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Joseph (Joe) F. Winterscheid provides legal counsel to clients on US and international antitrust law. From 2009 to 2015, Joe headed the Firm's global Antitrust & Competition Practice Group. From 1989 to 1994, he was partner-in-charge of an international law office in Brussels, where his practice focused on representing clients in competition matters before the European Commission and EU Member State competition authorities. Read Joe Winterscheid's full bio.

The U.S. Federal Trade Commission (FTC) recently announced increased thresholds for the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR) and 2015 thresholds for determining whether parties trigger the prohibition against interlocking directors under Section 8 of the Clayton Act.

Notification Threshold Adjustments

Pursuant to the amendments passed by the U.S. Congress in 2000, the FTC published revised thresholds for HSR pre-merger notifications in the Federal Register on January 21, 2015.  These increased thresholds will become effective on February 20, 2015.  These new thresholds apply to any transaction completed and any HSR pre-merger notifications filed on or after February 20, 2015.

As required, the FTC adjusted the notification thresholds based on the change in the gross national product (GNP) for the fiscal year ending September 30, 2014.  Most notably, the base filing threshold of $50 million, which frequently determines whether a transaction requires filing of an HSR notification, will increase from $75.9 million to $76.3 million.  The changes also will affect other dollar-amount thresholds:

  • The alternative statutory size-of-transaction test, which captures all transactions valued above $200 million regardless of the “size-of-persons,” will be adjusted to $305.1 million.
  • The statutory size-of-person thresholds (applicable to transactions valued at more than $76.3 million, but less than $305.1 million) will increase slightly from $15.2 million to $15.3 million and from $151.7 million to $152.5 million.

The adjustments will affect parties contemplating HSR notifications in various ways.  Parties may be relieved from the obligation to file a notification for transactions closed on or after February 20, 2015, that result in holdings below the adjusted base threshold.  For example, a transaction resulting in the acquiring person holding voting securities, a controlling interest in a non-corporate entity, or assets valued at less than $76.3 million would not be reportable on or after the effective date.  The adjustments will also affect various exemptions under the HSR rules.  For example, acquisitions by U.S. persons of foreign assets and voting securities of foreign issuers will now be exempt unless they generated U.S. sales in excess of $76.3 million or, in the case of foreign voting securities, the issuer has assets in the United States valued in excess of $76.3 million.

Parties may also realize a benefit of lower notification filing fees for transactions that just cross current thresholds.  Under the rules, the acquiring person must pay a filing fee, although the parties may allocate that fee amongst themselves.  Filing fees for HSR-reportable transactions will remain unchanged; however, the applicable filing fee tiers will shift upward as a result of the GNP-indexing adjustments:

  • Transactions valued at or in excess of $76.3 million, but less than $152.5 million, require a $45,000 filing fee.
  • Transactions valued at or in excess of $152.5 million, but less than $762.7 million, require a $125,000 filing fee.
  • Transactions valued at or above $762.7 million require a $280,000 filing fee.

Interlocking Directorate Thresholds Adjustment

On January 21, 2015, the FTC also published revised thresholds for interlocking directorates that are effective immediately.  The FTC revises these thresholds annually based on the change in the level of GNP.  Section 8 of the Clayton Act prohibits a person from serving as a director or officer of two competing corporations if certain thresholds are met.  The prohibition against interlocking directors applies if each corporation has more than $10 million (as adjusted) in capital, surplus and undivided profits; however, the prohibition does not apply if either corporation has less than $1 million (as adjusted) in competitive sales.  Pursuant to the recently revised thresholds, Section 8 of the Clayton Act applies to corporations with more than $31,084,000 in capital, surplus and undivided profits, while it does not apply where either corporation has less than $3,108,400 in competitive sales.

In an announcement made on 10 September 2014, the President-elect of the next European Commission, Jean-Claude Juncker from Luxemburg, unveiled his team and announced that Magrethe Vestager from Denmark will replace Joaquin Almunia as the EU Commissioner for Competition.  Ms Vestager is to take office in November, subject to confirmation by the European Parliament.

The new Commissioner and her agenda will have a significant impact on business in the European Union in the upcoming years.  The EU Commissioner for Competition is one of the most powerful figures in Europe because this role has the ability to review deals, impose fines for cartel behaviour or abuse of dominance (monopolisation) and order the recovery of illegal subsidies.

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During the last several years, the Federal Trade Commission (FTC) has taken an active role in antitrust enforcement in the health care industry, particularly with respect to hospital and physician group acquisitions.  Last week, the FTC held a two-day public workshop to examine new trends and developments in the health care industry related to professional regulations of health care providers, health information technology, new care delivery models, quality measurements and pricing transparency and how those developments may affect competition.  Health care providers should anticipate increased FTC scrutiny of these trends and how they affect health care costs, quality, access and care coordination.

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