Hart-Scott-Rodino (HSR) Archives

Antitrust M&A Snapshot | Q1 2021

by Alexandra Lewis | May 4, 2021 | DOJ Developments, EC Developments, EU Developments, FTC Developments, Mergers & Acquisitions

As the United States rounds the corner toward getting the COVID-19 epidemic under control within its borders, the US antitrust enforcers have seen a major spike in Hart-Scott-Rodino (HSR) premerger filings. In addition, the healthcare and technology industries can expect to remain under close watch by US enforcement agencies as the Biden administration continues to appoint progressive antitrust scholars to key leadership and advisory roles. And for the first time in many decades, the FTC has filed suit to block a vertical merger, indicating a more aggressive posture towards vertical transactions.

Meanwhile, the European Commission is focusing on “green killer acquisitions,” highlighting the interplay between the EU competition rules and the European Union’s environmental protection objectives. The Commission also published its evaluation of the functioning of the EU merger control rules in light of rapidly changing market realities. And in parallel with the publication of its evaluation findings, the Commission issued practical guidance that has the potential to create meaningful new transaction risk for mergers by subjecting more deals to in-depth Commission review.

Access the full issue.

Notification Threshold Under the Hart-Scott-Rodino Act Increased to $90 Million

by Gregory E. Heltzer and Matt Evola | Feb 15, 2019 | DOJ Developments, FTC Developments

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

Notification Threshold Adjustments

The US Federal Trade Commission (FTC) announced revised thresholds for the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR) pre-merger notifications on February 15, 2019. These increased thresholds will become effective mid-to-late March. These new thresholds apply to any transaction that closes on or after the effective date.

The base filing threshold, which frequently determines whether a transaction requires filing of an HSR notification, will increase to $90 million.
The alternative statutory size-of-transaction test, which captures all transactions valued above a certain size (even if the “size-of-person” threshold is not met), will be adjusted to $359.9 million.
The statutory size-of-person thresholds will increase slightly to $18 million and $180 million.

The adjustments will affect parties contemplating HSR notifications in various ways. Transactions that meet the current “size-of-transaction” threshold, but will not meet the adjusted $90 million threshold, will only need to be filed if they will close before the new thresholds take effect mid-to-late March.

Parties may also realize a benefit of lower notification filing fees for certain transactions. 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 size of transactions subject to the filing fee tiers will shift upward as a result of the gross national product (GNP)-indexing adjustments:

Filing Fee Size-of-Transaction $45,000 $90 million, but less than $180 million $125,000 $180 million, but less than $899.8 million $280,000 $899.8 million or more Interlocking Directorate Thresholds Adjustment

The FTC also announced revised thresholds for interlocking directorates. 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. Pursuant to the recently revised thresholds, Section 8 of the Clayton Act applies to corporations with more than $36,564,000 in capital, surplus and undivided profits, but it does not apply where either interlocked corporation has less than $3,656,400 in competitive sales. These new thresholds are effective immediately upon publication in the Federal Register, expected within the week.

Change in LBO Valuation for HSR Purposes

by Emily Townsend | Oct 13, 2016 | FTC Developments, Mergers & Acquisitions

The Federal Trade Commission (FTC) recently reversed its position on how to calculate the size-of-transaction for HSR purposes in connection with leveraged buyouts (LBOs). This change in position may result in more reportable transactions.

As detailed here, the FTC’s position, effective immediately, is that any new debt used to finance an LBO transaction, counts toward the size of transaction. Previously, whether or not new debt used to finance an LBO transaction was included in the size of transaction turned on whether the buyer or the target company incurred, provided, or guaranteed the debt.

This does not change the treatment of payment of third-party debt out of transaction consideration:

In equity transactions, payment of third-party debt that is deducted from the consideration ultimately paid by the buyer to seller is not included in the size of transaction (e.g., $100 million purchase price of which $30 million goes to pay off third party debt = $70 million transaction for HSR purposes).
In asset acquisitions, assumption of liabilities continues to be additive to the purchase price (e.g., $50 purchase price plus $30 million in assumed liabilities = $80 million transaction for HSR purposes).

Antitrust M&A Snapshot | Q1 2021

Notification Threshold Under the Hart-Scott-Rodino Act Increased to $90 Million

Change in LBO Valuation for HSR Purposes

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