By Tod Northman

The Federal Trade Commission (FTC) released the annual changes to the minimum size of transaction threshold under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976, as amended. The minimum reporting thresholds will increase by approximately 4.4% over the 2019 thresholds. These increases will take effect February 27, 2020 – 30 days after their publication in the Federal Register.

FTC Annual HSR Act Revisions

By law, the FTC is required to revise HSR Act thresholds annually by the end of January based on the change in gross national product. The HSR Act requires parties of a certain size to notify the FTC and the DOJ and observe a waiting period before consummating certain transactions above a transaction size threshold, unless the transaction is exempt.

Size of the Transaction Threshold

The most significant threshold to determine reportability to the FTC is the minimum size of the transaction threshold. In 2020, the HSR Act “size of transaction” threshold will increase from $90 million USD to $94 million USD for transactions that also satisfy the “size of parties” test. For transactions that are expected to close around the effective date of the new threshold, the correct threshold for determining reportability is the one effective at the time of the closing.

Despite being reportable based on the above threshold, a transaction still may qualify for an HSR Act exemption.

Size of the Parties Test

If a transaction is HSR reportable, the FTC filing fee for that transaction is based on the filing fee threshold in effect at the time of filing. For 2020, the cost of the filing fees themselves remain the same as 2019; however, the FTC increased the 2020 thresholds for calculating the correct fee from the previous year.

The new filing fee thresholds are as follows: a $45,000 USD filing fee for those transactions valued over $94 million USD but under $188 million USD; a $125,000 USD filing fee for those transactions valued over $188 million USD but under $940.1 million USD; and a $280,000 USD filing fee for those transactions valued at $940.1 million USD or more.

Other Considerations – Section 8 of the Clayton Act

HSR Act compliance may be bypassed in transactions that do not meet the minimum jurisdictional thresholds or have an exemption to filing available; however, “no obligation to file under the HSR” is not synonymous with “no antitrust issues.”

On January 21, 2020, the FTC announced the revised thresholds for interlocking directorates required by the 1990 amendment of Section 8 of the Clayton Act. The provision prohibits a person from serving as a director or officer in two competing corporations if certain thresholds are met. These thresholds, found under Sections 8(a)(1) and 8(a)(2), also require annual revision by the FTC. In 2020, the thresholds increased from $35,564,000 USD to $38,204,000 for Section 8(a)(1), and from $3,656,400 USD to $3,820,400 USD for Section 8(a)(2).

As a result of the adjustments, Section 8 of the Clayton Act shall apply to corporations with capital, surplus, and undivided profits totaling more than $38,204,000 USD, unless (1) the competitive sales of either corporation are less than $3,820,400 USD; (2) the competitive sales of either corporation are less than two percent of that corporation’s total sales; or (3) the competitive sales of each corporation are less than four percent of that corporation’s total sales.