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January 30, 2024

FTC Raises Both Hart-Scott-Rodino Premerger Filing and Interlocking Directorate Thresholds and Introduces a New Filing Fee Structure

Advisory

On January 22, the Federal Trade Commission (FTC) announced its annual revision of the filing thresholds under the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act), increasing the minimum reportable transaction from US$111.4 million to US$119.5 million. The FTC also announced revisions to thresholds relating to prohibitions on interlocking directorates under Section 8 of the Clayton Act.

HSR Reporting Threshold

Under the HSR Act, parties may be required to file notification for various acquisitions of voting securities, assets, and noncorporate interests with the FTC and Department of Justice (DOJ) and observe a waiting period before closing. The thresholds for filing are revised annually to adjust for inflation. The size of transaction and size of person thresholds were also increased.

Size of the Transaction Thresholds Size of the Person Thresholds and
Reporting Obligation
 More than US$119.5 million, but less than US$478 million
Filing may be required if one party’s sales or assets exceed US$239 million and the other party’s sales or assets exceed US$23.9 million.
More than US$478 million Filing may be required irrespective of the parties’ size.

Filing Fees

The FTC also announced revised filing fee amounts:

Size of the Transaction Filing Fee
Greater than US$119.5 million,
but less than US$173.3 million
$30,000
At least US$173.3 million,
but less than US$536.5 million
$105,000
At least US$536.5 million,
but less than US$1.073 billion

$260,000
At least US$1.073 billion,
but less than US$2 billion
$415,000
At least US$2 billion,
but less than US$5 billion
$830,000
US$5 billion or more US$2,335,000

Clayton Act Section 8 Thresholds

New thresholds for the Clayton Act's prohibition on interlocking directorates were also announced. Section 8 of the Clayton Act makes it illegal, subject to certain exceptions, for a person to serve as a director or officer for two competing companies when the companies' profits or competitive sales exceed threshold limits.

Under the new thresholds, it is illegal for an individual to serve in these capacities for competing corporations if each company has capital, surplus, and undivided profits aggregating more than US$48,559,000 (§ 8(a)(1)), unless one of the companies' competitive sales against the other are less than US$4,855,900 (§ 8(a)(2)(A)) or other de minimis exemptions apply (§ 8(a)(2)(B) and (C)).

Effective Date

The revised HSR Act thresholds and adjusted filing fees will become effective on March 6, 2024. The revisions regarding interlocking directorates became effective immediately.

FTC Proposed Substantial Revisions to HSR Form

As we reported on July 5, 2023, the FTC, with the concurrence of the DOJ’s Assistant Attorney General of the Antitrust Division, proposed rules that would substantially increase the information required as part of the initial filings that companies have to make under the HSR Act. The comment period ended on September 27, 2023, and 721 comment letters were received, the majority of such letters being in opposition to the proposed changes. The proposed changes include an aggressive list of new required information concerning the transaction and its effects on both competition and labor. The proposed rules would substantially increase the burden and time it will take to prepare the initial HSR form and potentially subject more filed transactions to further review. We will continue to monitor the status of these proposed changes.

Increase of the Civil Penalty for Violations of the HSR Act

The FTC also separately announced that the maximum civil penalty for violations of the HSR Act will increase from $50,120 per day to $51,744 per day. The increased civil penalty became effective on January 10, 2024. The new penalty level will apply to civil penalties assessed after the effective date, including civil penalties for which the associated violation predated the effective date.

© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.