On Jan. 22, 2024, the Federal Trade Commission (FTC) announced new premerger filing thresholds under the Hart-Scott-Rodino Act (HSR Act) and new filing fee thresholds under the Merger Filing Fee Modernization Act of 2022. The HSR Act generally requires parties in mergers clearing certain thresholds to notify the FTC and the Antitrust Division of the U.S. Department of Justice of the transaction and observe a waiting period before closing.
The HSR Act directs the FTC to revise the thresholds governing the size-of-transaction and size-of-person tests each year in accordance with changes in the gross national product. Transactions that meet these two tests (or the size-of-transaction test only for transactions valued at above $478 million) are reportable under the HSR Act unless an exemption applies.
The 2024 thresholds will take effect 30 days after publication in the Federal Register, which will occur in the coming days. The value of the transaction for purposes of the thresholds is measured at the time of the closing of the transaction. The key threshold values are as follows:
- Transactions valued above $119.5 million will meet the size-of-transaction test. Under this test, a transaction is reportable only if the value of all voting securities, noncorporate interests and assets that will be held by the acquiring person as a result of the transaction exceed this threshold.
- The size-of-person test will not apply to transactions valued at $478 million or less. This threshold ensures that the FTC receives notice of large mergers even when the parties themselves are not large enough to satisfy the size-of-person test. Thus, any transaction exceeding this size-of-transaction threshold is reportable unless an exemption applies.
- The size-of-person test is met where one party meets a threshold of $23.9 million or more and the other party meets a threshold of $239 million or more. A transaction satisfies the size-of-person test when the value of the assets and/or annual revenues of one party exceeds the higher threshold and the value of the assets and/or annual revenues of the other party exceeds the lower threshold, subject to additional criteria set forth in the HSR rules.
In its announcement, the FTC also announced new thresholds for filing fees. The new fees also will take effect 30 days after publication in the Federal Register. The new thresholds are as follows:
| Filing Fee | Value of Transaction |
|---|---|
| $30,000 | $119.5 million ≤ Value of Transaction > $173.3 million |
| $105,000 | $173.3 million ≤ Value of Transaction > $536.5 million |
| $260,000 | $536.5 million ≤ Value of Transaction > $1.073 billion |
| $415,000 | $1.073 billion ≤ Value of Transaction > $2.146 billion |
| $830,000 | $2.146 billion ≤ Value of Transaction > $5.365 billion |
| $2,335,000 | $5.365 billion ≤ Value of Transaction |
McGuireWoods’ antitrust lawyers are highly skilled in guiding parties to a transaction through the HSR Act investigatory process, and can help clients determine how these new rules will affect the reportability of any potential transaction under the HSR Act.