FTC Revises HSR and Interlocking Directorate Thresholds

Antitrust Alert

Client Alert


HSR Revisions

The Federal Trade Commission (“FTC”) recently announced the annual changes to the notification thresholds for filings under the Hart-Scott-Rodino Antitrust Improvements Act (“HSR”), as well as certain other values under the HSR rules. As background, the HSR Act requires that acquisitions of voting securities or assets that exceed certain thresholds be disclosed to U.S. antitrust authorities for review before they can be completed. The “size-of-transaction threshold” requires that the transaction exceeds a certain value. Under certain circumstances, the parties involved also have to exceed “size-of-person thresholds.” This year’s values, which are adjusted annually based on changes in the GNP, take effect in mid-to-late February 2013. The FTC also adjusted the safe harbor thresholds that govern interlocking directorates in competing companies.

The most important change is that the minimum size-of-transaction threshold will increase from the current $68.2 million to $70.9 million. The size-of-person thresholds will also increase as follows:

  • For transactions valued between $70.9 million and $283.6 million, one party to the transaction must have $14.2 million in sales or assets and the other party must have $141.8 million in sales or assets, as reported on the last regularly prepared balance sheet or income statement.
  • For transactions valued at greater than $283.6 million, no size-of-person threshold must be met to require an HSR filing.

The filing fee thresholds have similarly increased as follows:

Filing Fee Transaction Value
$45,000 $70.9 to $141.8 million
$125,000 $141.8 to $709.1 million
$280,000 $709.1 million or greater


Underscoring the importance of compliance with the HSR Act, this past September the Department of Justice, on behalf of the FTC, signed a consent decree with Biglari Holdings, Inc., requiring the company to pay an $850,000 civil penalty for failing to file under the HSR Act. The company took advantage of a rule that exempts an acquirer from filing if the acquisition is up to 10% of the stock and was “made solely for the purpose of investment.” The FTC/DOJ contended that Bilgari intended to be actively involved in the management of the acquired company (including seeking a seat on the Board) and was therefore not entitled to the “passive investor” exemption. Violations of the HSR Act are subject to a $16,000/day civil penalty, though most often an inadvertent failure to file will not result in civil penalty.

Interlocking Directorates

Section 8 of the Clayton Act generally prohibits one person from serving as a director or officer of two competing corporations if two thresholds are met – one relates to the companies’ profitability and one relates to the amount of competitive sales between the companies. The statute requires the FTC to revise these thresholds annually, also based on changes to the GNP. Effective immediately, only companies with capital, surplus, and undivided profits aggregating more than $28,883,000 are covered by Section 8, and a violation can be found only if the competitive sales of each company are $2,888,300 or greater.

If you have any questions concerning this briefing, please contact Michael Denniston at mdenniston@bradley.com.