On January 28, 2020, the Federal Register published an FTC notice with the latest annual adjustments to the statutory thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (15 U.S.C. § 18a) (HSR). Once the new thresholds come into effect, the HSR size-of-the-transaction threshold will increase from $90 million to $94 million. The revised HSR thresholds will apply for transactions that close on or after February 27, 2020.
On January 21, 2020, the Federal Register also published an FTC notice with the latest annual adjustments to the statutory thresholds under Section 8 of the Clayton Act (15 U.S.C. § 19). The revised Section 8 thresholds are effective immediately.
Size-of-the-Transaction Test
(Original: $50 Million; New as of February 27, 2020: $94 Million)
The 2000 HSR amendments raised the size-of-the-transaction test to $50 million. This figure is currently $90 million, based upon the 2019 annual adjustment. On February 27, 2020, however, it will increase to $94 million. Accordingly, for transactions that close on or after February 27, 2020, no HSR filing will be required unless the acquisition will result in the acquiring person holding an aggregate total amount of voting securities, non-corporate interests, and/or assets of the acquired person in excess of $94 million.
Size-of-the-Parties Test
(Original: $10 Million/$100 Million; New as of February 27, 2020: $18.8 Million/$188 Million)
Under the new adjustments, acquisitions valued above $376 million will be reportable regardless of the size of the parties, and acquisitions valued at greater than $94 million, but less than or equal to $376 million, will only be reportable if the size-of-the-parties test is met. The revised thresholds adjust the size-of-the-parties test so that it (typically) will be met if either the acquiring or acquired person has annual net sales or total assets of $188 million or more, and the other person has annual net sales or total assets of $18.8 million or more.
Umbrales de notificación para adquisiciones de valores con derecho a voto
Para las adquisiciones de valores con derecho a voto, la persona adquirente presenta la notificación correspondiente al umbral más alto aplicable entre cinco opciones. La adquisición del 50 % o más de los valores con derecho a voto de un emisor es el umbral más alto, pero por debajo de ese nivel hay cuatro niveles diferentes para notificar las adquisiciones de participaciones minoritarias en valores con derecho a voto. El umbral de notificación puede determinar, por ejemplo, si una adquisición posterior de valores con derecho a voto adicionales del mismo emisor requerirá otra presentación HSR. Los nuevos umbrales de notificación serán, en orden ascendente:
- An aggregate total amount of voting securities valued at greater than $94 million, but less than $188 million
- An aggregate total amount of voting securities valued at $188 million or greater, but less than $940.1 million
- An aggregate total amount of voting securities valued at $940.1 million or greater
- Twenty-five percent of an issuer’s outstanding voting securities, if valued at greater than $1,880.2 million
- Fifty percent of an issuer’s outstanding voting securities, if valued at greater than $94 million
Límites de las tasas de presentación
The filing fee amounts are not changing; in fact, the HSR filing fee amounts have not been adjusted in more than a decade. However, the thresholds for the application of the fees are increasing, meaning that for transactions on the margin, the cost of making an HSR filing is going down.
- For transactions where the aggregate amount of assets, non-corporate interests, and voting securities to be held as a result of the acquisition will be more than $94 million, but less than $188 million, the filing fee will be $45,000.
- For transactions where the aggregate amount of assets, non-corporate interests, and voting securities to be held as a result of the acquisition will be $188 million or more, but less than $940.1 million, the filing fee will be $125,000.
- For transactions where the aggregate amount of assets, non-corporate interests, and voting securities to be held as a result of the acquisition will be $940.1 million or more, the filing fee will be $280,000.
Umbrales anteriores del tamaño de la transacción
A efectos de divulgar las adquisiciones de activos anteriores para el punto 8 del formulario HSR, y para analizar un posible incumplimiento anterior de la obligación de presentación en virtud del HSR, sigue siendo necesario examinar los umbrales que estaban vigentes en el momento de la adquisición anterior. Los umbrales relativos al volumen de la operación desde las modificaciones del HSR de 2000 han sido los siguientes:
- 50 millones de dólares a fecha de 1 de febrero de 2001.
- 53,1 millones de dólares a fecha de 2 de marzo de 2005.
- 56,7 millones de dólares a fecha de 17 de febrero de 2006.
- 59,8 millones de dólares a fecha de 21 de febrero de 2007.
- 63,1 millones de dólares a 28 de febrero de 2008.
- 65,2 millones de dólares a fecha de 12 de febrero de 2009.
- 63,4 millones de dólares a fecha de 22 de febrero de 2010.
- 66,0 millones de dólares a fecha de 24 de febrero de 2011.
- 68,2 millones de dólares a fecha de 27 de febrero de 2012.
- 70,9 millones de dólares a fecha de 11 de febrero de 2013.
- 75,9 millones de dólares a fecha de 24 de febrero de 2014.
- 76,3 millones de dólares a fecha de 20 de febrero de 2015.
- 78,2 millones de dólares a fecha de 25 de febrero de 2016.
- 80,8 millones de dólares a fecha de 27 de febrero de 2017.
- 84,4 millones de dólares a 28 de febrero de 2018.
- 90 millones de dólares a fecha de 3 de abril de 2019.
- 94,0 millones de dólares a 27 de febrero de 2020.
Most, although not all, of the dollar amounts in the HSR rules will be adjusted upward based upon the threshold indexing discussed above. It remains important for parties to be very careful in determining if a threshold is met given that the process can be very complex, the rules are highly technical, and failure to comply with HSR can result in significant civil penalties. Incidentally, the maximum civil penalty was recently increased to up to $43,280 for each day of noncompliance.
Interlocking Directorates Thresholds
(Original: $10 Million; New as of January 21, 2020: $38,204,000)
Finally, in a separate Federal Register notice, the Federal Trade Commission updated the jurisdictional threshold for interlocking directorates under Section 8 of the Clayton Act. Section 8 prohibits, subject to certain exceptions, persons from serving as an officer or director of two competing corporations (a practice known as “interlocking”), provided that each corporation has “capital, surplus, and undivided profits” above the statutory threshold. The 1990 amendments to Section 8 set this threshold at $10 million, but based on the latest annual adjustment, the threshold has been increased to $38,204,000.
Section 8 also has three safe harbor exceptions. One exception states that Section 8 does not apply if the competitive sales of either interlocked corporation are less than $1 million in 1989 dollars, as adjusted annually. This safe harbor has adjusted to $3,820,400 based on the new thresholds.
