Antitrust and Trade Regulation Alert
January 21, 2010
Authors:
Hart-Scott-Rodino Thresholds to Decrease
Brian K. McCalmon
brian.mccalmon@klgates.com
+1.202.661.6230
Jenée Desmond-Harris
jenee.desmond-harris@klgates.com
+1.202.661.3753
K&L Gates includes lawyers practicing
out of 35 offices located in North
America, Europe, Asia and the Middle
East, and represents numerous GLOBAL
500, FORTUNE 100, and FTSE 100
corporations, in addition to growth and
middle market companies,
entrepreneurs, capital market
participants and public sector entities.
For more information, visit
www.klgates.com.
For the first time in history, the value threshold for transactions required to be
notified under the under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the HSR Act), has been decreased by the Federal Trade Commission
(FTC) to $63.4 million. In 2009, the threshold was $65.2 million.
Parties closing a non-exempt acquisition of stock, non-corporate interests, or assets
on or after the effective date of the FTC’s decision (which is expected to be late
February 2010, 30 days after the publication of a Federal Register notice that the
FTC has approved) must first file premerger notification forms with the FTC and the
Antitrust Division of the Department of Justice (DOJ) and observe a statutory
waiting period if the value of the acquisition is greater than $63.4 million.
Pursuant to legislation adopted in 2000, the dollar values in the tests that are used to
determine what mergers and acquisitions must be filed with the FTC and Antitrust
Division of the DOJ are adjusted annually for changes in the gross national product.
The $1.8 million decrease in the filing threshold reflects the current recession. In
addition, the same adjustment factors are applied to the transaction-size criteria that
determine the amount of the filing fee paid for transactions in which a filing is
required.
The New Filing Thresholds
The HSR Act requires certain persons making acquisitions of assets, voting securities
and non-corporate interests (i.e., interests in partnerships and limited liability
companies) (a) to file premerger notifications with the FTC and the DOJ, and (b) to
wait until the expiration of a waiting period (usually 30 days) before consummating
the acquisition.
After the effective date of the amendment to the rules, the following transactions will
generally be subject to the HSR Act’s notification and waiting period requirements:
•
Transactions in which the acquirer will acquire or hold voting securities, assets
and non-corporate interests of the target company that have an aggregate value
of $253.7 million or more (compared to the 2009 threshold of $260.7
million);[1] and
•
Transactions in which the acquirer will acquire or hold voting securities, assets
and non-corporate interests of the target company with an aggregate value in
excess of $63.4 million but not more than $253.7 million, provided that either
the acquiring or the acquired person has net sales or total assets of $126.9
million or more (compared to the 2009 threshold of $130.3 million) and the
other person in the transaction has net sales or total assets in excess of $12.7
million (compared to the 2009 threshold of $13.0 million).
Antitrust and Trade Regulation Alert
All transactions valued at $63.4 million or less will
fall outside the jurisdiction of the HSR Act.
However, in determining the “value” of a
transaction, the acquiring person must include the
value of certain voting securities, assets, or noncorporate interests of the target company that the
acquiring person may have acquired in one or more
prior transactions.
Although a pre-merger notification may be required
prior to the acquisition of as little as $63.4 million in
voting securities, a person who files a notification
for an acquisition at that level would have to file
additional notifications for the acquisition of
additional voting securities before crossing further
thresholds of (a) $126.9 million (compared to $130.3
million in 2009), (b) $634.4 million (compared to
$651.7 billion in 2009), (c) 25 percent of voting
securities of an entity worth $1.2687 billion or more
(compared to $1.3034 billion in 2009), and (d) 50
percent of voting securities of an entity valued at
$63.4 million or more (compared to $65.2 million in
2009).
The New Fee Thresholds
The thresholds for the various levels of filing fees
will also change:
Fee
$45,000
$125,000
$280,000
Size of Transaction
If the size of transaction is valued at
more than $63.4 million but less
than $126.9 million (compared to
$130.3 million in 2009)
If the size of transaction is valued at
$126.9 million or more but less
than $634.4 million (compared to
$651.7 million in 2009)
If the size of transaction is valued at
$634.4 million or more
The thresholds discussed in this alert shall apply for
one year. They will be recalculated in 2011 based
upon the gross national product.
Notes:
[1]An acquiring person purchasing non-corporate
interests must obtain as a result of the acquisition
the right to 50 percent or more of the profits of the
non-corporate entity or the right in the event of a
dissolution to 50 percent or more of its assets after
the payment of its debts for a premerger notification
filing to be required under the HSR Act. Such
acquisitions are deemed to be acquisitions of the
underlying assets of the acquired person.
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GLOBAL 500, FORTUNE 100, and FTSE 100 corporations, in addition to growth and middle market companies, entrepreneurs, capital market
participants and public sector entities. For more information, visit www.klgates.com.
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January 20, 2010
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