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FTC Adjusts Hart-Scott-Rodino Thresholds

March 13, 2012

Effective February 27, 2012, the Federal Trade Commission (“FTC”) revised the various dollar thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR”). Most notably, the minimum “size of the transaction” threshold was increased to $68.2 million (previously $66 million), while the “size of the parties” thresholds were increased to $136.4 million (previously $131.9 million) and $13.6 million (previously $13.2 million).

HSR requires parties to certain mergers and acquisitions in excess of the minimum size of transaction test to file notifications and obtain antitrust clearance from the FTC and the U.S. Department of Justice prior to consummating the transaction. Normally, the acquiring party and the acquired party are each required to submit separate filings. The regulators then have a 30-day period to analyze the potential anti-competitive impact of the transaction and to raise objections or seek additional information from the parties. The parties may, and often do, request early termination of this 30-day waiting period. If no additional information is requested and no objections are raised by the regulators during the 30-day waiting period (or, if requested, early termination of the waiting period is granted), the parties can proceed to close the transaction.

HSR can potentially apply to both stock/equity and asset acquisitions, including mergers or even tender offers. In order for HSR to apply to a particular transaction, the value of the stock/equity or assets acquired (which is usually determined by the purchase price) must be more than $68.2 million (the current “size of the transaction” threshold); acquisitions having a value of less than that minimum threshold are automatically exempt. For transactions valued over $68.2 million but less than $272.8 million, the current “size of the parties” test must also be satisfied for HSR to be applicable – this generally requires that the ultimate parent of one of the parties (either the acquiring party or the acquired party) and all entities it controls collectively have total assets or annual net sales of at least $136.4 million, while the other party must have total assets or annual net sales of at least $13.6 million. Where the size of the transaction is $272.8 million or higher, HSR applies regardless of the size of the parties.

Where filings are required, the filing fees (normally paid by the acquiring party) also depend on the size of the transaction:

 

Size of Transaction

 
Filing Fee
Over $68.2 million but less than
$136.4 million
$45,000
$136.4 million or more but less
than $682.1 million
$125,000
$682.1 million or more
$280,000

 

The thresholds described above are required to be adjusted annually by the FTC based on changes in the gross national product, and the adjustments are usually made in January or February of each year.

HSR and related regulations (which include detailed rules on such matters as how to calculate the size of the transaction and the size of the parties, aggregation of transactions, and exemptions from filing requirements) are fairly complex, and the preparation and content of the filings themselves can be a daunting task for someone who is not well-versed in the field. Furthermore, the HSR requirements can often have a significant impact on both the timing and structure of acquisition transactions. If you are, or anticipate being, involved in an acquisition transaction near or exceeding the $68.2 million minimum size of transaction threshold, we recommend that you contact one of our HSR practitioners to provide the guidance you will need to navigate the complicated and sometimes confusing HSR process.

For more information concerning HSR, please contact:

Aaron D. Bassan | Counsel | (973) 530-2038 | abassan@wolffsamson.com

Joseph Zawila | Counsel | (973) 530-2042 | jzawila@wolffsamson.com