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Volume XII, Number 148

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FTC Announces 2022 Thresholds for Merger Control Filings under HSR Act and Interlocking Directorates under the Clayton Act

The Federal Trade Commission (“FTC”) has increased the dollar jurisdictional thresholds necessary to trigger the reporting requirements in the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”); the revised thresholds will become effective on February 23, 2022. The FTC also increased the thresholds for interlocking directorates under Section 8 of the Clayton Act, effective as of January 24, 2022. The maximum civil penalty dollar amounts for HSR violations also were increased, effective January 10, 2022.

Revised HSR Thresholds

Under the HSR Act, parties involved in proposed mergers, acquisitions of voting securities, unincorporated interests or assets, or other business combinations (e.g., joint ventures, exclusive license deals) that meet certain thresholds must report the contemplated transactions to the FTC and the Antitrust Division of the U.S. Department of Justice (“DOJ”) unless an exemption applies.  The parties to a proposed transaction that requires notification under the HSR Act must observe a statutorily prescribed waiting period (generally 30 days) before closing.  Under the revised thresholds, transactions valued at $101 million or less are not reportable under the HSR Act. 

A transaction closing on or after the date the revised thresholds become effective may be reportable if it meets the following revised criteria:

Size-of-Transaction Test

The acquiring person will hold, as a result of the transaction, an aggregate total amount of voting securities, unincorporated interests, or assets of the acquired person valued in excess of $403.9 million;

or

The acquiring person will hold, as a result of the transaction, an aggregate total amount of voting securities, unincorporated interests, or assets of the acquired person valued in excess of $101 million but not more than $403.9 millionand the Size-of-Person thresholds below are met.

Size-of-Person
Test
One party (including the party’s ultimate parent entity and its controlled subsidiaries) has at least $202 million in total assets or annual sales, and the other has at least $20.2 million in total assets or annual sales. If the acquired party is not “engaged in manufacturing,” and is not controlled by an entity that is, then the test applied to the acquired side is annual sales of $202 million or total assets of $20.2 million.

The full list of the revised thresholds is as follows:

Original Threshold
2021 Threshold
2022 Revised Threshold
(Effective February 23, 2022)

$10 million $18.4 million $20.2 million
$50 million $92 million $101 million
$100 million $184 million $202 million
$110 million $202.4 million $222.2 million
$200 million $368 million $403.9 million
$500 million $919.9 million $1,009.8 million
$1 billion $1,839.8 million $2,019.6 million

The filing fees for reportable transactions have not changed, but the transaction value ranges to which they apply have been adjusted as follows:

Filing Fee Revised Size-of-Transaction Thresholds
$45,000 For transactions valued in excess of $101 million but less than $202 million
$125,000 For transactions valued at $202 million or greater but less than $1,009.8 million
$280,000 For transactions valued at $1,009.8 million or greater

Note that the HSR dollar thresholds are part of the analysis only to determine whether a particular transaction must be reported to the FTC and DOJ.  Failure to notify the FTC and DOJ under the HSR Act remains subject to a statutory penalty of up to $46,517 per day of noncompliance (up from $43,792 per day).   

Revised Thresholds for Interlocking Directorates

Section 8 of the Clayton Act prohibits one person from simultaneously serving as an officer or director of two corporations if: (1) the “interlocked” corporations each have combined capital, surplus, and undivided profits of more than $41,034,000 (up from $37,382,000); (2) each corporation is engaged in whole or in part in commerce; and (3) the corporations are “by virtue of their business and location of operation, competitors, so that the elimination of competition by agreement between them would constitute a violation of any of the antitrust laws.”1 

Section 8 provides several exemptions from the prohibition on interlocks for arrangements where the competitive overlaps “are too small to have competitive significance in the vast majority of situations.”2  After the revised thresholds take effect, a corporate interlock does not violate the statute if: (1) the competitive sales of either corporation are less than $4,103,400 (down from $3,738,200); (2) the competitive sales of either corporation are less than 2 percent of that corporation’s total sales; or (3) the competitive sales of each corporation are less than 4 percent of that corporation’s total sales. 

1    15 U.S.C. § 19(a)(1)(B).

2    S. Rep. No. 101-286, at 5-6 (1990), reprinted in 1990 U.S.C.C.A.N. 4100, 4103-04.

© Copyright 2022 Cadwalader, Wickersham & Taft LLPNational Law Review, Volume XII, Number 24
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About this Author

Joel Mitnick, Cadwalader Law Firm, New York, Finance and Litigation Law Attorney
Partner

Joel Mitnick is a partner in the Antitrust and Global Litigation groups. Joel’s practice focuses on antitrust matters on behalf of a wide array of financial market, life science, media, service industry and industrial clients. Joel represents clients in Federal and State antitrust investigations, antitrust class actions and merger clearance proceedings. He has tried merger cases to verdict and briefed antitrust class actions up to the United States Supreme Court. Joel also counsels some of the nation’s most prominent activist and passive hedge funds and private equity...

212-504-6555
Ngoc Pham Hulbig, Cadwalader, coordinated competition filing attorney, high stakes transactions lawyer
Counsel

Ngoc Pham Hulbig's practice focuses on counseling regarding U.S. and global premerger notification requirements. She has extensive experience in preparing filings under the Hart-Scott-Rodino Act and has coordinated competition filings around the world for complex and high-stakes transactions. She also counsels clients in the full range of antitrust matters, including mergers and acquisitions, joint ventures, and in connection with investigations by the U.S. Department of Justice and the U.S. Federal Trade Commission. Ngoc has experience representing clients in matters...

704-348-5282
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