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Volume XII, Number 148

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Revised Jurisdictional Thresholds Under HSR Act and for Prohibition of Interlocking Directorates

On Jan. 24, the Federal Trade Commission (FTC) published a notice in the Federal Register revising the premerger notification thresholds for mergers and acquisitions under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (HSR Act). Also on Jan. 24, the FTC published revisions to the thresholds that trigger, under Section 8 of the Clayton Act, a prohibition preventing companies from having interlocking memberships on their corporate boards of directors. These revisions represent the annual adjustment of thresholds based upon changes in the gross national product (GNP).

Congress amended the HSR Act in 2000 to require the annual adjustment of notification thresholds based on the change in GNP.

Revised HSR Act Thresholds

The initial threshold for a notification under the HSR Act will increase from $92 million to $101 million. For transactions valued between $101 million and $403.9 million (increased from $368 million), the size of the person test will continue to apply. That test will make the transaction reportable generally only where one party has sales or assets of at least $202 million (increased from $184 million), and the other party has sales or assets of at least $20.2 million (increased from $20.2 million). All transactions valued in excess of $368 million are reportable without regard to the size of the parties. The new thresholds will apply to any transaction that will close on or after Feb. 23, 2022.

The following is a summary chart of the threshold adjustments:
 

PRIOR THRESHOLD REVISED THRESHOLD

 

Size of the transaction test

in excess of $92 million in excess of $101 million
(filing fee remains $45,000)
 
Size of the person test
 
$18.4 million/$184 million $20.2 million/$202 million
 
Transaction value above which size of the person test is inapplicable
 
$368 million $403.9 million

In addition to adjusting downward the initial threshold for HSR notification, the amendments will adjust all subsequent notification thresholds as follows: 

NOTIFICATION LEVELS
 
in excess of $50 million in excess of $101 million
(filing fee remains $45,000)
$100 million $202 million
(filing fee remains $125,000)
$500 million $1,009.8 million
(filing fee remains $280,000)
25% of total outstanding shares worth
more than $1 billion
25% of total outstanding shares worth
more than $2,019.6 million
50% of total outstanding shares worth
more than $50 million
50% of total outstanding shares worth
more than $101 million

These notification threshold adjustments also adjust upward thresholds applicable to certain exemptions, such as those involving the acquisition of foreign assets or voting securities of foreign issuers.

Revised Section 8 Thresholds

The FTC also published revisions to the thresholds that trigger a prohibition preventing companies from having interlocking memberships on their corporate boards of directors under Section 8 of the Clayton Act. These revised thresholds are effective as of Jan. 24, 2022.

Section 8 prohibits a “person,” which can include a corporation and its representatives, from serving as a director or officer of two “competing” corporations, unless one of the following exemptions applies:

  • either corporation has capital, surplus, and undivided profits of less than $41,034,000 (increased from $37,382,000);

  • the competitive sales of either corporation are less than $4,103,400 (increased from $3,738,200);

  • the competitive sales of either corporation amount to less than 2% of that corporation’s total sales; or

  • the competitive sales of each corporation amount to less than 4% of each corporation’s total sales.

“Competitive sales” means “the gross revenues for all products and services sold by one corporation in competition with the other, determined on the basis of annual gross revenues for such products and services in that corporation’s last completed fiscal year.” “Total sales” means “the gross revenues for all products and services sold by one corporation over that corporation’s last completed fiscal year.”

©2022 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume XII, Number 24
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About this Author

Shareholder

Andrew G. Berg Chairs the Global Antitrust Litigation & Competition Regulation Practice and advises clients on litigation, mergers and acquisitions, and other antitrust and competition-related matters before the Federal Trade Commission (FTC), the Antitrust Division of the Department of Justice (DOJ), state attorneys general, and in private litigation. Andrew's practice includes a full range of antitrust transactional and mergers and acquisitions experience, including Hart-Scott-Rodino filings at the FTC and DOJ, and related merger analysis issues. He also counsels...

202-.331-3181
Stephen Pepper Antitrust Attorney Greenberg Traurig
Shareholder

Stephen M. Pepper advises clients on the antitrust aspects of mergers, acquisitions and joint ventures. He has wide-ranging experience with the antitrust pre-acquisition reporting requirements of the Hart-Scott-Rodino (HSR) Act, including HSR Act implications of complex transactions involving private equity firms and hedge funds. He frequently advises clients on global merger clearance strategy for international transactions, including the coordination of international merger control filings and clearance efforts.

Stephen has obtained antitrust clearance from the U.S. Department of...

212-801-6734
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