On January 24, 2022, the Federal Trade Commission (FTC) announced that in 2022 the threshold for applying the size-of-parties test of the Hart-Scott-Rodino (HSR) Act will increase from $92 million to $101 million. Deals that exceed this $101 million threshold may need to be reported to the FTC and U.S. Department of Justice (DOJ) depending on the size of the parties to the transaction as measured by the volume of their sales or the value of their assets.
Generally, transactions in 2022 with a value greater than $403.9 million will be reportable under the HSR Act, regardless of the volume of sales or value of assets of the parties. Parties reporting transactions under the HSR Act must observe a 30-day waiting period after reporting the transaction before closing the deal. The HSR Act imposes these notification and waiting period requirements so that the FTC and DOJ can assess the potential competitive effects of proposed transactions before the deal is consummated. The new thresholds will apply to all transactions that close on or after February 23, 2022.
In a concurring statement to the FTC's action adopting these increases, FTC Commissioner Rebecca Kelly Slaughter, joined by FTC Chair Lina M. Khan, expressed support for congressional action "to increase merger filing fees for large transactions and to require annual adjustments to ensure that they keep pace with the ongoing merger wave and growth of the U.S. economy more broadly." The concurring statement also urged changes to the HSR review process more generally, arguing that "[t]he short 30-day window the agencies are given to determine whether a deal warrants close investigation and the 30-day timeline imposed on the agencies after parties certify they have 'substantially complied' with the inquiry have not kept pace with the increased volume and complexity of transactions and their related data and documents since passage of the HSR Act in 1976."
Under the Clayton Act, the FTC is required to adjust HSR thresholds annually based on changes in U.S. gross national product. Earlier this month, the FTC announced an upward adjustment to the maximum daily civil penalty for HSR violations. Unlike HSR thresholds, which are adjusted for change in gross national product, the maximum daily civil penalty is adjusted for changes in inflation. The new maximum daily civil penalty is $46,517.
When in doubt as to whether a transaction is reportable under the HSR Act, consult with antitrust counsel to be sure.
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