FTC Revises Merger Filing Fees and Jurisdictional Thresholds for HSR Act and Corporate Interlocks
On January 23, 2023, the Federal Trade Commission announced revised merger filing fees and jurisdictional thresholds for the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”) and Section 8 of the Clayton Act (“Corporate Interlock Statute”).
Under the revised thresholds, the “size-of-transaction” increased by over $10 million from $101.0 million to $111.4 million, and HSR filing fees for the largest transactions will increase significantly to $2.25 million, nearly 10 times the current fee of $280,000. The new jurisdictional and filing fee thresholds will become effective February 27, 2023, 30 days after publication in the Federal Register. The revisions to the corporate interlock thresholds became effective on January 20, 2023, upon publication in the Federal Register.
The FTC also revised the maximum civil penalty for HSR Act violations from $46,517 per day to $50,120 per day per day, effective January 11, 2023.
REVISED HSR JURISDICTIONAL THRESHOLDS
The FTC is required to adjust the jurisdictional thresholds annually, based on changes in the gross national product. Under the revised HSR thresholds, unless covered by an exemption, HSR filings and waiting periods are required for transactions valued in excess of the $111.4 million "size-of-transaction" threshold involving parties with annual net sales or total assets meeting the "size-of-persons" threshold of $22.3 million or more and $111.4 million or more.
In addition, if the size-of-transaction will exceed $445.5 million, HSR filings are required regardless of the size-of-persons.
A complete list of the revised thresholds is set out below.
|
ORIGINAL THRESHOLDS |
2022 THRESHOLDS |
ADJUSTED THRESHOLDS |
|
|
Size of Transaction1 |
$50 million |
$101.0 million |
$111.4 million |
|
Size of Persons2 |
$10 million |
$20.2 million |
$22.3 million |
|
Notification Thresholds3 |
$50 million |
$101.0 million |
$111.4 million |
NEW MERGER FILING FEES
In addition to announcing the new jurisdictional thresholds, on January 23, 2023 the FTC approved publication of a Federal Register notice as required under the 2023 Consolidated Appropriations Act announcing the new merger filing fees.
Under the new law, HSR filing fees for the largest transactions will increase significantly to $2.25 million, nearly 10 times the current fee of $280,000. The HSR filing fees will generally decrease modestly for deals valued below $500 million, ranging from $30,000 to $100,000.4
A complete list of the new filing fee thresholds are as follows:
|
TRANSACTION VALUES |
FILING FEE |
|
Greater than $111.4 million but less than $161.5 million |
$30,000 |
|
At least $161.5 million but less than $500 million |
$100,000 |
|
At least $500 million but less than $1 billion |
$250,000 |
|
At least $1 billion but less than $2 billion |
$400,000 |
|
At least $2 billion but less than $5 billion |
$800,000 |
|
$5 billion or more |
$2,250,000 |
The new HSR filing fees will be increased annually by an amount equal to the percentage increase in the consumer price index for the year then ended over the level established for the year ending September 30, 2022. The new law requires the Federal Trade Commission to publish the adjusted amounts not later than January 31 of each year.
CORPORATE INTERLOCK THRESHOLDS
Under the revised corporate interlock thresholds, one person may not serve simultaneously as an officer or director of competing corporations if each “interlocked” corporation has capital, surplus, and undivided profits aggregating more than $45,257,000. The threshold amount applicable to the statutory “safe harbor” based on the dollar value of “competitive sales” has also been revised: a corporate interlock does not violate the statute if the “competitive sales” of either interlocked corporation are less than $4,525,700. The statutory safe harbors based on ratios of “competitive sales” to total sales remain unchanged.
REVISED CIVIL PENALTY
On January 6, 2023, the FTC announced an increase in the maximum civil penalty for HSR Act violations from $46,517 to $50,120 per day. The new penalties became effective January 11, 2022. The FTC adjusts the civil penalty annually for inflation. The increased maximum penalty will apply to civil penalties assessed after the effective date of the adjustment, including for violations that predated the effective date.
1 Size-of-Transaction: HSR notifications may be required if an acquiring person, as a result of an acquisition, will hold assets, voting securities, and/or non-corporate interests valued at more than $50 million, as adjusted.
2 Size-of-Persons: Generally, one “person” to the transaction must have at least $10 million, as adjusted, in annual net sales or total assets, and the other “person” must have at least $100 million, as adjusted, in annual net sales or total assets. Transactions valued in excess of $200 million, as adjusted, are not subject to the size-of-persons threshold and are reportable unless exempt.
3 Notification Thresholds: HSR notifications are generally required for transactions that will exceed a notification threshold where the size-of-persons threshold is met or does not apply, unless exempt.
4 Current HSR filing fees: $45,000 for transactions valued in excess of $101.0 million but less than $202.0 million; $125,000 for transactions valued at $202.0 million but less than $1,009.8 million; and $280,000 for transactions valued at $1,009.8 million or more.
ABOUT BAKER BOTTS L.L.P.
Baker Botts is an international law firm whose lawyers practice throughout a network of offices around the globe. Based on our experience and knowledge of our clients' industries, we are recognized as a leading firm in the energy, technology and life sciences sectors. Since 1840, we have provided creative and effective legal solutions for our clients while demonstrating an unrelenting commitment to excellence. For more information, please visit bakerbotts.com.
