On February 2, 2021, the FTC published its annual changes to the thresholds for determining whether certain transactions must be reported to FTC and DOJ under the Hart-Scott-Rodino Act before closing can occur.
For the first time since 2010, the HSR thresholds for 2021 will be lower than the previous year’s. Filing thresholds under the HSR Act will decrease by approximately 2% for 2021, based on the change in the U.S. gross national product during 2020.
The new thresholds are expected to apply to transactions that close on or after March 4, 2021.
Summary of the New Thresholds
- The smaller size-of-transaction threshold will decrease from $94 million to $92 million. This threshold is measured by looking at the aggregate total value of the voting securities and assets of the acquired person that the acquiring person will hold as a result of the transaction.
- The size-of-person thresholds will decrease from $188 million to $184 million and from $18.8 million to $18.4 million. The size-of-person test is measured by looking at a party’s total assets or annual net sales. (For an acquired party not engaged in manufacturing, only total assets are considered.) To satisfy this test, only one party must meet the $184 million threshold, so long as the other party meets the $18.4 million threshold.
- The larger size-of-transaction threshold, which can trigger a filing even if the size-of-person test is not met, will decrease from $376 million to $368 million.
The filing fee levels will be adjusted as follows:
- A $45,000 filing fee will be required for transactions valued in excess of $92 million but below $184 million;
- A $125,000 filing fee will be required for transactions valued from $184 million but below $919.9 million; and
- A $280,000 filing fee will be required for transactions valued at or above $919.9 million.
Once parties have submitted notification together with the required filing fees, they must also observe a waiting period before closing can occur (typically 30 days).
The new lower thresholds for 2021 are likely to expand the number of transactions that must be reported to the antitrust enforcement agencies under the HSR Act.
Complex valuation and aggregation rules apply when assessing whether a particular threshold is met. Parties should consult with antitrust counsel to determine whether a transaction is subject to the reporting requirements of the HSR Act.
The penalties for failure to observe the reporting requirements and waiting period under the HSR Act can be stiff. The maximum civil penalty for violations of the HSR Act increased this year to $43,792 per day.