The Federal Trade Commission (FTC) has announced the annual revisions to the monetary thresholds that determine whether companies are required to notify federal antitrust authorities about a transaction under Section 7A of the Clayton Act (the Hart-Scott-Rodino Antitrust Improvements Act [HSR]) and the monetary thresholds that trigger prohibitions on certain interlocking directorates under Section 8 of the Clayton Act. The values are adjusted annually based on changes in the GNP. The FTC published the new thresholds in the Federal Register on January 29, 2018, and they become effective 30 days after publication on February 28, 2018.
The FTC’s announcement impacts the notification thresholds for filings under the HSR Act, as well as certain other values under the HSR rules. 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 consummated. 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.”
The most important change is that the minimum size-of-transaction threshold will increase from the current $80.8 million to $84.4 million. The size-of-person thresholds will also increase as follows:
- For transactions valued between $84.4 million and $337.6 million, one party to the transaction must have $16.9 million in sales or assets and the other party must have $168.8 million in sales or assets, as reported on the last regularly prepared balance sheet or income statement.
- For transactions valued at greater than $337.6 million, no size-of-person threshold must be met to require an HSR filing.
The filing fees have not changed, but the monetary thresholds that dictate the required filing fee have similarly increased as follows:
|Filing Fee||Transaction Value|
|$45,000||$84.4 to $168.8 million|
|$125,000||$168.8 to $843.9 million|
|$280,000||$843.9 million or greater|
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 threshold 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 $34,395,000 are covered by Section 8(a)(1), and a violation can be found only if the competitive sales of each company are $3,439,500 or greater under Section 8(a)(2)(A).
If you have any questions concerning this briefing, please contact Mike Denniston at firstname.lastname@example.org, Emily Ruzic at email@example.com, or any other member of our Antitrust and Competition team.