Authors: Steven Cernak and Luis Blanquez
On January 10, 2025, the Federal Trade Commission (FTC) issued its usual annual announcement to increase the Hart-Scott-Rodino (HSR) Act thresholds. The 2025 thresholds will take effect 30 days after publication in the Federal Register, which means February 10, 2025.
HSR requires the parties to submit certain information and documents and then wait for approval before closing a transaction. The FTC and DOJ then have 30 days to determine if they will allow the merger to proceed or seek much more detail through a “second request” for information. The parties may also ask for “Early Termination” to shorten the 30-day waiting period, although for nearly two years the agencies have suspended this option.
The HSR Act notification requirements apply to transactions that satisfy the specified “size of transaction” and “size of person” thresholds. These thresholds adjust annually to reflect changes in the U.S. gross national product.
Three thresholds determine the applicability of HSR filing requirements.
First, one of the parties to the transaction must be in commerce in the United States or otherwise affect U.S. commerce.
Second, the acquiring party must be acquiring securities, non-corporate interest, or assets of the target in excess of $126.4 million––the “size of transaction” threshold. Entities need not file notifications when the value of the voting securities and assets is below this threshold.
Third, if the transaction exceeds $126.4 million but does not exceed $505.8 million–the “size of the parties” threshold–– then at least one party involved in the transaction must have annual net sales or total assets of at least $252.9 million, and the other party must have annual net sales or total assets of at least $25.3 million.
Transactions valued at more than $505.8 million are reportable regardless of the size of the parties, unless an HSR Act exemption applies.
The FTC’s notice also implemented a new filing fee structure from the new legislation. The new structure will be in place starting with filings made on or after February 10, 2025. Below are the new fee thresholds:
2025
Size of the Transaction Merger Fee
$126.4 million – $179.4 million $30,000
$179.4 million – $555.5 million $105,000
$555.5 million – $1.111 billion $265,000
$1.111 billion – $2.222 billion $425,000
$2.222 billion – $5.555 billion $850,000
$5.555 billion or more $2,390,000
As a result of the new legislation, those fees will also adjust annually, based on changes to the consumer price index.
The FTC further published revised thresholds relating to Section 8 of the Clayton Act. Section 8 prohibits interlocking directorates in which one “person” serves simultaneously as an officer or director of competing corporations, subject to certain exceptions. Now, Section 8 of the Clayton Act applies when each of the competing corporations has capital, surplus, and undivided profits aggregating more than $51,380,000 and each corporation’s competitive sales are at least $5,138,000 again with certain exceptions.
The maximum civil penalty amount for violations of the HSR Act remains at $51,744 per day.
Important changes to the HSR filing rules will also become effective after February 10, 2025, significantly expanding the amount of information required from the parties. But on Jan. 10, 2025, the U.S. Chamber of Commerce, together with other business groups, challenged the FTC’s proposed changes to the HSR filing rules under the Administrative Procedure Act. This lawsuit does not affect the entry into force of the new thresholds, but it remains to be seen to what extent the lawsuit will affect the new amendments to the HSR filing rules.