New HSR Thresholds for 2022

What Happened: The Federal Trade Commission published revised Hart-Scott-Rodino (“HSR”) and interlocking directorates thresholds in the Federal Register on January 24, 2022, and increased civil penalties for HSR noncompliance.   

The Bottom Line: The new thresholds are higher than current thresholds. The HSR thresholds will apply to all transactions closed on or after February 23, 2022, while the interlocking directorates thresholds are effective immediately. Clients contemplating mergers or acquisitions, or appointing board members need to be aware of the new thresholds. Companies may need to file with the Federal Trade Commission (“FTC”) and Department of Justice (“DOJ”) if the value of the deal exceeds $101 million, or reconsider potential board appointees subject to removal.

The Full Story:

HSR Thresholds

The FTC revises the HSR thresholds each year based on gross national product. Generally, under the revised thresholds, if the value of non-corporate interests, assets, voting securities or a combination thereof exceeds $403.9 million and no exemption applies, the parties must file. If the value of the transaction exceeds $101 million but is less than $403.9 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 $20.2 million or more and the other party has total assets or annual net sales of $202 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:

While the filing fees remain the same, the thresholds for those fees have also changed:

The civil penalty for violating the HSR Act was increased from $43,792 to $46,517 per day for each day of noncompliance, effective January 10, 2022.

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 $41,034,000 and each corporation’s competitive sales are at least $4,103,400.

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.