August 4, 2021

Volume XI, Number 216

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August 03, 2021

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August 02, 2021

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Lower Filing Thresholds for HSR Act Premerger Notifications and Interlocking Directorates Announced

Lower Thresholds For HSR Filings

On February 1st, 2021, the Federal Trade Commission announced revised, lower thresholds for premerger filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The filing thresholds are revised annually, based on the change in Gross National Product (GNP) and had not been lowered since 2010.

The new thresholds will become effective on March 4, 2021. Acquisitions that close on or after the effective date will be subject to the new thresholds.

The HSR Act notification requirements apply to transactions that satisfy the specified “size of transaction” and “size of person” thresholds. The key adjusted thresholds are summarized in the following chart:

   

Size of Transaction Test

Notification is required if

  • the acquiring person will hold certain assets, voting securities, and/or interests in non-corporate entities valued at more than $92 million AND the parties meet the Size of Person test; OR

  • the acquiring person will hold certain assets, voting securities, and/or interests in non-corporate entities valued at more than $368 million – such transactions are not subject to the Size of Person test.

Size of Person Test

Generally, one “person” to the transaction must have at least $184 million in total assets or annual net sales, and the other must have at least $18.4 million in total assets or annual net sales.

   

The above rules are general guidelines only and their application may vary depending on the particular transaction.While the filing thresholds have changed, the filing fees have not, and will be based on the new thresholds as follows: $45,000 for transactions valued at more than $92 million but less than $184 million; $125,000 for transactions valued at more than $184 million but less than $919.9 million; and $280,000 for transactions valued at more than $919.9 million.

Lower Thresholds For the Prohibition Against Interlocking Directorates

Lower thresholds for the prohibition in Section 8 of the Clayton Act against interlocking directorates became effective on January 21, 2021. Section 8 prohibits, with certain exceptions, one person from serving as a director or officer of two competing corporations if two thresholds are met. Applying the new thresholds, competitor corporations are covered by Section 8 if each one has capital, surplus and undivided profits aggregating to more than $37,382,000, with the exception that the interlock is not prohibited if the competitive sales of either corporation are less than $3,738,200.

Copyright © 2021, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XI, Number 33
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About this Author

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
Malika Levarlet, Attorney, Sheppard Mullin, Corporate Practice, mergers
Associate

Ms. Malika Levarlet is an associate in the Corporate Practice Group in the firm's Washington, D.C. office.

Areas of Practice

Ms. Levarlet's practice focuses on advising international and domestic companies in connection with mergers and acquisitions, cross-border transactions (with a focus on U.S. and European companies), joint ventures, licensing agreements, and corporate governance. She represents clients operating in a wide range of industries including technology, hospitality, fashion and apparel, healthcare, financial services, and aerospace and defense...

202-772-5331
Robert Magielnicki, Legal Specialist, Sheppard Mullin,Antitrust,Trade Regulation
Partner

Robert L. Magielnicki is a partner in the Antitrust and Trade Regulation Practice Group.  He has a multi-disciplinary practice and engages in a diverse commercial practice with emphasis on antitrust, domestic and international business transactions, and complex civil and criminal litigation.

Areas of Practice

Mr. Magielnicki has more than 40 years of experience in the fields of antitrust and trade regulation, and business law, both domestically and internationally, including having served as General Electric Company's Associate Litigation and Antitrust...

202.218.0002
Bevin M.B. Newman Antitrust Lawyer Sheppard Mullin Law Firm
Partner

Bevin Newman is a partner in the Antitrust and Competition Practice Group in the firm's Washington, D.C. office.

Areas of Practice

Bevin is a strategic adviser to clients in cutting edge affiliations and collaborative arrangements. She focuses much of her practice in the healthcare industry bringing over twenty years of experience advising and defending globally renowned health systems, academic medical centers, providers, payers, and pharmaceuticals companies undertaking significant transactions, including mergers and acquisitions, joint ventures,...

202-747-1940
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