On Jan. 23, 2023, the Federal Trade Commission (FTC) announced new premerger filing thresholds under the Hart-Scott-Rodino Act (HSR Act).
Under the HSR Act, parties to mergers clearing certain thresholds generally must notify the FTC and the Antitrust Division of the U.S. Department of Justice of the transaction and let a waiting period expire before closing.
The HSR Act directs the FTC to revise the filing thresholds each year in accordance with changes in the gross national product. The 2023 thresholds, which take effect 30 days after publication in the Federal Register, are as follows:
- $111.4 million for the size-of-transaction test. Under this test, a transaction is reportable only if the value of all voting securities, noncorporate interests and assets that will be held by the acquiring person as a result of the transaction exceed this threshold.
- $445.5 million for transactions to which the size-of-person test will not apply. This threshold ensures that the FTC receives notice of large mergers even when the parties themselves are not large enough to satisfy the size-of-person test. Thus, any transaction exceeding this size-of-transaction threshold is reportable unless an exemption applies.
- $22.3 million and $222.7 million for the size-of-person test. When the size of the transaction is below $445.5 million, this test looks to the value of the assets and/or annual revenues of both parties to a merger. A transaction satisfies this test when the value of the assets and/or annual revenues of one party exceeds the higher threshold and the value of the assets and/or annual revenues of the other party exceeds the lower threshold, subject to additional criteria set forth in the HSR rules. Unless an exemption applies, a transaction meeting the size-of-transaction test is reportable if it also satisfies the size-of-person test.
In its announcement, the FTC also announced new thresholds for filing fees. Those fees derive from the 2023 Merger Filing Fee Modernization Act. As described in a previous alert, that law modified the filing fee regime under the HSR Act. The new fees, which will take effect 30 days after publication in the Federal Register, are as follows:
- $30,000 for transactions valued at or above $111.4 million and less than $161.5 million
- $100,000 for transactions valued at or above $161.5 million and less than $500 million
- $250,000 for transactions valued at or above $500 million and less than $1 billion
- $400,000 for transactions valued at or above $1 billion and less than $2 billion
- $800,000 for transactions valued at or above $2 billion and less than $5 billion
- $2.25 million for transactions valued at or above $5 billion
The lawyers in McGuireWoods’ Antitrust, Trade & Commercial Litigation Department have substantial experience in mergers and acquisitions, and they can help you determine how these new rules will affect the reportability of any potential transaction under the HSR Act.