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Hart-Scott-Rodino Filing Thresholds to Increase

February 2018
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Effective February 28, the minimum dollar thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and its rules and regulations (the HSR Act) will increase. The thresholds determine whether companies are required to notify federal antitrust authorities before consummating a transaction. The increased thresholds will give both buyer and seller more leeway to possibly avoid the expense and distraction of filing for antitrust clearance before closing a transaction.

The HSR Act "size of transaction" threshold will increase from $80.8 million to $84.4 million. Transactions in which the acquiring party will hold voting securities, non-corporate interests, or assets valued above $84.4 million (as determined under the HSR Act’s rules and regulations) may require a pre-merger notification if the "size of parties" test is also satisfied and no HSR Act exemptions are applicable. The closing date of the transaction determines which threshold applies.

For transactions valued at more than $84.4 million but less than $337.6 million, the "size of parties" test thresholds will also increase. Generally, the ultimate parent entity of one party to the transaction must have annual net sales or total assets of at least $168.8 million (up from $161.5 million) and the ultimate parent entity of the other party must have annual net sales or total assets of at least $16.9 million (up from $16.2 million). Transactions valued at $337.6 million (up from $323 million) or more must be reported, regardless of the size of parties involved in the transaction, unless an exemption applies.

The Federal Trade Commission (FTC) is required by law to annually revise these jurisdictional HSR Act thresholds based upon the change in gross national product. The HSR Act requires companies of a certain size involved in a transaction that exceeds the filing thresholds to file a pre-merger notification with the FTC and Department of Justice and observe a waiting period unless an HSR Act exemption applies.

The applicable HSR Act filing fees will not increase, although the new thresholds described above apply: a $45,000 filing fee for transactions valued at $84.4 million up to $168.8 million; a $125,000 filing fee for transactions valued at $168.8 million up to $843.9 million; and a $280,000 filing fee for transactions valued at $843.9 million or more.

Finally, effective January 22, the FTC increased the maximum daily civil penalties for noncompliance with HSR requirements: up to $41,484 for each day of violation, based on the increase in the gross national product.

This Client Alert has been prepared by Tucker Ellis LLP for the use of our clients. Although prepared by professionals, it should not be used as a substitute for legal counseling in specific situations. Readers should not act upon the information contained herein without professional guidance.

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