Annual changes to merger and acquisition notification thresholds are mandated by the Hart-Scott-Rodino Act (HSR), which ties the threshold to the gross national product. As such, HSR notification thresholds are rising in 2023 as expected, but bipartisan legislation passed late last year means that starting in 2024, HSR-mandated filing fees will also be tied to an economic index. Katherine I. Funk and Alex S. Lewis of Baker Donelson discuss these changes and others, including an update on interlocking directorates.
The FTC has announced changes to the Hart-Scott-Rodino (HSR) Act notification thresholds and filing fees. Annual adjustments, based on changes in the gross national product, mean reporting thresholds for mergers and acquisitions will increase by about 10%, reflecting a rise in the GNP during 2022.
In addition, HSR filing fees will change significantly in 2023 for the first time this century due to the Merger Filing Fee Modernization Act of 2022, which became law in December 2022. From now on, the FTC will adjust HSR filing fees annually based on changes in the consumer price index.
The FTC approved the changes to the transaction and filing fee thresholds by a vote of 4-0 and published the changes in the Federal Register. The revised thresholds will apply to transactions closing on or after the effective date of the notice, which is 30 days after publication, or Feb. 22, 2023. Note that the application of the HSR filing thresholds to transactions requires a thorough understanding of the statute and the complex implementing regulations.
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The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) governs the timing of mergers, acquisitions and other transactions — and failure to comply can carry significant penalties.Read more
Revised HSR filing thresholds
The HSR Act requires parties to a transaction that meets or exceeds the jurisdictional thresholds in the Act to file notification with the FTC and DOJ, and wait until the expiration or termination of the statutory 30-day waiting period before closing the transaction. Transactions that meet the following thresholds and will close on or after Feb. 22 will require HSR notification unless an applicable exemption applies:
- Transactions valued between $111.4 million and $445.5 million where:
- One party holds assets or has annual net sales of $222.7 million; and
- The other party holds assets or has annual net sales of $22.3 million.
- Transactions valued in excess of $445.5 million are reportable notwithstanding “size of the parties.”
Revised and updated transaction filing fees based on size of transaction
|Filing fee||Size of transaction|
|$100,000||$161.5 million-$500 million|
|$250,000||$500 million-$1 billion|
|$400,000||$1 billion-$2 billion|
|$800,000||$2 billion-$5 billion|
Civil penalty for failure to file HSR notification
The current civil penalty for violations of the HSR Act is $50,120 per day. The FTC adjusted the amount on Jan. 6, 2023, pursuant to the Federal Civil Penalties Inflation Adjustment Act of 2015, which requires annual inflation adjustments based on a prescribed formula.
Revised interlocking directorate thresholds
The 2023 thresholds under Section 8 of the Act that trigger prohibitions on certain interlocking memberships on corporate boards of directors are $45,257,000 for Section 8(a)(l) and $4,525,700 for Section 8(a)(2)(A). These thresholds became effective upon publication in the Federal Register, or Jan. 23, 2023.