Filing Threshold Will be Increased to $50 Million; Fees to Vary Based on Size of Transaction
On February 1, 2001, significant changes will take effect regarding the filing requirements of the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976 (15 U.S.C. 18a), which requires certain companies and others to notify the Federal Trade Commission and the U.S. Department of Justice (DOJ) before completing transactions such as mergers and acquisitions. Chief among these changes are an increase from $15 million to $50 million in the transaction value threshold over which companies must file premerger notification forms, as well as the implementation of a new tiered fee structure, with companies paying $45,000 for transactions valued at less than $100 million, $125,000 for transactions valued at $100 million to less than $500 million, and $280,000 for transactions valued at $500 million or more.
Under the HSR Act's provisions, certain acquired and acquiring persons must file a notification and report form with the FTC and the DOJ to provide advance notification of mergers and acquisitions. The agencies use this information to determine if the proposed transaction may be anticompetitive and to take enforcement action, if appropriate, to prevent the consummation of transactions that violate Section 7 of the Clayton Act. Only after observing the waiting period under the HSR Act may the companies complete the proposed transaction.
Through the reform bill signed by the President, the following changes will occur in the HSR filing requirements:
- The size of transaction threshold will increase to over $50 million (replacing the current over $15 million threshold).
- The 15 percent size of transaction threshold will be eliminated. This means that the over $50 million threshold will be an absolute floor -- no transaction resulting in an acquiring person holding $50 million or less of assets or voting securities of an acquired person will have to be reported.
- Transactions valued at more than $200 million will be reportable without regard to "size of person." The current size of person test (which generally requires one side of the transaction to have sales or assets in excess of $100 million and the other $10 million) will continue to be in place for transactions valued at $200 million or less.
- All dollar thresholds will be adjusted each fiscal year, beginning with fiscal year 2005, to reflect changes in the gross national product during the previous year.
- A tiered fee structure will be implemented, replacing the existing uniform filing fee. Currently, the acquiring person in all reportable transactions must pay a $45,000 filing fee. Under the new legislation, the fee that the acquiring person must pay will be based on the value of the voting securities or assets held as a result of the transaction. The fees will range from $45,000 to $280,000, as detailed above. The dollar thresholds will be adjusted annually, beginning with fiscal year 2005, to reflect changes in the GNP during the previous year.
- The length of the waiting period that follows substantial compliance with a "second request" for additional information will become 30 days for most transactions (instead of 20 days under the current law). The 10-day period for cash tenders (and bankruptcy transactions) will not change.
- If the end of any waiting period is a Saturday, Sunday or legal holiday, it will end on the next regular business day.
In accordance with these statutory reforms, the Commission, with the concurrence of the DOJ Assistant Attorney General for Antitrust, has implemented certain changes to its premerger notification rules and notification form. In conjunction with these rule changes, the Commission has also amended its Rules of Practice to reflect an internal appeals process for second requests. Premerger rules changes are detailed on the Commission's Internet Web site within the Antitrust/Competition (Premerger/Hart-Scott-Rodino Act) section. The changes to the premerger rules and notification form and the changes to the Rules of Practice are being published in two separate Federal Register notices and will become effective on February 1, 2001. The Commission has also approved publication of an additional Federal Register notice setting forth certain proposed HSR amendments for public comment for 45 days after Federal Register publication.
The Commission votes to approve publication of these notices were each 5-0. The notices will be published in the Federal Register shortly. Comments should be sent to: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Ave., NW, Washington, D.C. 20580. Comments may also be sent via e-mail to: email@example.com.
Copies of the HSR reform legislation and a summary of the changes that will take effect on February 1 are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.
Mitchell J. Katz
Office of Public Affairs
Marian R. Bruno
Bureau of Competition
(File No. P989316)