By: Rony Kishinevsky, Cade Satterfield and Cale McDowell

On February 15, 2019, the Federal Trade Commission (FTC) announced the adjusted jurisdictional and filing fee thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (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 (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, as announced on February 14, 2019, to be effective upon publication in the Federal Register, can now be as high as $42,530 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.

The adjusted thresholds are as follows:

• The $50 million original threshold used in the Size of Transaction test will increase to $90 million (from $84.4 million in 2018);
• The $10 million and $100 million original sales and assets thresholds used in the Size of Persons test will increase to $18 million (from $16.9 million in 2018) and $180 million (from $168.8 million in 2018), respectively; and
• The $200 million original threshold, above which premerger notification is generally required regardless of the Size of Persons test, will increase to $359.9 million (from $337.6 million in 2018).

These adjusted thresholds are expected to be published in the Federal Register this week, and will become effective 30 days after publication.

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 $359.9 million; or
• Where the acquirer will acquire or hold voting securities or assets of the target company with an aggregate value in excess of $90 million, but not more than $359.9 million, if either the acquiring or the acquired party has annual net sales or total assets of $180 million or more and the other party to the transaction has annual net sales or total assets in excess of $18 million.

Filing fees under the HSR Act remain unchanged, but the accompanying thresholds have been adjusted as follows:

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:

Rony Kishinevsky‘s practice focuses on mergers and acquisitions, private fund formations, joint ventures, and private placements of debt and equity securities. He represents private companies, investment fund sponsors, and investor groups in a broad range of engagements, including entity structuring and formation, alternative assets investments, and general corporate governance, securities and transactional matters. He received his J.D., with high honors, from the University of Texas School of Law, where he served on the Texas Law Review, the Texas Law Review Association, and the Texas Law Alumni Association Student Steering Committee.

Cade Satterfield‘s practice focuses on mergers and acquisitions, structuring joint ventures, and private fund formations. Cade has a special focus on helping private real estate funds navigate all aspects of their investment spectrums, from fund formation to consummating portfolio transactions to negotiating joint ventures with operators across the country. Cade has been involved in both domestic and international transactions, including the representation of U.S. clients in cross-border transactions in Switzerland, the United Kingdom, the British Virgin Islands, and Iraq. He received his J.D., magna cum laude, from SMU Dedman School of Law.

Cale McDowell represents public and private companies, investor groups and investment fund sponsors in a broad array of engagements, including mergers, acquisitions and divestitures, the structuring and formation of investment funds, joint ventures and other entities, offerings of debt and equity securities and general corporate governance, securities and transactional matters. Cale is involved in both domestic and international transactions, including the representation of U.S. clients in significant cross-border transactions in the British Virgin Islands, Canada, Cayman Islands, Cyprus, Germany, India, Iraq, Mexico, the Netherlands, Norway, South Africa, Singapore, South Korea, and Switzerland. He received his J.D. from the University of Texas School of Law. Since 2014, Cale has been recognized as a “Rising Star” by Thomson Reuters’ Super Lawyers.