The Federal Trade Commission (FTC) has announced revised
thresholds for merger notifications under the Hart-Scott-Rodino
(HSR) Act. Once effective, the lowest size-of-transaction filing
threshold (also known as the "$50 million threshold")
will increase from the current $68.2 million to $70.9 million. The
FTC is expected to publish a notice of the new thresholds in the
Federal Register in the next few days, and the thresholds will
become effective 30 days later (the "Effective Date").
Parties whose transaction will close on or after the Effective Date
will be subject to the revised thresholds.
The "$10 million" and "$100 million" amounts
applicable to the size-of-person threshold will increase to $14.2
million and $141.8 million, respectively. The size-of-person
threshold applies to transactions valued at less than $200 million
(as adjusted, $283.6 million) and is based on the total assets and
annual net sales of the ultimate parent entities (UPEs) of the
acquiring and acquired persons. In general, to be reportable, the
UPE of one party to the transaction needs to have annual net sales
or total assets of $10 million or more (as adjusted, $14.2 million)
and the UPE of the other party must have annual net sales or total
assets of $100 million or more (as adjusted, $141.8 million). There
are, however, several nuances and exceptions to the size-of-person
threshold that need to be examined separately for each
transaction.
The increased thresholds arise from amendments to the HSR Act in
2000 that require the FTC to adjust the thresholds annually for
change in the gross national product. All of the notification and
exemption dollar thresholds in the HSR statute, regulations and
reporting instructions that are subject to annual adjustments will
also be adjusted. The new HSR dollar thresholds will be as
follows:
Original Threshold |
2012 Threshold |
2013 Threshold |
$10 million |
$13.6 million |
$14.2 million |
$50 million |
$68.2 million |
$70.9 million |
$100 million |
$136.4 million |
$141.8 million |
$110 million |
$150.1 million |
$156.0 million |
$200 million |
$272.8 million |
$283.6 million |
$500 million |
$682.1 million |
$709.1 million |
$1 billion |
$1.3641 billion |
$1.4181 billion |
The FTC has also announced that it will be adjusting both dollar
thresholds for Section 8 of the Clayton Act to account for changes
in the gross national product. Section 8, in many circumstances,
forbids a person from serving as an officer or director of two
competing corporations if two thresholds are met. Under the revised
thresholds, effective when published in the Federal Register,
Section 8 may apply when each of the competing corporations has
capital, surplus and undivided profits aggregating more than
$28,883,000, and each corporation's competitive sales are at
least $2,888,300.
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.