• The FTC has increased the HSR premerger notifications thresholds, which are expected to come into effect in late February 2024 (30 days after publication in the Federal Register). The base size-of-transaction threshold will increase from US$111.4 million to US$119.5 million, so acquisitions resulting in total holdings below US$119.5 million will not be reportable.
• The FTC has also updated the HSR filings fees, which are expected to come into effect in late February 2024. The fee structure ranges from $30,000 (no change) to a top fee of US$2,335,000 (formerly US$2,250,000).
• The FTC also increased the Clayton Act Section 8 thresholds, which trigger prohibitions on persons serving as directors or officers of two competing corporations. Effective January 22, 2024, Section 8’s prohibitions may apply if each corporation has capital, surplus and undivided profits of more than US$48,559,000 (formerly US$45,257,000), and no statutory exemption is applicable.
• Lastly, the FTC increased the maximum civil penalty for HSR Act violations from US$50,120 to US$51,744 per day. This increased penalty is effective for all penalties assessed after January 10, 2024, even if the underlying violation preceded that date.

The Federal Trade Commission (the “FTC”) has announced its annual revisions to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) premerger notification thresholds, the Clayton Act Section 8 thresholds for interlocking directorates and the maximum civil penalty for violations of the HSR Act. These figures are revised annually based on changes in the gross national product.

The FTC has also announced the first annual revisions to the new HSR filing fee schedule enacted in 2023. The filing fees are adjusted annually based on the percentage increase, if any, in the Consumer Price Index.

Updated HSR Act Premerger Notification Thresholds. On January 22, 2024, the FTC announced the revised HSR premerger notification thresholds, which govern whether a proposed merger or acquisition must be reported to the antitrust agencies prior to its consummation. These thresholds are expected to come into effect in late February 2024 (30 days after publication in the Federal Register) and apply to transactions closing on or after that date.

The base size-of-transaction threshold will increase from US$111.4 million to US$119.5 million. Acquisitions resulting in total holdings below this threshold will not be reportable. Transactions resulting in the acquirer holding voting securities, controlling interests in noncorporate entities or assets valued above the US$119.5 million threshold may be reportable in either of the two following circumstances:

• The transaction will result in total holdings between US$119.5 million and US$478.0 million (formerly US$445.5 million) and the size-of-persons test is met, which occurs when either the acquiring or acquired person has at least US$239.0 million (formerly US$222.7 million) in gross assets or annual net sales, and the other person has at least US$23.9 million (formerly US$22.3 million) in gross assets or annual net sales;

or

• The transaction will result in total holdings above US$478.0 million (formerly US$445.5 million), as in this case the size-of-persons test does not apply.

Under the HSR Act, an acquiring person that makes incremental acquisitions of voting securities of a particular issuer may be required to file a notification each time its holdings cross one of these thresholds. The HSR Act creates five notification thresholds, which have also been increased: US$119.5 million (formerly US$111.4 million); US$239.0 million (formerly US$222.7 million); US$1,195.0 million (formerly US$1,113.7 million), 25% of voting securities if greater than US$2,390.0 million (formerly US$2,227.4 million); and 50% of voting securities.

To summarize:

Even if a transaction appears reportable based on the thresholds above, it may qualify for an HSR Act exemption. Assessment of HSR reportability is complex and requires a thorough understanding of the statute and implementing regulations. We recommend consulting with a lawyer experienced in HSR matters to determine whether your transaction is reportable.

Updated HSR Act Premerger Filing Fees. Parties that are required to file a premerger notification form under the HSR Act must pay a filing fee based on the size of transaction; the new fee schedule is outlined below. The new fees are expected to come into effect in late February 2024.

NEW HSR ACT FILING FEES

Updated Clayton Act Section 8 Thresholds for Interlocking Directorates. On January 22, 2024, the FTC published revisions to the Clayton Act Section 8 thresholds, which became effective on that date. Section 8 prohibits, with certain exceptions, a person from serving as a director or officer of two competing corporations. Section 8 may apply if each competitor corporation has capital, surplus and undivided profits of more than US$48,559,000 (formerly US$45,257,000). One exemption from this prohibition applies if the “competitive sales” of either corporation are less than US$4,855,900 (formerly US$4,525,700), while other exemptions are based on percentages of a corporation’s total sales. Because the application of the “competitive sales” concept and other aspects of Section 8 can be complex, we recommend consulting with a lawyer experienced in Section 8 matters to determine if the prohibition applies.

Updated Maximum Civil Penalty Amount for HSR Violations. On January 10, 2024, the FTC announced that the maximum civil penalty for violations of the HSR Act has increased from US$50,120 to US$51,744 per day. This increase applies to civil penalties assessed after January 10, 2024, even if the underlying violation preceded the effective date.

How Debevoise Can Help. Debevoise lawyers are well versed in the HSR Act and its reporting requirements. We are available to advise parties regarding the applicability of their transactions, as well as guide clients through the reporting process and any government investigation and/or litigation that may follow the HSR filing. We are also available to assist in evaluating the application of Clayton Act Section 8.