March 23, 2023

Volume XIII, Number 82


March 23, 2023

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The New Hart-Scott-Rodino Magic Number is $111.4 million, and Big Changes in HSR Filing Fees

The Hart-Scott-Rodino Act (“HSR”) requires that transactions over a certain value be reported to the Federal Trade Commission (FTC) and U.S. Department of Justice Antitrust Division at least 30 days prior to closing. That reporting threshold is revised annually based on U.S. gross national product. Effective February 27, 2023, the new threshold to keep in mind is $111.4 million (up from $101 million in 2022).  You should consult antitrust counsel if you are acquiring or selling voting securities, non-corporate interests in a business (such as interests in an LLC or partnership), or assets valued over $111.4 million.

The fees for making HSR filings have also changed this year. The Merger Filing Fee Modernization Act of 2022 dramatically increased filing fees for larger transactions but lowered the fees for some smaller transactions. The following fees are also effective February 27, 2023:

More guidance on the Merger Filing Fee Modernization Act is available here.

When determining whether an HSR filing is necessary, the following questions usually must be addressed:

What is the value of the transaction?  

The HSR rules are complex, and many times, whether the size-of-the-transaction threshold is met depends on the details of the transaction’s structure and whether any HSR exemptions apply.
If the transaction exceeds the $111.4 million threshold, are the parties large enough?  
If the transaction is valued at or above $111.4 million but less than $445.5 million, then the size of the parties is considered. If one party to the deal (and all of that party’s parents, affiliates and subsidiaries) has sales or assets over $222.7 million dollars, and if the other party has sales or assets over $22.3 million, then the transaction might be reportable. All non-exempt transactions valued over $445.5 million are reportable, regardless of the size of the parties. 

Do any exemptions apply?  

The HSR rules contain several exemptions which can reduce the transaction value or eliminate the obligation to make a filing altogether. For instance, the HSR rules do not apply to certain acquisitions of non-U.S. entities or assets, acquisitions made solely for the purpose of investment, or certain real estate acquisitions.  

The last and perhaps most critical question is:

What will the FTC or Antitrust Division do after the filing is made?  

The filing triggers a 30-day waiting period during which the parties cannot close the transaction. The waiting period allows the Agencies to review whether the transaction could harm or diminish competition in the market for any particular product or service. If the parties compete or operate in the same market or industry, antitrust counsel should be consulted early in the process to determine how the transaction might affect competition and the likelihood that the Agencies may oppose or challenge the transaction.    

Ignoring the HSR threshold can be costly. Failure to file a required HSR notification can draw penalties of over $45,000 for each day of noncompliance. Keep the number $111.4 million in mind as you negotiate and structure any transaction in 2023. 

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume XIII, Number 32

About this Author

Matthew Hans, Polsinelli Law Firm, St. Louis, Antitrust and Commercial Litigation Attorney

Matthew Hans enjoys solving tough problems. He serves clients by eliminating the obstacles preventing them from achieving their business goals. He uses his broad experience in antitrust law to help clients avoid problems in numerous competition issues including mergers, joint ventures, restraints of trade, exclusive dealer relationships, and other collaborations among competitors. Matthew also guides clients through the Hart-Scott-Rodino notification process and represents clients during Federal Trade Commission and Department of Justice investigations.

Herbert F. Allen, Polsinelli, Antitrust Litigation Lawyer, Complex Healthcare Compliance Attorney

Herb Allen finds inspiration helping clients tackle complex antitrust and litigation problems, both in the courtroom and before government enforcement agencies. He brings the perspective of a journalist to his practice, having worked for several years on the editorial staff of The New Yorker magazine. His experience includes:

  • Litigating complex antitrust and commercial ligation matters in a variety of industries, including pharmaceuticals and college athletics.

  • Defending proposed and...

Arindam Kar St. Louis Antitrust Attorney Polsinelli Law Firm

Arindam Kar’s practice encompasses antitrust compliance, counseling, government investigations, and counseling higher education institutions. Arindam partners with clients in the development and implementation of robust antitrust compliance programs. Arindam also works with clients on antitrust audits, including the implementation of recommendations in a cost-effective manner to strengthen the client’s compliance and risk management profiles. Arindam has extensive experience with day-to-day counseling in addition to advising on complex global mergers, acquisitions, joint...

Mitchell D. Raup, Polsinelli, Merger Transactions Lawyer, Complex Antitrust Attorney

Mitchell Raup, vice-chair of Polsinelli’s Antitrust practice, has 30 years’ experience solving the most difficult antitrust problems. He has been lead antitrust counsel on dozens of health care M&A transactions involving hospitals, physician groups, provider networks, health insurers, pharmaceuticals, dialysis clinics, and group purchasing organizations. He regularly represents businesses and witnesses in antitrust investigations by the Federal Trade Commission, the Antitrust Division of the Department of Justice, and state attorneys general.