by Jon B. Dubrow, Joseph F. Winterscheid and Carla A. R. Hine

The U.S. Federal Trade Commission (FTC) recently announced revised thresholds for the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR) and 2012 thresholds for determining whether parties trigger the prohibition against interlocking directors under Section 8 of the Clayton Act.

Notification Threshold Adjustments

Pursuant to the amendments passed by the U.S. Congress in 2000, the FTC published revised thresholds for HSR pre-merger notifications in the Federal Register on January 27, 2012.  These revised thresholds will become effective on February 27, 2012.  Any transaction completed and any HSR pre-merger notifications filed on or after February 27, 2012, must comply with these new thresholds.

As required, the FTC adjusted the notification thresholds based on the change in the gross national product (GNP) for the fiscal year ending September 30, 2011.   Most notably, the base filing threshold of $50 million, which frequently determines whether a transaction requires filing of an HSR notification, will increase from $66.0 million to $68.2 million.  The changes also will affect other dollar-amount thresholds:

• The alternative statutory size-of-transaction test, which captures all transactions valued above $200 million regardless of the “size-of-persons,” will be adjusted to $272.8 million.
• The statutory size-of-person thresholds (applicable to transactions valued at less than $272.8 million, but more than $68.2 million) will increase from $13.2 million to $13.6 million and from $126.9 million to $131.9 million.

The adjustments will affect parties contemplating HSR notifications in various ways.   Parties may be relieved from the obligation to file a notification for transactions closed on or after February 27, 2012, that result in holdings below the adjusted base threshold.  For example, a transaction resulting in the acquiring person holding voting securities or assets valued at less than $68.2 million would not be reportable on or after the effective date.  The adjustments will also affect various exemptions under the HSR rules.  For example, acquisitions of foreign assets and voting securities of foreign issuers will now be exempt unless they generated U.S. sales in excess of $68.2 million or, in the case of foreign voting securities, the issuer has assets in the United States valued in excess of $68.2 million.

Parties may also realize a benefit of lower notification filing fees for transactions that just cross current thresholds.   Under the rules, the acquiring person must pay a filing fee, although the parties may allocate that fee amongst themselves.  Filing fees for HSR-reportable transactions will remain unchanged for now (although the FTC is pursuing filing fee increases).  However, the applicable filing fee tiers will shift upward as a result of the GNP-indexing adjustments:

• Transactions valued at or in excess of $68.2 million, but less than $136.4 million require a $45,000 filing fee.
• Transactions valued at or in excess of $136.4 million, but less than $682.1 million require a $125,000 filing fee.
• Transactions valued at or above $682.1 million require a $280,000 filing fee.

Interlocking Directorate Thresholds Adjustment

On January 27, 2012, the FTC published [...]

Continue Reading

by Carla A. R. Hine

Today, the Federal Trade Commission (FTC) announced revised, higher Hart-Scott-Rodino (HSR) pre-merger notification filing thresholds.  The FTC adjusts the HSR thresholds annually to represent the increase or decrease in gross national product (GNP).  These revised thresholds will become effective 30 days from the date on which notice is published in the Federal Register, which should occur within the next week.  As such, we expect that these new thresholds will become effective near the end of February.  

Most notably, the size-of-transaction threshold, which frequently determines whether a transaction requires an HSR notification, will increase from $66.0 million to $68.2 million.  Other thresholds will increase as well, including thresholds for the size-of-person test, filing fees and certain exemptions.  The revised thresholds are as follows:

Original Threshold 2012 Adjusted Threshold $10 million $13.6 million $50 million $68.2 million $100 million $136.4 million $110 million $150.1 million $200 million $272.8 million $500 million $682.1 million

Generally, a transaction requires an HSR notification if it meets the applicable size-of-transaction and/or the size-of-person tests, described briefly below, and does not fall within any exemptions.

A transaction meets the size-of-transaction test if as a result of the transaction the acquiring party holds assets, voting securities or a controlling interest in a non-corporate entity valued in excess of

• $50 million, as adjusted ($68.2 million upon the effective date of these revised thresholds), assuming the size-of-person test is met, or
• $200 million, as adjusted ($272.8 million upon the effective date of these revised thresholds) — this threshold applies to transactions even if the size-of-person test below is not met.

For the size-of-person test, upon the effective date of these revised thresholds, a transaction resulting in the acquiring party holding assets, voting securities or a controlling interest in a non-corporate entity valued at $68.2 million or more, but less than $272.8 million is generally reportable if one party has assets or sales of at least $10 million, as adjusted ($13.6 million upon the effective date of these revised thresholds), and the other party has assets or sales of at least $100 million, as adjusted ($136.4 million upon the effective date of these revised thresholds).

Although the filing fees for HSR notifications will not change at this time (although this is something currently under review), the thresholds (based upon the size-of-transaction) that determine the correct filing fee will also adjust:

Filing Fee Size-of-Transaction $45,000 $68.2 million, but less than $136.4 million $125,000 $136.4 million, but less than $682.1 million $280,000 $682.1 million or more

Again, these revised thresholds will become effective 30 days after publication of notice in the Federal Register.