On January 23, the Federal Trade Commission (FTC) announced that the 2023 threshold for applying the size-of-parties test of the Hart-Scott-Rodino (HSR) Act will increase from $101 million to $111.4 million. Deals that exceed this $111.4 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 2023 with a value greater than $445.5 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. Under the Clayton Act, the FTC is required to adjust HSR thresholds annually based on changes in U.S. gross national product (GNP). The new thresholds will go into effect 30 days after their publication in the Federal Register, which is expected this week.
The FTC also announced its approval of publication of the Federal Register notice announcing the new six-tier structure of HSR filing fees pursuant to the Merger Filing Fee Modernization Act of 2022. Filing fees for the new lowest size of transaction threshold will decrease, while filing fees for transactions valued at $1 billion or more will increase significantly.
|
Size (Value) of Transaction |
Filing Fee |
|
< $161.5 million |
$30,000 |
|
$161.5 million to < $500 million |
$100,000 |
|
$500 million to < $1 billion |
$250,000 |
|
$1 billion to < $2 billion |
$400,000 |
|
$2 billion to < $5 billion |
$800,000 |
|
? $5 billion |
$2.25 million |
Beginning in fiscal year 2024, filing tiers will be adjusted annually to reflect changes in the GNP for the previous year. Filing fees will be increased annually if the percentage increase in the consumer price index, as determined by the Department of Labor, is greater than one percent. The FTC expects to publish the adjusted amounts as soon as practicable each year, but no later than January 31. Like the new size of transaction thresholds, the new six-tiered structure and associated fees will go into effect 30 days after publication in the Federal Register.
In January, the FTC announced an upward adjustment to the maximum daily civil penalty for HSR violations. Unlike HSR size of transaction thresholds, which are adjusted for change in GNP, the maximum daily civil penalty is adjusted for changes in inflation. The new maximum daily civil penalty, effective January 11, 2023, is $50,120.
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