The Federal Trade Commission (the “FTC”) has announced the annual adjustment for 2019 of notification thresholds for proposed mergers and acquisitions under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”). The FTC is required to adjust these thresholds annually, based on the yearly change in U.S. gross national product. The changes become effective 30 days after publication in the Federal Register.
The HSR Act size-of-transaction threshold will increase from $84.4 million to $90 million. A transaction may require HSR filing if, as a result of the transaction, the acquirer will hold voting securities and assets of the acquired valued at more than $90 million but not more than $359.9 million (the new size-of-transaction maximum, see below), and the size-of-parties thresholds are also met.
The HSR Act size-of-parties thresholds will increase from $168.8 million and $16.9 million to $180 million and $18 million, respectively. A transaction may require HSR filing if it is valued in excess of the size-of-transaction threshold up to and including the size-of-transaction maximum, and one party has annual net sales or total assets of at least $180 million and the other party has annual net sales or total assets of at least $18 million.
Any transaction with a value of greater than $359.9 million will require a HSR filing, regardless of the size of the parties, unless another exemption applies.
In the same release, the FTC also announced the adjustment of thresholds in Section 8 of the Clayton Act that trigger the prohibition on “interlocking directorates” – where one person serves as a director or officer of two competing corporations (subject to certain exceptions). The prohibition may apply when (1) each corporation has capital, surplus, and undivided profits aggregating more than $36,564,000, and (2) each corporation’s competitive sales are at least $3,656,400. These new thresholds will become effective when published in the Federal Register.
Steptoe & Johnson PLLC has an experienced group of business attorneys who can help you analyze HSR Act issues. Please contact Bryan Prosek or John Chad with any questions on this alert.