New HSR Filing Thresholds for 2020

On January 28, 2020, the U.S. Federal Trade Commission (FTC), the agency charged with administering the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), as amended, and its filing requirements, announced the adjusted HSR Act notification thresholds for 2020. The new thresholds will become effective on February 27, 2020.

The HSR Act notification requirements apply to transactions that satisfy the specified “size of transaction” and “size of person” thresholds, and the thresholds are adjusted annually to reflect changes in the U.S. gross national product. The key adjusted thresholds are summarized in the following chart:

The new thresholds also apply to certain other HSR Act thresholds and exemptions.

Under the new thresholds, the “size of transaction” threshold will increase from $90 million to $94 million. No HSR Act notification will be required if the value of voting securities and assets held as a result of the transaction is below this threshold.

The “size of parties” thresholds of $18 million and $180 million in either annual sales or total assets will increase to $18.8 million and $188 million, respectively. For transactions valued at more than $94 million but not more than $376 million, no HSR Act notification will be required if the ultimate parent entities of one or both parties to the transaction do not satisfy the applicable “size of parties” thresholds.

Transactions valued at more than $376 million (previously $359.9 million) will be reportable regardless of the size of the parties, unless an HSR Act exemption applies.

The new thresholds do not affect the HSR Act filing fees, but the applicable filing fee will be based on the new thresholds, as follows: $45,000 for transactions valued at less than $188 million; $125,000 for transactions valued from $188 million to $940.1 million; and $280,000 for transactions valued at $940.1 million or more.

The new thresholds will remain in effect until the next annual adjustment, expected in the first quarter of 2021.

It is important to keep in mind that a transaction will not escape antitrust scrutiny simply because the HSR Act’s filing thresholds are not satisfied or because the transaction receives HSR clearance to close. Indeed, the Antitrust Division and FTC each regularly file suits seeking to unwind previously consummated mergers. Even small transactions with a purchase price below $10 million have been challenged.

The FTC also announced the revised thresholds for Section 8 of the Clayton Act, which prohibit, with certain exceptions, interlocking directorates where one person serves as a director or officer of two competing corporations, if two thresholds are met. Under the revised thresholds, effective when published in the Federal Register, Section 8 may apply when each of the competing corporations has capital, surplus, and undivided profits aggregating more than $38,204,000 and each corporation’s competitive sales are at least $3,820,400.