2021 Decreases to HSR Act Thresholds
On February 2, 2021, the Federal Trade Commission (“FTC”) announced the annual changes to the Hart-Scott-Rodino Antitrust Improvement Act of 1976 (the “HSR Act”) pre-merger notification thresholds (see attached Federal Register publication here). The thresholds for 2021 decreased by 2.1% from the 2020 amounts, based on the change in gross national product during 2020. This is the first time since 2010 and only the second time since 2004 that the threshold amounts have decreased.
The revised thresholds will apply to any transaction that closes on or after March 4, 2021. If a transaction closes before March 4, 2021 the current 2020 thresholds will continue to apply.
The new thresholds will decrease the minimum value of a transaction that could trigger an HSR Act filing, as follows:
Size of Transaction
|Transaction Value||HSR Act Filing Required?|
|$92 million or less (from 2020 threshold of $94 million)||No|
|More than $92 million up to $368 million (from 2020 threshold of $376 million||Only if size of person test is met (see below)|
|More than $368 million (from 2020 threshold of $376 million)||Yes|
Size of Person
|Total assets or annual net sales of||2020 Threshold||Adjusted 2021 Threshold|
|Acquiring/acquired person||$188 million||$184 million|
|Other person||$18.8 million||$18.4 million|
Although the filing fee itself has not changed, the new filing-fee thresholds will also take effect on March 4, 2021 and will apply to transactions filing an HSR Act Notification and Report Form on or after that date. For transactions that have been signed but have not yet closed, the applicable filing-fee thresholds are those in effect at the time of filing the HSR Act Notification and Report Form.
|Transaction Value||Filing Fee|
|More than $92 million but less than $188 million||$45,000|
|$184 million but less than $919.9 million||$125,000|
|$919.9 million or more||$280,000|
The FTC also recently announced an increase in the maximum daily civil penalty for violations of the HSR Act from $42,530 per day to $43,792 per day (see attached Federal Register publication here). This change became effective on January 13, 2021 when it was published in the Federal Register. This change will only apply to penalties that are assessed after January 13, 2021, even if the actions causing the violation occurred before that effective date.
As a general summary of the HSR Act, the FTC and Department of Justice must be notified before the consummation of mergers, acquisitions, and other transactions that meet certain monetary thresholds. Once the parties have filed their HSR Act Notification and Report Forms, the enforcement agencies have up to 30 days to decide whether to seek additional information—a process commonly known as a “second request.” The parties also have the option to request “Early Termination” which, if granted, will shorten the 30-day waiting period to approximately two weeks. If the 30-day waiting period expires without the issuance of a second request, or if Early Termination is granted, the parties are free to close the transaction immediately. If a second request is issued, the government has 30 days from the date the parties comply with the request to decide whether to let the transaction proceed or attempt to block it in court.