New HSR Thresholds Announced for 2020
By Michael Wise
Effective in February, the mandatory notification thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), will increase, including an increase to the Size of Transaction threshold from its current $90 million to $94 million. The increased thresholds officially become effective 30 days after publication in the Federal Register and will apply to all transactions that close on or after February 27, 2020.
Background: The Hart-Scott-Rodino Antitrust Improvements Act of 1976
The HSR Act provides that, where certain jurisdictional thresholds are met, parties intending to merge or make acquisitions must (absent any applicable exemptions) furnish the Premerger Notification Office of the FTC and the Antitrust Division of the Department of Justice with prescribed information regarding their respective businesses and the proposed transaction, and wait a specified period of time before consummating the transaction. The statutory “waiting period” stays consummation of the transaction for a minimum of 30 days (15 days in the case of bankruptcy or cash tender offers), absent a grant of early termination.
Revised Notification Thresholds
The 2000 amendments to Section 7A of the Clayton Act mandate annual adjustments of the HSR Act thresholds each year, based on changes in the gross national product. The revised jurisdictional and filing fee thresholds for this year increase the dollar amount limits for the size of transaction and the size of person at which parties to a transaction are required to make an HSR filing, as well as the filing fee thresholds. Many of the other filing requirements related to dollar amounts in the HSR Act have similarly been increased to remain consistent with the revised jurisdictional and filing fee thresholds.
An overview of the updated thresholds for the most common HSR filing issues is included below.
New Jurisdictional Thresholds
|Revised 2020 Thresholds||2019 Thresholds|
|Size of Transaction Test
||The Acquiring Person will
hold, as a result of the transaction, an aggregate total amount of voting
securities, assets and/or interests in non-corporate entities of the Acquired
Person valued at in excess of $94 million.
|Size of Person Test||Transactions valued at more
than $376 million are
reportable, regardless of the size of person test above.
One party has annual net sales or total assets of $188 million or more, and the
other party has annual net sales or total assets of $18.8 million or more.*
|Subsequent Acquisitions of Voting Securities
||Voting securities valued at
$188 million or more;
Voting securities valued at
$940.1 million or more;
constituting 25% of the issuer’s securities if valued at more than $1,880.2 million; and
constituting 50% of the issuer’s securities if valued at more than $94 million.
Where the target is not engaged in manufacturing, it must have total assets of $18.8 million or annual net sales of $188 million to satisfy the lower Size of Person threshold.
New Filing Fee Thresholds
|Filing Fee||Revised 2020 Filing Fee Thresholds||2019 Thresholds|
||Transactions valued at
more than $94 million but
less than $188 million.
|$125,000||Transactions valued at $188 million or more but less than
||Transactions valued at more
than $940.1 million.