Antitrust Agency Publishes New HSR Notification Thresholds and Filing Fees For 2023
Authors: Luis Blanquez and Steven Cernak
On December 23, 2022, the U.S. Congress passed an omnibus spending bill incorporating the Merger Filing Fee Modernization Act. This new bill included significant changes to filing fee thresholds applicable to mergers and acquisitions reportable under HSR. On January 24, the Federal Trade Commission (FTC) issued rules implementing some of the changes from that legislation as well as its usual annual announcement to increase the Hart-Scott-Rodino (HSR) Act thresholds. The 2023 thresholds will take effect 30 days after publication in the Federal Register, which means February 27, 2023.
The new update significantly increases the filing fee for HSR notifications for transactions valued at $5 billion or more, while raising the minimum value of transactions that must be notified under the HSR Act to $111.4 million.
HSR requires the parties to submit certain information and documents and then wait for approval before closing a transaction. The FTC and DOJ then have 30 days to determine if they will allow the merger to proceed or seek much more detail through a “second request” for information. The parties may also ask for “Early Termination” to shorten the 30-day waiting period, although for nearly two-year this option has been––and continues to be––suspended.
The HSR Act notification requirements apply to transactions that satisfy the specified “size of transaction” and “size of person” thresholds. These thresholds are adjusted annually to reflect changes in the U.S. gross national product.
Three thresholds determine the applicability of HSR filing requirements.
First, one of the parties to the transaction must be in commerce in the United States or otherwise affect U.S. commerce.
Second, the acquiring party must be acquiring securities, non-corporate interest, or assets of the target in excess of $111.4 million––the “size of transaction” threshold. A notification is thus not required when the value of the voting securities and assets is below this threshold.
Third, if the transaction exceeds $111.4 million but does not exceed $445.5 million--the "size of the parties" threshold–– then at least one party involved in the transaction must have annual net sales or total assets of at least $222.7 million, and the other party must have annual net sales or total assets of at least $22.3 million. The test for an acquired person not engaged in manufacturing is sales of $222.7 million or assets of $22.3 million.
Transactions valued at more than $445.5 million are reportable regardless of the size of the parties, unless an HSR Act exemption applies.
The FTC’s notice also implemented a new filing fee structure from the new legislation. The new structure will be in place starting with filings made on or after February 27. Below we compare the old and new fee thresholds:
2022
| Size of the Transaction | Merger Fee |
|---|---|
| $101million - $202 million | $45,000 |
| $202 million - $1.0098 billion. | $125,000 |
| >$1.0098 billion. | $280,000 |
2023
| Size of the Transaction | Merger Fee |
|---|---|
| $111.4 million - $161.5 million | $30,000 |
| $161.5 million - $499.999 million | $100,000 |
| $500 million - $999.999 million | $250,000 |
| $1 billion - $1.999 billion | $400,000 |
| $2 billion - $4.999 billion | $800,000 |
| $5 billion or more | $2,250,000 |
As a result of the new legislation, those fees will also be adjusted annually, based on changes to the consumer price index.
The FTC further published revised thresholds relating to Section 8 of the Clayton Act. Section 8 prohibits interlocking directorates in which one “person” serves simultaneously as an officer or director of competing corporations, subject to certain exceptions. Now, Section 8 of the Clayton Act applies when each of the competing corporations has capital, surplus, and undivided profits aggregating more than $45,257,000 and each corporation’s competitive sales are at least $4,525,700, again with certain exceptions.
The same omnibus spending bill also includes the Foreign Merger Subsidy Disclosure Act, which will require merging parties to provide information about foreign subsidies received from foreign entities or countries of concern. We expect rules on those obligations to be issued soon.