Hart-Scott-Rodino and interlocking directorate thresholds announced for 2017
Newsletters
09 February 2017
Notification thresholds
Interlocking directorates threshold
On January 19 2017 the Federal Trade Commission (FTC) released the annual jurisdictional adjustments for pre-merger notification filings made pursuant to Section 7A of the Clayton Act, known as the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as well as for Section 8 of the Clayton Act. The new filing thresholds for Hart-Scott-Rodino notification will become effective 30 days after publication in the Federal Register, while the revisions to Section 8 will become effective immediately on publication in the Federal Register.
Under the Hart-Scott-Rodino Act, certain acquisitions of assets, voting securities or interests in non-corporate entities are subject to pre-closing notification and waiting period requirements if the applicable jurisdictional thresholds are satisfied and no exemption applies.
Each year the FTC adjusts the Hart-Scott-Rodino jurisdictional threshold tests based on changes to the US gross national product. The threshold changes do not affect the amount of the applicable Hart-Scott-Rodino filing fees to be paid, but do affect the threshold levels applicable to each of the filing fees.
The principal changes to the Hart-Scott-Rodino jurisdictional thresholds will be as follows.
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Existing threshold |
New threshold effective 30 days after Federal Register publication |
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Size-of-transaction threshold test |
Notification may be required if the acquiring person will acquire and hold certain assets, voting securities or interests in non-corporate entities valued at more than $78.2 million. |
$80.8 million |
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Size-of-person threshold test |
Generally, one person to the transaction must have at least $156.3 million in total assets or annual net sales, and the other must have at least $15.6 million in total assets or net sales. |
At least $161.5 million and $16.2 million in total assets or annual net sales |
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Transactions valued at more than $312.6 million are not subject to the size-of-person threshold test and therefore are reportable unless exempt. |
$323 million |
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Filing fee threshold levels |
Hart-Scott-Rodino filing fee of $45,000 for transactions where the acquiring person will hold an aggregate total amount of assets, voting securities or controlling non-corporate interests valued at more than $78.2 million but less than $156.3 million. |
More than $80.8 million but less than $161.5 million Hart-Scott-Rodino filing fee remains unchanged |
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Hart-Scott-Rodino filing fee of $125,000 for transactions where the acquiring person will hold an aggregate total amount of assets, voting securities or controlling non-corporate interests valued at more than $156.3 million but less than $781.5 million. |
More than $161.5 million but less than $807.5 million Hart-Scott-Rodino filing fee remains unchanged |
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Hart-Scott-Rodino filing fee of $280,000 for transactions where the acquiring person will hold an aggregate total amount of assets, voting securities or controlling non-corporate interests valued at $781.5 million or more. |
$807.5 million or more Hart-Scott-Rodino filing fee remains unchanged |
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Notification thresholds |
When completing a Hart-Scott-Rodino filing, the acquiring person in a voting securities acquisition must indicate which notification threshold it will cross:
These notification thresholds are also relevant to a certain HSR exemption. |
The new notification thresholds are:
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In addition, the civil penalty for pre-merger filing notification violations under the Hart-Scott-Rodino Act has increased from $40,000 to $40,654, effective January 24 2017.
Interlocking directorates threshold
Section 8 of the Clayton Act prohibits a person from serving as a director or officer of two competing corporations if certain thresholds are satisfied and no exception applies. The FTC must adjust annually certain thresholds related to Section 8 based on changes to the gross national product.
Under the new thresholds that will become effective on publication in the Federal Register, a person may not serve as a director or officer of competing corporations if each corporation has capital, surplus and undivided profits aggregating more than $32,914,000, unless one of the corporations has competitive sales of less than $3,291,400. Previously, a person was prohibited from serving as a director or officer of competitive corporations if each corporation had capital, surplus and undivided profits aggregating more than $31,841,000 unless one of the corporations had competitive sales of less than $3,184,100.
For further information on this topic please contact Michele S Harrington at Hogan Lovells US LLP's McLean office by telephone (+1 703 610 6100) or email (michele.harrington@hoganlovells.com). Alternatively, contact Joseph G Krauss or Robert Baldwin at Hogan Lovells US LLP's Washington DC office by telephone (+1 202 637 5600) or email (joseph.krauss@hoganlovells.com or robert.baldwin@hoganlovells.com). The Hogan Lovells website can be accessed at www.hoganlovells.com.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
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