U.S. Merger Notification Threshold Increases to $90 Million on April 3
On March 4, 2019, the Federal Trade Commission published in the Federal Register its 2019 adjustments to the Hart-Scott-Rodino ("HSR") Act thresholds. The adjusted thresholds take effect on April 3, and will remain in effect through early 2020.
Each year by January 31, the FTC must publish adjusted thresholds, which are used to determine when transactions require premerger reporting under the HSR Act. Following the government shutdown last December, publication of the 2019 thresholds was delayed. April 3 marks the latest effective date for new HSR thresholds since Congress amended the Act to require annual indexing in 2005.
The Commission also published notification of revised thresholds under Section 8 of the Clayton Act, which prohibits interlocking directorates in certain circumstances. The new Section 8 thresholds take effect on March 4.
Adjusted HSR Jurisdictional Thresholds
Size-of-Transaction threshold. An HSR Act filing may be required if the acquirer will hold, as a result of the transaction, voting securities, non-corporate interests, and/or assets of the acquired person valued in excess of $90 million (the 2018 threshold was $84.4 million). If the Size-of-Transaction is between $90 million and $359.9 million, the transaction also must satisfy the Size-of-Person threshold. Transactions valued in excess of $359.9 million need not satisfy the Size-of-Person threshold.
Size-of-Person threshold. A transaction meets the Size-of-Person threshold if either the acquired or acquiring person has annual net sales or total assets of at least $180 million and the other party to the transaction has at least $18 million in annual net sales or total assets.
New Interlocking Directorates Thresholds
Clayton Act Section 8 prohibits a single person from serving as an officer or director of competing corporations if certain thresholds are met. The revised Section 8 threshold prohibits an individual from serving as an officer or director of competing corporations if each company has capital, surplus, and undivided profits aggregating to more than $36,564,000 (Section 8(a)(1)). However, there is no violation if the competitive sales of either are less than $3,656,400 (Section 8(a)(2)(A)).
The Federal Register notice on the FTC's website contains a complete list of these and related HSR thresholds (16 C.F.R. Parts 801-803): https://www.ftc.gov/news-events/press-releases/2019/02/ftc-announces-annual-update-size-transaction-thresholds-premerger.
Each year by January 31, the FTC must publish adjusted thresholds, which are used to determine when transactions require premerger reporting under the HSR Act. Following the government shutdown last December, publication of the 2019 thresholds was delayed. April 3 marks the latest effective date for new HSR thresholds since Congress amended the Act to require annual indexing in 2005.
The Commission also published notification of revised thresholds under Section 8 of the Clayton Act, which prohibits interlocking directorates in certain circumstances. The new Section 8 thresholds take effect on March 4.
Adjusted HSR Jurisdictional Thresholds
Size-of-Transaction threshold. An HSR Act filing may be required if the acquirer will hold, as a result of the transaction, voting securities, non-corporate interests, and/or assets of the acquired person valued in excess of $90 million (the 2018 threshold was $84.4 million). If the Size-of-Transaction is between $90 million and $359.9 million, the transaction also must satisfy the Size-of-Person threshold. Transactions valued in excess of $359.9 million need not satisfy the Size-of-Person threshold.
Size-of-Person threshold. A transaction meets the Size-of-Person threshold if either the acquired or acquiring person has annual net sales or total assets of at least $180 million and the other party to the transaction has at least $18 million in annual net sales or total assets.
New Interlocking Directorates Thresholds
Clayton Act Section 8 prohibits a single person from serving as an officer or director of competing corporations if certain thresholds are met. The revised Section 8 threshold prohibits an individual from serving as an officer or director of competing corporations if each company has capital, surplus, and undivided profits aggregating to more than $36,564,000 (Section 8(a)(1)). However, there is no violation if the competitive sales of either are less than $3,656,400 (Section 8(a)(2)(A)).
The Federal Register notice on the FTC's website contains a complete list of these and related HSR thresholds (16 C.F.R. Parts 801-803): https://www.ftc.gov/news-events/press-releases/2019/02/ftc-announces-annual-update-size-transaction-thresholds-premerger.
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