Hart-Scott-Rodino Pre-Merger Notification 2019 Adjustments to Filing Thresholds

The Hart-Scott-Rodino Antitrust Improvements Act (the “HSR Act”) requires parties contemplating entering into transactions that meet certain “size of transaction” and “size of person” thresholds to submit pre-merger notification with the Federal Trade Commission (“FTC”) and the Department of Justice, if an exemption is not otherwise available. With few exceptions, both the seller and the buyer must make a separate filing with each agency. The submission of the parties’ complete filings commences a mandatory waiting period (commencing the day after the last filing) before the transaction may be consummated.

Subject to certain exemptions and exceptions, an HSR filing is required in the following situations under the 2109 adjusted thresholds:

• Transaction is valued at more than $359.9 million
• Transaction is valued at more than $90 million and up to $359.9 million AND the “size of person” thresholds are met

Transactions valued at $90 million or less do not trigger an HSR filing under the 2019 adjustments.

The pre-merger thresholds are adjusted each year to reflect changes in the U.S. gross national product. The annual update to the HSR pre-merger notification thresholds will become effective on April 3, 2019, and will remain effective until adjusted for 2020 (expected in the first quarter of 2020).

The filing requirement is triggered if the transaction is valued at more than $359.9 million, even if the “size of person” thresholds are not met. The filing requirement is also triggered if the transaction is valued at more than $90 million and up to $359.9 million if the “size of person” thresholds are met and the transaction is not otherwise exempt. No HSR filing is required if the transaction is valued at $90 million or less. The “size of transaction” is calculated based on the value of voting securities, non-corporate interests (such as interests in LLCs or partnerships), and assets acquired in the transaction.

If the transaction is valued at more than $90 million and up to $359.9 million,
the HSR filing requirement will generally be triggered if one party to the transaction has total assets or annual revenues of at least $18 million, and the other party has assets or annual revenues of at least $180 million. The “size of person” thresholds are calculated on the basis of annual sales or total assets of the ultimate parent entity of the parties to the transaction. The “size of persons” test is irrelevant to transactions valued at more than $359.9, which are required to make an HSR filing regardless of the “size of persons.”

The filing fees applicable to transactions in 2918 remain unchanged, but they are
based upon the 2019 adjusted transaction sizes:

Consummation of a reportable merger without filing a pre-merger notification and observing the statutory waiting period can subject a party to civil penalties
The HSR Act maximum civil penalties for non-compliance with the Act were significantly increased in 2016. The FTC now adjusts the maximum civil penalty amounts annually. On February 14, 2019, the FTC adjusted the maximum civil penalty amount for violations of the HSR Act to $42,530 per day, effective immediately.