By David Gordon
On January 26, the Federal Trade Commission (FTC) announced their annual update to the size-of-transaction thresholds for both premerger notifications and interlocking directorates. The FTC revises these thresholds annually based on changes in gross national product. This year’s update included significant increases.
Changes to Premerger Notification Thresholds
Under the Hart-Scott-Rodino Act (HSR), transactions that meet the following three tests are required to file premerger notifications with the FTC and the Antitrust Division of the Justice Department:
- The Commerce Test
– This test is met if either party is engaged in commerce or in any activity affecting commerce.
- The Size of Transaction Test
– The transaction must be valued at more than $50 million (as adjusted).
– Transactions valued at $50 million (as adjusted) or less are not required to file premerger notifications.
– Transactions that are valued at more than $50 million (as adjusted), but less than $200 million (as adjusted) are required to file premerger notifications only if they also meet the size of person test.
– Transactions valued at more than $200 million (as adjusted) are required to file if no other exemption applies.
- The Size of Person Test
– Only applies to transactions valued in excess of $50 million (as adjusted) but is $200 million (as adjusted) or less.
– At least one “person” involved in the transaction must have $100 million (as adjusted) or more in annual net sales or total assets, and the other person must have $10 million (as adjusted) or more in annual net sales or total assets.
– If a transaction falls within the size of transaction requirements, but does not meet the size of person test, then filings are not required.
The following changes will take effect February 28, 2018:
Changes to Size of Transaction Thresholds
| Original Threshold | 2018 Threshold |
| $50 million | $84.4 million |
| $200 million | $337.6 million |
Changes to Size of Person Thresholds
| Original Threshold | 2018 Threshold |
| $10 million | $16.9 million |
| $100 million | $168.8 million |
Filing Requirements
| Size of Transaction | Required to File Premerger Notifications? |
| $84.4 million or less | No |
| More than $84.4 million, but less than $337.6 million | Potentially required, only if Size of Person test is met. |
| $337.6 million or more | Potentially required regardless whether Size of Person test is met, if no other exemptions apply. |
Changes to HSR Filing Fees
In light of the above changes, the filing fee thresholds for notifications required under the HSR Act have also been adjusted.
| Size of Transaction | Filing Fee |
| More than $84.4 million, but less than $168.8 million | $45,000 |
| $168.8 million or more, but less than $843.9 million | $125,000 |
| $843.9 million or more | $280,000 |
Interlocking Directorates Thresholds
Section 8 of the Clayton Act prohibits interlocking directorates—the business practice of a member of a company’s board of directors also serving on the board of other companies or within another company’s management. As originally enacted, Section 8 applies to two competing corporations if each has capital, surplus, and undivided profits aggregating more than $10,000,000 and neither have competitive sales that are less than $1,000,000. Effective January 29, 2018, the FTC announced the following changes:
Changes to Interlocking Directorates Thresholds
| Original Threshold | 2018 Threshold |
| $10,000,000 (Capital, surplus, and undivided profits) |
$34,395,000 (Capital, surplus, and undivided profits) |
| $1,000,000 (Competitive sales) |
$3,439,500 (Competitive sales) |
Read More…
Revised Premerger Notification Thresholds as Published in the Federal Register
Revised Interlocking Directorates Thresholds as Published in the Federal Register
MSK Blog 