New Filing Fees and Updated HSR Thresholds for 2023

What Happened: The Federal Trade Commission published revised Hart-Scott-Rodino (“HSR”) thresholds and updated filing fees for 2023. Earlier this month, the FTC published increased civil penalties for HSR noncompliance and revised thresholds for interlocking directorates.   

The Bottom Line: The new HSR thresholds are higher than current thresholds, and the new filing fees include six tiers (previously three) that substantially increase the filing costs for large transactions. The HSR thresholds and filing fees will apply to all transactions closed on or after the effective date of February 27, 2023. The increased civil penalties for HSR noncompliance became effective January 11, 2023, and interlocking directorates thresholds became effective January 20, 2023. Clients contemplating mergers or acquisitions or appointing board members need to be aware of the new thresholds and filing fees. Companies may need to file with the Federal Trade Commission (“FTC”) and Department of Justice (“DOJ”) if the value of the deal exceeds $111.4 million or reconsider potential board appointees subject to removal.

The Full Story:

HSR Thresholds and Filing Fees

The FTC revises the HSR thresholds each year based on gross national product. Generally, under the revised thresholds, if the “size of transaction”—value of non-corporate interests, assets, voting securities or a combination thereof held as a result of the transaction—exceeds $445.5 million and no exemption applies, the parties must file. If the size of transaction exceeds $111.4 million but is less than $445.5 million, then antitrust counsel will need to do a “size of person” analysis. Generally, an HSR filing will not be required unless one party to the transaction has total assets or annual net sales of $22.3 million or more and the other party has total assets or annual net sales of $222.7 million or more.

The new Size of Transaction thresholds are as follows:

The new Size of Person thresholds are as follows:

The notification thresholds for less than 50% acquisitions of voting securities, which are designed to act as exemptions, also increased as follows:

Pursuant to the Merger Filing Fee Modernization Act signed into law at the end of 2022, the HSR filing fees have a new six-tier structure, and fees have been increased for transactions valued at $500 million or greater. In future years, both the thresholds and the amount of the fee for each tier will be adjusted based on changes to gross national product and the consumer price index, respectively.

 The civil penalty for violating the HSR Act was increased from $46,517 to $50,120 per day for each day of noncompliance, effective January 11, 2023.

 Interlocking Directorates

The FTC also published revised thresholds relating to interlocking directorates based on gross national product. Section 8 of the Clayton Act prohibits a person from serving simultaneously as an officer or director of two or more competing corporations, subject to certain exceptions. Under the revised thresholds, Section 8 may apply when each of the competing corporations has capital, surplus and undivided profits aggregating more than $45,257,000 and each corporation’s competitive sales are at least $4,525,700.

Conclusion

HSR and interlocking directorates analysis is fact-specific and requires a comprehensive and thorough understanding of both the statute and relevant regulations. Clients are advised to consult with antitrust counsel as early as possible to determine if an HSR filing is needed before closing the deal or when appointing board members.