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Hogan Lovells US LLP

Hart-Scott-Rodino and interlocking directorate thresholds announced for 2017

Newsletters

09 February 2017

Competition & Antitrust USA

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.

Notification thresholds

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.

Existing threshold

New threshold effective 30 days after Federal Register publication

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

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

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

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

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

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

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:

  • $78.2 million;
  • $156.3 million;
  • $781.5 million;
  • 25% (if the value of the voting securities to be held is greater than $1.563 billion); or
  • 50%.

These notification thresholds are also relevant to a certain HSR exemption.

The new notification thresholds are:

  • $80.8 million;
  • $161.5 million;
  • $807.5 million;
  • 25% (if the value of the voting securities to be held is greater than $1.615 billion); or
  • 50%.

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.

ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.

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Authors

Michele S Harrington

Michele S Harrington

Joseph G Krauss

Joseph G Krauss

Robert F Baldwin

Robert F Baldwin

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