past two or three sessions as well). It states that “while the filing fee thresholds are revised annually, the actual filing fees are not similarly indexed and, as a result, have not been adjusted for inflation for over a decade.”