On January 29, 2018, the Federal Trade Commission (the “FTC”) published in the Federal Register adjusted jurisdictional and filing fee thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). The HSR Act requires persons considering certain transactions which exceed the applicable size thresholds to file a premerger notice with the FTC and the Antitrust Division of the United States Department of Justice (the “DOJ”), pay the required filing fee and observe a designated waiting period before consummating the transaction. Failure to comply with the HSR Act could result in a civil penalty, which, effective as of January 22, 2018, can now be as high as $41,484 per day, per violation.
The HSR Act requires that the FTC make annual adjustments to the thresholds requiring premerger notification based on the change in the gross national product for the preceding year.
Effective as of February 28, 2018, the adjusted thresholds are as follows:
- The $50 million original threshold used in the Size of Transaction test will increase to $84.4 million (from 80.8 million in 2017);
- The $10 million and $100 million original sales and assets thresholds used in the Size of Persons test will increase to $16.9 million (from $16.2 million in 2017) and $168.8 million (from $161.5 million in 2017), respectively; and
- The $200 million original threshold, above which premerger notification is generally required regardless of the Size of Persons test, will increase to $337.6 million (from $323 million in 2017).
As a result of the new thresholds, a premerger notification must generally be filed pursuant to the HSR Act in the following cases:
- Where the acquirer will acquire or hold voting securities or assets of the target company that have an aggregate value in excess of $337.6 million; or
- Where the acquirer will acquire or hold voting securities or assets of the target company with an aggregate value in excess of $84.4 million, but not more than $337.6 million, if either the acquiring or the acquired party has annual net sales or total assets of $168.8 million or more and the other party to the transaction has annual net sales or total assets in excess of $16.9 million.
Filing fees under the HSR Act remain unchanged, but the accompanying thresholds have been adjusted as follows:
|Fee||Size of Transaction|
|$45,000||Higher than $84.4 million, but less than $168.8 million|
|$125,000||$168.8 million or higher, but less than $843.9 million|
|$280,000||$843.9 million or higher|
Even where the jurisdictional thresholds described above have been met, exemptions under the HSR Act and related regulations may apply in respect of certain transactions, such as the acquisition of certain agricultural property, office and residential property and oil and gas assets. Notably, the $200 million and $500 million thresholds set forth in FTC Rule 802.3 for acquisitions of certain carbon-based mineral reserves and associated exploration and production assets remain unchanged.
Parties considering mergers or acquisitions should consult with counsel to determine whether premerger notification is required under the HSR Act. Jackson Walker’s transactional attorneys have extensive experience with all aspects of the merger and acquisition process, including related HSR Act considerations. Additionally, Jackson Walker’s antitrust attorneys have the capability to assist clients in responding to second requests from the DOJ and the FTC and, if necessary, defending proposed mergers and acquisitions from challenges by enforcement agencies and private litigants.
For more information about the HSR Act, please contact any of the following Jackson Walker attorneys:
|Brandon Janes (Corporate)||firstname.lastname@example.org|
|Brad Knippa (Corporate)||email@example.com|
|Cale McDowell (Corporate)||firstname.lastname@example.org|
|Mike Meskill (Corporate)||email@example.com|
|Bob Cohan (Antitrust)||firstname.lastname@example.org|
|Alden Crow (Corporate)||email@example.com|
|Rick Dahlson (Corporate)||firstname.lastname@example.org|
|Mario Dolan (Corporate)||email@example.com|
|Byron Egan (Corporate)||firstname.lastname@example.org|
|Alex Frutos (Corporate)||email@example.com|
|Kevin Jones (Corporate)||firstname.lastname@example.org|
|Mike Laussade (Corporate)||email@example.com|
|Jim Ryan (Corporate)||firstname.lastname@example.org|
|Jeff Sone (Corporate)||email@example.com|
|Mike Taten (Corporate)||firstname.lastname@example.org|
|Rob Lydick (Corporate)||email@example.com|
|David Deaton (Corporate)||firstname.lastname@example.org|
|Jeff Harder (Corporate)||email@example.com|
|Christina Lyons (Corporate)||firstname.lastname@example.org|
|Sabrina McTopy (Corporate)||email@example.com|
|Mike Pearson (Energy)||firstname.lastname@example.org|
|Stephanie Chandler (Corporate)||email@example.com|
|Lauren Ciminello (Corporate)||firstname.lastname@example.org|
|Steven Jacobs (Corporate)||email@example.com|
|Patrick Tobin (Corporate)||firstname.lastname@example.org|