HSR threshold adjustments and reportability for 2023

When Congress passed the Hart-Scott-Rodino Antitrust Improvements Act of 1976, it created minimum dollar thresholds for mandatory premerger reporting. In 2000, Congress amended the HSR statute to require an annual adjustment of these thresholds based on the change in gross national product. As a result, reportability under the Act changes from year to year as the statutory thresholds adjust.

The HSR statute requires the Commission to assess and collect filing fees from persons acquiring voting securities or assets under the Act. Recently, Congress passed the 2023 Consolidated Appropriations Act which requires the Commission to create new filing fee tiers and new filing fees. The fees will be adjusted annually along with the thresholds.

The Commission recently announced the revised HSR jurisdictional thresholds and filing fee schedule, which will become effective on February 27, 2023. The following rules of thumb should help parties determine the relevant thresholds and any resulting reporting obligations that apply based on when the filing is made, when the transaction closes, and when the thresholds adjust.

Rule 1: The correct threshold for determining reportability is the one in effect at the time of closing.

The most significant threshold in determining reportability is the minimum size of transaction threshold. This is often referred to as the “$50 million (as adjusted)” threshold because it started at $50 million and is now adjusted annually. For 2023, that threshold will be $111.4 million. To determine reportability for a deal that will close around the time that the new threshold becomes effective, look to what the $50 million (as adjusted) threshold will be at the time of closing. For example, a deal valued at $107 million, which will close on or after March 1, is not reportable because it is below the new minimum size of transaction threshold, even though it exceeds the current threshold of $101 million.

Here are the new jurisdictional thresholds, effective on February 27, 2023:

Rule 2: The filing fee is determined by the value of the transaction at the time of filing.

If you determine that a transaction is reportable, the filing fee should be based on the filing fee threshold that is in effect at the time of filing. Here are the new filing fee thresholds, revised in accordance with the 2023 Consolidated Appropriations Act and effective on February 27, 2023:

Rule 3: Notification thresholds for subsequent purchases adjust yearly, too.

The HSR Rules contain additional notification thresholds that allow parties to close certain subsequent transactions without making another filing every time additional voting shares of the same person are acquired. When an HSR notification is filed, Section 802.21 provides the acquiring person with one year to reach the notification threshold in place at the time that they filed, even though the notification threshold may have subsequently been adjusted during that year. Section 802.21 also specifies that once the filed-for waiting period ends or terminates, you can acquire up to the next threshold over the next five years without filing again.

Here’s how this works. If you file on February 1, 2023, for a $115 million voting securities acquisition that will close sometime in March 2023, you should file to cross the $50 million (as adjusted) threshold. You then have one year to acquire more than $101 million of voting securities, even though the $50 million (as adjusted) threshold has adjusted to $111.4 million and may be higher next year when the thresholds adjust again.

The next relevant threshold is the “$100 million (as adjusted)” threshold (so called because it started as $100 million and is now adjusted annually). Thus, you have five years to acquire up to the next notification threshold -- in this case, the $100 million (as adjusted) threshold -- without an additional HSR filing. In each subsequent year of the five-year period under Section 802.21, that threshold will adjust and you should always look to the revised threshold in effect at the time. The revised $100 million (as adjusted) threshold for 2023 will be $222.7 million, but in 2024, it will likely be higher and you would look to the higher 2024 figure for evaluating additional acquisitions at that time.

As always, contact the PNO with specific questions regarding the HSR rules.