FTC Announces New Filing Fees Up to $2.25 Million and Annual Changes to US HSR Thresholds (2023)

The Federal Trade Commission (FTC) announced the annual changes to the Hart-Scott-Rodino (HSR) Act notification thresholds – effective for deals closing on or after February 27, 2023 – and the new HSR merger filing fees. 

The FTC is required by law to revise the jurisdictional thresholds annually, based on the change in gross national product. Accordingly, the 2023 Hart-Scott-Rodino reporting thresholds will increase by approximately 10% over 2022 thresholds. These changes will apply to deals closing on or after February 27, 2023, 30 days after the updated thresholds were published in the Federal Register. The application of these HSR filing thresholds, particularly to cross-border transactions, is not straightforward and requires a thorough understanding of the statute and the voluminous and complex implementing regulations.

The HSR size-of-transaction threshold for U.S. HSR filings will increase to US$111.4 million from US$101 million in 2022. Transactions in which the acquirer will hold voting securities, non-corporate interests, or assets valued above that amount (as calculated under the Act) may be reportable if the size-of-parties test is also satisfied and no exemptions are available. In determining reportability, parties must adhere to the applicable threshold that is (or will be) in effect at the time of closing. However, the applicable filing fee that must be paid is based on the filing fee threshold that is in effect at the time of the HSR filing.

The HSR size-of-parties threshold will also increase. It generally will require that one party have sales or assets of at least US$222.7 million and the other party have sales or assets of at least US$22.3 million. (Currently these thresholds are US$202 million and US$20.2 million, respectively.) Transactions valued at more than US$445.5 million will be subject to pre-merger notification without regard to the sales or assets of the parties (subject to the applicability of other exemptions). (Currently, this threshold is US$403.9 million.)

Certain dollar thresholds relevant to HSR exemptions, including those for acquisitions of non-US assets and voting securities, will also increase. The notification thresholds (which determine the filing fee payable) have increased as well, along with filing fees for the largest deals.

Filing fees and filing fee thresholds will also change, going into effect on February 27, 2023, due to the Merger Filing Fee Modernization Act of 2022.¹ In addition to announcing the new HSR thresholds, on January 23, 2023 the FTC also approved publication of new merger filing fees and filing fee thresholds to implement the Act. Filing fees will increase for the largest deals and decrease for smaller deals. 

The new filing fees, which will take effect on February 27, 2023 in order to implement the 2022 Act, will establish six filing fee thresholds (currently, there are three) based on the size of the proposed transaction: 
1.) US$30,000 for transactions valued at or above US$111.4 million but less than US$161.5 million; 
2.) US$100,000 for transactions valued at or above US$161.5 million but less than US$500 million; 
3.) US$250,000 for transactions valued at or above US$500 million but less than US$1 billion; 
4.) US$400,000 for transactions valued at or above US$1 billion but less than US$2 billion; 
5.) US$800,000 for transactions valued at or above US$2 billion but less than US$5 billion; and 
6.) US$2.25 million for transactions valued at or above US$5 billion.

Until the new filing fees and thresholds come into effect, transactions valued above US$101 million but less than $202 million will have a filing fee of US$45,000; transactions valued at US$202 million or greater but less than US$1,009.8 million will have a filing fee of US$125,000; and transactions valued at US$1,009.8 million or greater will have a filing fee of US$280,000.

To summarize, the new HSR thresholds are as follows:

Size-of-transaction threshold:
US$101 million will become US$111.4 million

Size-of-parties thresholds:
US$20.2 million will become US$22.3 million
US$202 million will become US$222.7 million

Size-of-parties valuation "cap":
US$403.9 million will become US$445.5 million

Filing fees under the Merger Filing Fee Modernization Act of 2022 (new, effective February 27, 2023): 

Civil penalty for violations of HSR Act rises:

On January 6, 2023, the FTC separately announced that the maximum civil penalty amount for violations of the HSR Act would increase from $46,517 to $50,120 per day. The new penalty amount became effective on January 11, 2023. The new penalty levels apply to civil penalties assessed after the effective date of the adjustment, including civil penalties whose associated violation predated the effective date.

Noncompliance with the HSR Act continues to carry serious penalties, as fines continue to mount for each day that a party is in violation of the Act; parties should consult with their counsel before acting.

Interlocking directorates and officers thresholds rise under Clayton Act Section 8:

Under Section 8 of the Clayton Act, a person is generally prohibited from forming an interlocking directorate – that is, serving simultaneously as an officer or director of two "competitor" corporations engaged in commerce – if each corporation has aggregated capital, surplus, and undivided profits exceeding a certain threshold amount. For 2023, effective as of January 20, 2023, the threshold that triggers this prohibition is US$45,257,000 (currently US$41,032,000). The exemption threshold will also increase; as of January 20, 2023, if either corporation has less than US$4,525,700 (currently US$4,103,400) in competitive sales, the Section 8 prohibition does not apply. Other de minimis exemptions include situations where the competitive sales of either corporation are less than 2% annually of the corporation's total sales, and where the competitive sales of both corporations are less than 4% annually of each corporation's total sales. We have seen a marked increase in enforcement actions under Section 8, so assuring compliance with this statutory provision is more important than ever.²

^{1 See "US Merger Filing Fees to Increase Dramatically for Large Deals," dated Dec. 27, 2022, https://www.whitecase.com/insight-alert/us-merger-filing-fees-increase-dramatically-large-deals. 
2 See "DOJ Announces Seven Director Resignations from Five US Public Company Boards in the Most Recent Wave of Reinvigorated Clayton Act Section 8 Enforcement," dated October 21, 2022, https://www.whitecase.com/insight-alert/doj-announces-seven-director-resignations-five-us-public-company-boards-most-recent.} 

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