FTC Annual Changes to U.S. HSR Thresholds Will Be Effective March 6; Highest Filing Fees Now $2.335 Million

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 March 6, 2024 – and updated filing fee thresholds, effective for deals filing on or after March 6, 2024.

The FTC is required by law to revise the jurisdictional thresholds annually, based on the change in gross national product. Accordingly, the 2024 Hart-Scott-Rodino reporting thresholds will increase by approximately 7% over 2023 thresholds. These changes will become effective for deals closing on or after March 6, 2024, 30 days after the changes 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$119.5 million in 2024, up from US$111.4 million in 2023. 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. The applicable filing fee that must be paid is based on the filing fee threshold that is in effect at the time of 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$239 million and the other party have sales or assets of at least US$23.9 million. (Currently these thresholds are US$222.7 million and US$22.3 million, respectively.) Transactions valued at more than US$478 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$445.5 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.

The filing fees and filing fee thresholds originally established with the Merger Filing Fee Modernization Act of 2022 will also increase, with the new thresholds and fee amounts coming into effect on March 6, 2024.

The new thresholds and fees are as follows:

1.) US$30,000 for transactions valued at or above US$119.5 million but less than US$173.3 million;
2.) US$105,000 for transactions valued at or above US$173.3 million but less than US$536.5 million;
3.) US$260,000 for transactions valued at or above US$536.5 million but less than US$1.073 billion;
4.) US$415,000 for transactions valued at or above US$1.073 billion but less than US$2.146 billion;
5.) US$830,000 for transactions valued at or above US$2.146 billion but less than US$5.365 billion; and
6.) US$2.335 million for transactions valued at or above US$5.365 billion.

Until the new filing fees and thresholds come into effect, transactions valued at or above US$111.4 million but less than US$161.5 million will have a filing fee of US$30,000; transactions valued at or above US$161.5 million but less than US$500 million will have a filing fee of US$100,000; transactions valued at or above US$500 million but less than US$1 billion will have a filing fee of US$250,000; transactions valued at or above US$1 billion but less than US$2 billion will have a filing fee of US$400,000; transactions valued at or above US$2 billion but less than US$5 billion will have a filing fee of US$800,000; and transactions valued at or above US$5 billion will have a filing fee of US $2.25 million.

To summarize, the new HSR thresholds are as follows:

Size-of-transaction threshold:

US$111.4 million will become US$119.5 million

Size-of-parties thresholds:

US$22.3 million will become US$23.9 million
US$222.7 million will become US$239 million

Size-of-parties valuation "cap":

US$445.5 million will become US$478 million

Filing fees:

Civil penalty for violations of HSR Act rises:

The FTC has also adjusted the maximum civil penalty amount for violations of the HSR Act, increasing the penalty from $50,120 to $51,744 per day. The new penalty amount was published in the Federal Register on January 10, 2024 and became effective the same day. 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 2024, effective as of January 22, 2024, the threshold that triggers this prohibition is US$48,559,000 (up from US$45,257,000 ). The exemption threshold will also increase; as of January 22, 2024, if either corporation has less than US$4,855,900 (up from US$4,525,700) 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.¹

_{1 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. See also "DOJ Antitrust Announces Five More Director Resignations from US Company Boards in Continued Aggressive Clayton Act Section 8 Enforcement, Increasing the Spotlight on Private Equity (PE) and Technology Firms," dated March 17, 2023, https://www.whitecase.com/insight-alert/doj-antitrust-announces-five-more-director-resignations-us-company-boards-continued.}

_{White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.}

_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}

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