FTC Provides 2019 Thresholds For Merger Control Filings

The Federal Trade Commission ("FTC") provided its annual revisions to the dollar jurisdictional thresholds in the Hart-Scott-Rodino Antitrust Improvements Act ("HSR Act"). The changes increase the dollar thresholds necessary to trigger the HSR Act's premerger notification reporting requirements. The revised thresholds become effective 30 days following their publication in the Federal Register.

In addition, the FTC increased the thresholds for interlocking directorates under Clayton Act Section 8; the revised thresholds for interlocking directorates are effective immediately upon their publication in the Federal Register.

HSR Act. As described more fully in a Cadwalader memorandum, under the HSR Act, parties in proposed mergers, the acquisitions of voting securities, unincorporated interests or assets, or other business combinations that meet certain thresholds are obligated to report the contemplated transactions to the FTC and the Antitrust Division of the DOJ, provided that no exemption applies. Under the revised thresholds, Cadwalader attorneys noted, transactions valued at $90 million or less are not reportable under the HSR Act. Unless an exemption applies, a transaction is reportable if:

• the transaction is valued at more than $90 million but not more than $359.9 million, and one party (including the party's ultimate parent entity and controlled entities) to the transaction has at least $180 million in total assets or annual sales and the other party has at least $18 million in total assets or annual sales (if the acquired party is not "engaged in manufacturing," or controlled by an entity that is, then the test applied to the acquired side is annual sales of $180 million or total assets of $18 million); or

• the transaction is valued at more than $359.9 million, regardless of the size of the parties involved.

Interlocking Directorates. After the revised thresholds become effective, Clayton Act Section 8 bars one person from simultaneously serving as the officer or director of two corporations if:

• the "interlocked" corporations each have combined capital, surplus and undivided profits of over $36,564,000;
• each corporation is engaged in commerce; and
• the corporations are, "by virtue of their business and location of operation, competitors, so that the elimination of competition by agreement between them would constitute a violation of any of the antitrust laws."

Clayton Act Section 8 provides exemptions from the prohibition on interlocks for arrangements where the competitive overlaps "are too small to have competitive significance in the vast majority of situations." Cadwalader attorneys state that a corporate interlock does not violate the statute if (i) the competitive sales of either corporation are less than $3,656,400, (ii) the competitive sales of either corporation are less than 2 percent of that corporation's total sales, or (iii) the competitive sales of each corporation are less than 4 percent of that corporation's total sales.

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