On February 15, 2019, the Federal Trade Commission ("FTC") announced an increase in the thresholds that determine whether companies must notify federal antitrust authorities under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and its rules and regulations ("HSR Act"), before consummating a transaction. The HSR Act requires the FTC to revise these jurisdictional thresholds annually based upon the change in gross national product. The HSR Act requires companies of a certain size involved in a transaction that exceeds the reportability thresholds to file a pre-merger notification with the FTC and Department of Justice and observe a waiting period unless an exemption applies.
For 2019, the HSR Act reporting thresholds will increase by approximately 6.6% from 2018. The HSR "size of transaction" threshold will increase from $84.4 million to $90 million. Transactions in which the acquiring party will hold voting securities, non-corporate interests, or assets valued above $90 million (as determined under the HSR Act's rules and regulations) may require a pre-merger notification if the "size of parties" test is also satisfied and no HSR Act exemptions are applicable.
The HSR "size of parties" thresholds will also increase. The "size of parties" test generally requires that one party to the transaction has annual net sales or total assets of $180 million or more (up from $168.8 million), and that the other party has annual net sales or total assets of $18 million or more (up from $16.9 million). For transactions valued at more than $90 million, but less than $359.9 million, no HSR Act pre-merger notification will be required if the "ultimate parent entities" of one or both parties to the transaction do not satisfy these "size of parties" thresholds.
Transactions valued at $359.9 million or more (up from $337.6 million) will be subject to pre-merger notification requirements under the HSR Act without regard to any "size of parties" thresholds, unless an HSR Act exemption applies. Certain thresholds relevant to exemptions under the HSR Act will also increase.
The new HSR Act thresholds will apply to all transactions that close on or after the effective date, which is expected to be in approximately mid-March (or 30 days after the new thresholds are published in the Federal Register).
While the new reportability thresholds do not change the amount of the HSR Act filing fees, the applicable filing fee for a transaction will be based on the new thresholds, and are as follows:
A $45,000 filing fee for transactions valued at $90 million or more but less than $180 million;
A $125,000 filing fee for transactions valued at $180 million or more but less than $899.8 million; and
A $280,000 filing fee for transactions valued at $899.8 million or more.
Separately, the FTC announced that the civil penalty amount for violations of the HSR Act will increase to $42,530 per day (up from $41,484).