On Jan. 28, 2020, the Federal Trade Commission announced the 2020 adjusted thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”). The HSR Act notification requirements apply to transactions that satisfy the specified “size of transaction” and “size of person” dollar thresholds. These thresholds, however, change from year to year. The HSR Act requires an annual threshold adjustment based on changes in the U.S. gross national product for each fiscal year. The newly announced 2020 thresholds are expected to become effective Feb. 27, 2020 (30 days following publication in the Federal Register), and will be applicable until recalculated in early 2021.
The key HSR Act threshold adjustments are summarized in the following chart:
|
Test
|
2019 Threshold
|
2020 Adjusted Threshold
|
|
Size of Transaction
|
$90.0 million
|
$94.0 million
|
|
Size of Party (lower)
|
$18.0 million
|
$18.8 million
|
|
Size of Party (higher)
|
$180.0 million
|
$188.0 million
|
|
Size of Transaction Where Size of Party Threshold Is Not Relevant
|
$359.9 million
|
$376.0 million
|
The “size of transaction” threshold is determined based on the value of voting securities, non-corporate interests and/or assets held as a result of the transaction. Under the new 2020 thresholds, there will be no HSR Act notification requirements for transactions valued at less than $94.0 million.
The “size of parties” thresholds, on the other hand, will increase to $18.8 million (in annual sales) and $188.0 million (in total assets), from $18.0 million and $180.0 million in 2019, respectively. If the ultimate parent entities of one or both parties to the transaction do not satisfy the applicable “size of parties” thresholds, there is no HSR Act notification required for transactions valued at more than $94.0 million but not more than $376.0 million. Conversely, transactions valued at more than $376.0 million (increased from $359.9 million in 2019) will be reportable in 2020 regardless of the size of the parties, unless an HSR Act exemption applies.
The underlying HSR Act filing fees remain unchanged, but the applicable filing fee will be based on the new thresholds, as follows:
|
Amount of the Filing Fee
|
Size of Transaction
|
|
$45,000
|
Greater than $94.0 million but less than $188.0 million
|
|
$125,000
|
$188.0 million or greater but less than $940.1 million
|
|
$280,000
|
$940.1 million or greater
|
Finally, the FTC also increased the maximum civil penalty for violations of the HSR Act to $43,280 per day (from $42,530 per day), effective on publication in the Federal Register.
As always, the value of a transaction is subject to certain exceptions and calculation adjustments that can affect either the obligation to make a notification filing or the amount of the filing fee required with the filing.
