On January 13, 2006, the Federal Trade Commission ("FTC"), the agency charged with administering the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") and its filing requirements, approved the new annual HSR Act notification thresholds. The new thresholds, which are expected to be published in the Federal Register by late January 2006 and will become effective 30 days later, will be as follows:

  • The "size of transaction" threshold will increase from $53.1 million to $56.7 million. No HSR Act notification will be required if the value of voting securities and assets held as a result of the transaction is below this threshold.
  • The "size of parties" thresholds of $106.2 million in annual sales and $10.7 million in total assets will increase to $113.4 million and $11.3 million, respectively. For transactions valued at more than $56.7 million, no HSR Act notification will be required if the ultimate parent entities of one or both parties to the transaction do not satisfy the applicable size of parties thresholds.
  • Transactions valued at more than $226.8 million (previously $212.3 million) will be reportable regardless of the size of the parties, unless an HSR Act exemption applies.

The new HSR Act thresholds also apply to certain other thresholds and exemptions.

The new thresholds do not affect the HSR filing fees, but the applicable filing fee will be based on the new thresholds, as follows: $45,000 for transactions valued at less than $113.4 million; $125,000 for transactions valued from $113.4 million up to $567.0 million; and $280,000 for transactions valued at $567.0 million or more.

The HSR notification thresholds are adjusted annually to reflect changes in the U.S. gross national product. The new thresholds will remain in effect until the next annual adjustment, expected in the first quarter of 2007.

The FTC also published recently certain other changes to the HSR Act notification requirements.

  • Effective January 11, 2006, a party submitting an HSR notification may provide an Internet address linking directly to certain Securities and Exchange Commission filings and financial information, in lieu of providing paper copies of these filings, in response to Items 4(a) and 4(b) of the HSR form.
  • Effective January 30, 2006, a party submitting an HSR form must provide its fiscal year 2002 annual revenues as the "base year" (currently the notification requires parties to provide fiscal year 1997 revenues as the base year). Prior to the effective date of this change, a party may report either 1997 or 2002 revenues, so long as all parties submitting an HSR form provide revenues for the same base year period.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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