October 25, 2021

Volume XI, Number 298

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October 25, 2021

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HSR Considerations For Chinese Investors In U.S. Companies

When Chinese investors are considering US targets, it is important to keep in mind the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”). For deals meeting certain thresholds, the HSR Act requires the parties to submit HSR filings to FTC and DOJ, pay a filing fee, and wait 30 days before closing. The purpose of this is to permit FTC and DOJ to investigate the potential antitrust and competition issues before the transaction closes. Failure to make a filing and/or observe the 30-day waiting period can have severe consequences. Currently, the maximum civil penalty for noncompliance is $43,792 per day.

当中国投资者考虑美国投资目标时,需注意1976年《哈特-斯科特-罗迪诺反垄断改进法案》(“HSR法案”)的各项要求。对于那些符合特定标准的交易,HSR法案要求各方向联邦贸易委员会和司法部提交HSR申报材料、支付申报费,并在交割前等待30天。如此安排的目的是使得联邦贸易委员会和司法部能在交易交割前调查潜在的反垄断和竞争问题。不进行申报或不遵守30天的等待期将会产生严重后果。目前对不遵守规定者最高可处每天43792美元的民事罚款。

In general, an HSR filing is required when a transaction meets the “size of transaction” and “size of persons” tests. The thresholds for these tests change annually. Currently, only deals valued at $92 million or more meet the size of transaction test; deals valued at less than $92 million are not reportable. For deals valued at $92 million or more, but less than $368 million, the size of persons test must also be satisfied. In general, this means that the ultimate parent entity of one party to the deal has at least $184 million in assets or annual sales, and the ultimate parent of the other party has at least $18.4 million in assets or annual sales. For deals valued at $368 million or more, the size of persons test does not apply.

一般而言,当一项交易符合“交易规模”和“参与方规模”要件时,就必须进行HSR申报。这两项标准的具体数值每年都在变化。目前,只有交易价值达到9200万美元或以上的交易符合“交易规模”要件的要求;价值低于9200万美元的交易则不需要申报。交易价值达9200万美元或以上但低于3.68亿美元的交易,则还须满足“参与方规模”要件的要求。一般来说,这意味着交易一方的最终母公司至少拥有1.84亿美元的资产或年销售额,同时交易另一方的最终母公司至少拥有1840万美元的资产或年销售额。对于交易价值达到3.86亿美元或以上的的交易,“参与方规模”要件则不适用。

The HSR landscape is changing rapidly. There have been more HSR filings this year than ever before, and the government is struggling to keep up. This year, there have been several important HSR developments, including:

HSR法案的具体适用正在迅速变化。今年的HSR申报数量比以往任何时候都多,政府正在努力适应。今年,HSR法案有几个重要的发展,包括:

  1. Suspension of early termination program. In February 2021, the FTC and DOJ suspended the “early termination” program, which has not been resumed. Previously, parties could request that the antitrust agencies terminate the HSR waiting period in less than 30 days, and the antitrust agencies had the discretion to grant “early termination” to deals posing no competitive concerns.

暂停“提前终止”程序。2021年2月,联邦贸易委员会和司法部暂停了“提前终止”程序,至今尚未恢复。此前,交易各方可以要求反垄断执法机关在不到30天内终止HSR审查等待期,反垄断执法机关有权酌情“提前终止”不具影响竞争效果的交易的等待期。

  1. FTC begins issuing close-at-your-own-risk letters. In August 2021, the FTC announced that when it runs out of time to fully investigate a deal before the end of the HSR waiting period, it may issue a letter informing the parties that the FTC may continue to investigate the deal after closing, and if the parties choose to close, they do so “at their own risk.”

联邦贸易委员会开始发布“自担风险交割”函。2021年8月,联邦贸易委员会宣布,当它在HSR审查等待期结束前尚未全面调查该项交易时,它可能会发信通知交易各方:联邦贸易委员会可能会在审查等待期结束后继续调查该交易,如交易各方决定进行交割,则它们将“自担风险”。

  1. Payoff of debt benefitting a selling shareholder must now be included in size of transaction. In August 2021, the FTC announced that the payoff of debt should be included in the HSR size of transaction where a selling shareholder benefits from the payoff of debt.

现在必须将有利于卖方股东的债务清偿计入交易规模。2021年8月,联邦贸易委员会宣布,如果发生债务清偿且卖方股东从该债务清偿中受益,则该笔债务清偿应当计入HSR审查的交易规模要件。

  1. FTC study of 10 years of unreported big tech deals indicates additional HSR changes may be coming. In September 2021, the FTC announced the results of a study of over 600 unreported big tech deals from 2010 to 2019, and FTC commissioners commented on the need to close “loopholes” in the HSR rules.

联邦贸易委员会对过去10年未申报的大型科技交易有关的调查表明,HSR审查可能将会出现更多的变化。2021年9月,联邦贸易委员会公布了对2010年至2019年间600多宗未申报的大型科技交易的调查结果,联邦贸易委员会主席评论说有必要填补HSR审查规则的“漏洞”。

  1. FTC continues to enforce HSR rules against individual shareholders.  In September 2021, the FTC assessed a civil penalty of $637,950 against CEO for failing to file an HSR form before acquiring stock in his company through the vesting of performance stock units, serving as an important reminder to executives and individual shareholders that HSR requirements apply to them as well.

联邦贸易委员会将继续对个人股东HSR审查规则的执法。2021年9月,联邦贸易委员会就公司的首席执行官通过绩效期权成熟从而购买其所在公司的股票前却未提交HSR申报的事实,判处637,950美元的民事罚款。这给广大高管和个人股东们敲响了警钟:HSR审查要求对于他们也一样适用。

Copyright © 2021, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XI, Number 285
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About this Author

Michael Zhang, Intellectual Property, Antitrust, Attorney, Sheppard Mullin, law
Associate

Michael Zhang is an associate in the Corporate Practice Group, Antitrust Practice Group and the Intellectual Property Practice Group in the firm's Shanghai office.  He has a deep understanding of China’s legal system and business practices. 

Mr. Zhang has broad experience in the areas of corporate law, antitrust law and intellectual property law in China.

He has represented many U.S. and European clients in a wide range of industries with respect to their mergers and acquisitions, joint venture projects and operations...

86.21.2321.6000
Leo Caseria Antitrust & Competition Attorney Sheppard Mullin Washington, DC
Partner

Leo Caseria is a partner in the Antitrust and Competition Practice Group in the Washington, D.C. and Los Angeles offices. 

Areas of Practice

Leo advises companies on antitrust issues in civil litigation, government investigations, mergers and acquisitions and proposed or contemplated business strategies. He has litigated numerous antitrust cases in federal and state courts, including cases based on alleged price-fixing, market allocation, boycott, monopolization and attempted monopolization.  He also has experience in consumer protection issues relating to...

202-747-1925
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