The Federal Trade Commission has just announced its annual adjustment to the notification thresholds that determine whether proposed transactions may trigger a filing obligation under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976, as amended, which will apply to transactions that close on or after February 27th, 2023.
Compliance with the HSR Act is imperative. The FTC already announced the annual increase of the maximum civil penalty available for HSR Act violations from $46,517 to $50,120 per day, effective on the date of the publication of the Federal Register (January 11th, 2023).
Under the 2023 thresholds, the lowest “size of transaction” notification threshold for any acquisitions of voting securities, assets, or non-corporate interests will increase from $101 million to $111.4 million. For transactions valued above $111.4 million but below USD 445.5 million, an HSR filing may be triggered only if the below-described “size of person” test is satisfied. Transactions valued above $445.5 million may trigger an HSR filing obligation irrespective of the size of the parties involved.
The HSR Act “size of person” threshold, when applicable, generally will be satisfied if one party to the transaction has annual net sales or total assets of $222.7 million or more and the other party has $22.3 million or more in annual net sales or total assets. In each case, the operative “party” is the ultimate parent entity of the party to the potentially notifiable transaction.
|Notification Threshold||New (USD)||Current (USD)|
|“Size of Transaction” Test||$111.4 million||$101 million|
|“Size of Person” Test*||One party $222.7 million;|
Other party $22.3 million
|One party $202 million;|
Other party $20.2 million
|“Size of Person” Test is Inapplicable||$445.5 million||$403.9 million|
* Applies to each party’s annual net sales or total assets; if target is not engaged in manufacturing, only assets are considered in determining its size.
In addition, the HSR Act filing fee structure has changed following passage of the Merger Filing Fee Modernization Act, which was included in the omnibus spending package. The new fee structure will reduce filing fees for smaller transactions, while significantly increasing fees for the largest ones.
|Transaction Value (USD)||New HSR Filing Fee (USD)|
|Under $161.5 million||$30,000|
|Over $161.5 million but under $500 million||$100,000|
|Over $500 million but under $1 billion||$250,000|
|Over $1 billion but under $2 billion||$400,000|
|Over $2 billion but under $5 billion||$800,000|
|$5 billion or more||$2,250,000|
The Federal Register notice announcing the revised HSR Act notification thresholds, including the new HSR filing fees, can be found here.
The new HSR notification thresholds and filing fees will take effect on Monday, February 27th and will apply to all transactions that close on or are notified after that date.