The Federal Trade Commission (“FTC”) has revised the thresholds that govern pre-merger notification requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”). The new HSR Act thresholds will become effective for all transactions closing on or after February 23, 2022.
HSR Act Thresholds
The HSR Act requires parties to transactions that meet the statutory thresholds to file notification with the FTC and the Department of Justice, and abide by a waiting period before completing the transaction. The statutory thresholds are revised each year based on a formula related to the size of the U.S. economy. On January 24, 2022, the FTC announced the revised thresholds for 2022. They will be effective for all transactions closing on or after February 23, 2022. The revised minimum size-of-transaction threshold rose from $92 to $101 million, an increase of $9 million, which is the largest annual increase since the advent of the $50 million (as adjusted) threshold in 2000.
Under the revised thresholds, parties to a transaction with a value of $101 million or less need not submit a notification or observe a waiting period. Parties to a transaction valued in excess of $101 million, and up to $403.9 million, must file notification with the federal antitrust agencies and observe the HSR Act waiting period if the parties also meet the “size of persons” test: one party to the transaction has annual net sales or assets of at least $202 million, and the other party to the transaction has annual net sales or assets of at least $20.2 million (increased from 2021 thresholds of $184 million and $18.4 million, respectively).
The “size of persons” test does not apply for larger deals: parties, regardless of their size, must file notification if the value of the transaction is greater than $403.9 million (increased from the 2021 threshold of $368 million).
HSR Act exemptions (except where tied to the “as adjusted” thresholds), filing fees, and waiting periods remain unchanged. Many filing exemptions apply; for example, asset acquisitions of certain types of real property are not subject to filing, and acquisitions of oil, gas, shale, and tar sand reserves and associated E&P assets are exempt if their value to be held as a result of the acquisition does not exceed $500 million. The typical waiting period is 30 days (unless extended), which may be shortened in the case of bankruptcy, tender offers, or discretionary “early termination,” the latter of which is presently not being used by the agencies.
The maximum civil penalties for violations of the HSR Act are similarly indexed, and have increased from $43,792 per day to $46,517 per day, effective as of January 6, 2022.