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FTC Announces Increased HSR and Interlocking Directorate Thresholds

Corporate & Business Law Alert
February 2, 2018

1.  HSR Act Thresholds

            The Federal Trade Commission (FTC) recently announced the revised transaction thresholds that trigger the requirement to file a premerger notification and report form under the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act). The FTC revises the thresholds annually based on changes in the gross national product. The new thresholds are effective for transactions closing on or after February 28, 2018. 

            With these recent adjustments to the HSR thresholds, the parties to a transaction must file an HSR notification if a deal meets one of two tests:

  • The total value of a proposed transaction exceeds $337.6 millionor
  • The total value of a proposed transaction exceeds $84.4 millionand one party has at least $16.9 million in total assets or annual sales, and the other party has at least $168.8 million in total assets or annual sales. 

            The HSR Act requires parties engaged in certain transactions (including certain mergers, acquisitions, asset sales, joint ventures, and exclusive license deals) to file a notification and report form to both the FTC and Department of Justice, Antitrust Division (DOJ) prior to closing. Reportable transactions cannot be consummated until after a designated period of time (usually 30 days). Although there are certain exemptions to the HSR filing requirements, the $84.4 million threshold is a key threshold to keep in mind. Any transaction that falls below that threshold is exempt from the filing requirements. However, transactions falling below the HSR Act threshold are not immune from antitrust scrutiny, and can be challenged by relevant authorities before or after the transaction closes.

            The filing fees under the HSR Act remain the same, but with the following adjusted transaction value thresholds:

Value of Transaction

Filing Fee

More than $84.4 million, but less than $168.8 million

$45,000

   

$168.8 million or greater, but less than $843.9 million

$125,000

   

$843.9 million or greater

$280,000



2. Interlocking Directorate Thresholds

            The FTC announced revised thresholds for the prohibition on interlocking directorates under Section 8 of the Clayton Antitrust Act of 1914 (the Clayton Act). Under the revised thresholds, which became effective on January 29, 2018, a single person cannot serve as an officer or director of two competing corporations if each corporation has capital, surplus, and undivided profits in excess of $34,395,000. This prohibition does not apply if the competitive sales of either corporation is less than (a) $3,439,500, or (b) 2% of such corporation’s total sales, or the competitive sales of both corporations are under 4% of that corporation’s total sales. The terms competitive sales and total sales have specific meanings pursuant to the Clayton Act.  

If you have any questions relating to the HSR Act, the Clayton Act, or other antitrust issues, please contact Valerie Stevens (646-218-7614; vstevens@hodgsonruss.com) or Nicholas Hoffman (716-848-1258; nhoffman@hodgsonruss.com).