On January 22, 2024, the Federal Trade Commission ("FTC") announced annual revisions for premerger filings required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"). The HSR Act generally requires parties to transactions—e.g., mergers, joint ventures, acquisitions of assets or voting securities—that meet certain thresholds to file premerger notifications with both the FTC and the United States Department of Justice ("DOJ"), and observe a statutory waiting period prior to closing. The new minimum size-of-transaction notification threshold will increase to $119.5 million. The FTC revises the notification thresholds annually based on changes in the gross national product ("GNP"). The newly announced thresholds will apply to transactions closing on or after March 6, 2024. The FTC also announced changes to HSR filing fees.
Size-of-Transaction Thresholds
For 2024, the minimum size-of-transaction notification threshold will increase. Unless otherwise exempted, acquisitions that will result in the acquiring person holding more than $119.5 million of the acquired person's voting securities, assets, or non-corporate interests, will require an HSR filing (assuming the size-of-person thresholds are also met).
| 2023 Minimum Threshold | 2024 Minimum Threshold |
| $111.4 million | $119.5 million |
A proposed transaction that satisfies the size-of-transaction test may require an HSR notification if the size-of-person test (discussed below) is also met and no exemptions apply.
Size-of-Person Thresholds
For 2024, the size-of-person notification thresholds will increase as follows:
| 2023 Threshold | 2024 Threshold |
| $22.3 million | $23.9 million |
| $222.7 million | $239 million |
The size-of-person test will be met if one party to the proposed
transaction has assets or annual net sales totaling $239 million or
more and the other party to the proposed transaction has assets or
annual net sales totaling $23.9 million or more. The size-of-person
test need not be met, however, if the total value of the proposed
transaction exceeds $478 million (this is an increase from the 2023
threshold of $445.5 million).
Filing Fees and Penalties
The HSR filing fees for 2024, which will apply to transactions filed on or after March 6, 2024, will be as follows:
| Size-of-Transaction Threshold | Updated Filing Fee |
|---|---|
| $119.5 million or greater but less than $173.3 million | $30,000 |
| $173.3 million or greater but less than $536.5 million | $105,000 |
| $536.5 million or greater but less than $1.073 billion | $260,000 |
| $1.073 billion or greater but less than $2.146 billion | $415,000 |
| $2.146 billion or greater but less than $5.365 billion | $830,000 |
| $5.365 billion or greater | $2,330,000 |
The FTC also announced that the maximum civil penalties for failure to comply with the notification and waiting period requirements of the HSR Act will increase from $50,120 to $51,744 per each day of non-compliance. These new penalties took effect on January 10, 2024, and apply regardless of when the underlying infraction took place.
Conclusion
Determining whether an HSR notification is required in connection with a transaction can be complicated, and requires an in-depth understanding of the HSR Act, the implementing regulations, and the applicable exemptions.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
