Alert
HSR Thresholds Will Decrease for 2021 Transactions
Size-of-transaction threshold under Hart-Scott-Rodino Act will decrease to $92 million; the first threshold decrease since 2010.
Alert
By Michael L. Sibarium, Alvin Dunn, Evan Storm, Drew A. Navikas
02.01.21
As a result of the decrease in the U.S. Gross National Product for 2020 due to the COVID-19 global pandemic, the Federal Trade Commission (FTC) has announced lower revised thresholds for the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR), which will become effective March 4, 2021. This is the first time that the thresholds will decrease since 2010. The thresholds determine whether parties involved in proposed mergers, consolidations, or other acquisitions of voting securities, assets or unincorporated interests must notify the FTC and the Antitrust Division of the Department of Justice (DOJ) of a proposed transaction and comply with a mandatory waiting period before the transaction may be consummated. Note that the current $94 million threshold is still in effect for transactions that will close before March 4, 2021.
HSR Thresholds Lower. Generally, a transaction will not be reportable under the new thresholds unless it is valued for HSR purposes at more than $92 million. If the value of the proposed transaction is greater than $92 million but not greater than $368 million, the transaction will not be reportable unless the “ultimate parents” of the acquiring and the acquired entities also meet a certain minimum “size-of-person” test—in most instances, where one ultimate parent (including all entities it controls) has net sales or total assets of at least $18.4 million and the other has net sales or total assets of at least $184 million. Where the jurisdictional tests are met, the transactions are reportable unless an exemption applies. The table below includes the original and the newly adjusted figures for each relevant HSR threshold (the original figure continues to appear in HSR regulations with the words “as adjusted” to remind the reader that the thresholds are adjusted each year). Parties should be mindful that there are many other factors that impact whether a given transaction is subject to the jurisdictional thresholds in addition to these dollar thresholds.
HSR Filing Fees. The filing fees for reportable transactions will be as follows:
- $45,000 - Transactions valued in excess of $92.0 million but less than $184.0 million.
- $125,000 - Transactions valued at or greater than $184.0 million but less than $919.9 million.
- $280,000 - Transactions valued at $919.9 million or more.
HSR Violations. Effective January 13, 2021, the maximum civil penalty for HSR Act violations increased from $43,280 to $43,792 per day. The new daily maximum civil penalty applies only to penalties assessed after the effective date, including those penalties whose associated violation predated January 13, 2021. The maximum civil penalty is not affected by the adjustments to the HSR filing thresholds.
Revised Thresholds for Interlocking Directorates. Section 8 of the Clayton Act generally prohibits companies that compete with each other from having interlocking memberships on their corporate boards of directors. The FTC annually revises the jurisdictional thresholds that trigger the interlocking directorate prohibition. The changes to the thresholds are based on the change in the gross national product and are effective as of January 21, 2021.
- Section 8(a)(1) of the Clayton Act prohibits a person from serving as a director or board-elected or board-appointed officer of two or more corporations if the combined capital, surplus, and undivided profits of each of the corporations exceeds $37,382,000.
- Section 8(a)(2)(A) of the Clayton Act exempts interlocks for which the competitive sales of either corporation are less than $3,738,200.
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