4 minute read | January.28.2025
The U.S. Federal Trade Commission (FTC) has announced revised filing thresholds as required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (HSR Act), along with adjusted HSR filing fee tiers and amounts.
Companies should consult with HSR counsel early in the deal process to assess potential filing requirements, particularly as an expanded HSR Form – requiring more information and documents from most parties, particularly buyers – is scheduled to take effect on February 10, 2025. Understanding as soon as possible whether a transaction will require an HSR filing – and, if so, the impact of that filing on the overall deal timeline – will be even more important for deals in 2025 and beyond.
The HSR Act applies to a wide variety of transactions, including those outside the usual M&A context. Potentially reportable transactions include mergers and acquisitions, minority stock positions (including compensation equity and financing rounds), asset acquisitions, joint venture formations, and grants of exclusive licenses, among others.
The HSR Act and related regulations (HSR Rules) require parties to certain transactions to submit an HSR filing and, generally, wait 30 days (or more if regulators request additional information) before closing, giving the agency time to review the transaction for potential antitrust concerns.
An HSR filing may be required when, as a result of the transaction, the acquiring person will hold voting securities, assets, and/or non-corporate interests valued in excess of the minimum HSR Size of Transaction threshold at the time of closing, as calculated under the HSR Rules (the “Size of Transaction”).
Because the HSR value considers what is held as a result of the transaction, the total Size of Transaction will include not only the value of what will be acquired in the present transaction but also the value of certain voting securities, non-corporate interests, and assets previously acquired. Contingent payments, earnouts, liabilities, debt paid off or assumed, and other forms of consideration can also impact the Size of Transaction.
A higher minimum HSR “Size of Transaction” threshold will apply to transactions closing on or after the date that is 30 days from February 21, 2025. As a result, a transaction will be potentially reportable under the HSR Act only if it is valued in excess of $126.4 million.
Size of Transaction Test |
|
2024 Threshold |
2025 Threshold |
> $119.5 million |
> $126.4 million |
Certain transactions that satisfy the Size of Transaction threshold must also satisfy the “Size of Person” test to be HSR-reportable. The relevant Size of Person thresholds will also increase and are reflected in the general Size of Person test set out below. The HSR Act and Rules apply the Size of Person test differently in certain situations – for example, the formation of joint ventures and where an Acquired Person is not engaged in manufacturing.
Size of Person Test |
|
Size of Transaction > $126.4 million, but ≤ $505.8 million |
One party (or its Ultimate Parent Entity) has ≥ $252.9 million in total assets or annual net sales,and |
The other party (or its Ultimate Parent Entity) has ≥ $25.3 million in total assets or annual net sales. |
|
Size of Transaction > $505.8 million |
Reportable regardless of the Size of Person. |
The HSR Act and Rules set out a number of exemptions. Even where a transaction satisfies the Size of Transaction and Size of Person thresholds, an exemption may render the transaction non-reportable or impact the Size of Transaction calculation.
Under the HSR Rules, the buyer must pay the filing fee for a reportable acquisition (although parties may agree to share the fee or shift responsibility to the seller). The amount depends on the Size of Transaction, as calculated under the HSR Rules.
This year’s adjustment results in no change to the filing fee for the two lowest fee tiers. There is an upward shift, however, for higher fee tiers.
New HSR Filing Fees |
|
Size of Transaction |
Filing Fee |
Less than $179.4 million |
$30,000 |
$179.4 million or more but less than $555.5 million |
$105,000 |
$555.5 million or more but less than $1.111 billion |
$265,000 |
$1.111 billion or more but less than $2.222 billion |
$425,000 |
$2.222 billion or more but less than $5.555 billion |
$850,000 |
$5.555 billion or more |
$2,390,000 |
Failure to file can carry a significant financial penalty (adjusted annually) for each day of non-compliance. The maximum civil penalty as of January 17, 2025 is $53,088 for each day in violation.
Want to know more? Contact one of the authors.