The US Federal Trade Commission recently announced increased thresholds for the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and for determining whether parties trigger the prohibition against interlocking directors under Section 8 of the Clayton Act.
Pursuant to the amendments passed by the US Congress in 2000, the FTC announced revised thresholds for HSR pre-merger notifications on January 19, 2017. These increased thresholds will become effective 30 days following publication in the Federal Register. These new thresholds apply to any transaction completed and any HSR pre-merger notifications filed on or after the effective date, expected in late February.
As many dealmakers doing business in Europe have realized, German and Austrian merger filing requirements are sometimes a bit tricky, and in some respects different from the rules in place at EU level and in other EU member states. For instance, it may be that a transaction has to be notified in one of these two countries although the transaction leads to a mere minority shareholding or one of the undertakings involved achieved (almost) no local turnover.
In this context, it should be noted that companies violating a filing obligation are subject to appreciable fines and run the risk that the closing acts of the transaction are null and void under civil law. Particularly after the recent Spar decision of the Austrian Supreme Cartel Court, which led to a tenfold increase of the fine originally imposed by the Austrian Cartel Court, it can be expected that the amount of fines for competition law breaches will generally increase in Austria. Against this background, it is worth noting some existing peculiarities and some new developments regarding the filing thresholds:
On January 17, 2014, 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 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 by late February. Once we know the precise effective date for these adjusted thresholds, we will publish an On The Subject that can be distributed to clients. Clients with transactions pending may benefit from the higher threshold if the transaction closes on or after the effective date and ultimately falls below the revised threshold.
Most notably, the size-of-transaction threshold, which frequently determines whether a transaction requires an HSR notification, will increase from $70.9 million to $75.9 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
2014 Adjusted Threshold
$10 million $15.2 million $50 million $75.9 million $100 million $151.7 million $110 million $166.9 million $200 million $303.4 million $500 million $758.6 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
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 $75.9 million or more, but less than $303.4 million, is generally reportable if one party has net sales or total assets of at least $10 million, as adjusted ($15.2 million upon the effective date of these revised thresholds), and the other party has net sales or total assets of at least $100 million, as adjusted ($151.7 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 $75.9 million, but less than $151.7 million $125,000 $151.7 million, but less than $758.6 million $280,000 $758.6 million or more
Again, these revised thresholds will become effective 30 days after publication of notice in the Federal Register.
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 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:
Interlocking Directorate Thresholds Adjustment
On January 27, 2012, the FTC published [...]
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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 millionGenerally, 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
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 moreAgain, these revised thresholds will become effective 30 days after publication of notice in the Federal Register.
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