The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”), as amended, requires all persons contemplating certain mergers or acquisitions that meet or exceed the jurisdictional thresholds (shown below) to file a premerger notification (an “HSR Filing”) with the Federal Trade Commission (“FTC”) Premerger Notification Office and Department of Justice (“DOJ”) Antitrust Division and to wait a period of time before consummating the transaction.
Each fiscal year, the jurisdictional filing thresholds are adjusted to reflect the percentage change in the gross national product. The FTC published the new jurisdictional filing thresholds on January 26, 2023. These changes will become effective 30 days after being published in the Federal Register.
Additionally, 2023 will bring changes to the filing fee thresholds, with the introduction of six tiers of fees instead of three. More details on those changes specifically can be found here.
Filing Thresholds
Parties must analyze their transactions against the “Size of Transaction” and “Size of Person” reporting thresholds. The “Size of Transaction” test is concerned with the value of what is being acquired (through voting securities, non-corporate interests (NCI), assets or a combination thereof being transferred), whereas the “Size of Person” test generally measures a company based on its last regularly prepared annual statement of income and expenses and its last regularly prepared balance sheet. To determine whether an HSR Filing is needed, parties should analyze the transaction utilizing the following steps:
- Will an acquiring person hold an aggregate amount of voting securities and assets less than $111.4 million? If yes, then no HSR Filing is needed. If no, move to Step 2.
- Will an acquiring person hold in excess of $111.4 million but not in excess of $445.5 million? If yes, then move to Step 3. If no, then move to Step 4.
- Does one person in the transaction have sales or assets of at least $22.3 million? If yes, then an HSR Filing is needed. If no, then no HSR Filing is needed.
- Will an acquiring person hold in excess of $445.5 million? If yes, an HSR Filing is needed.
For purposes of this analysis, the value of any assets under consideration is the fair market value of the entity’s non-cash assets without regard to whether those assets are subject to a mortgage or how the assets might have depreciated for accounting purposes. The table below summarizes the 2023 reporting thresholds under the HSR Act.
| Filing Required | 2022 Threshold | 2023 Threshold | |
| Size of Transaction Test | No | X ≤ $101 million | X ≤ $111.4 million |
| Size of Transaction Test AND Size of Person Test |
Yes | $101 million < X ≤ $403.9 million AND Person 1: ≥ $20.2 million Person 2: ≥ $202 million |
$111.4 million < X ≤ $445.5 million AND Person 1: ≥ $22.3 million Person 2: ≥ $222.7 million |
| Size of Transaction Test | Yes | X > $403.9 million | X > $445.5 million |
Filing Fee
In connection with an HSR Filing, the acquiring person must pay a filing fee at the time of filing by electronic wire transfer. The Merger Filing Fee Modernization Act restructured the filing fee thresholds for 2023, with those changes effective February 27, 2023. Instead of the previous three-tiered structure seen in the filing fee thresholds for 2022, the new structure features six tiers.
| Value of Holding Securities and Assets to Be Held | Fee Amount |
| 2022 Threshold | |
| $101 million < X < $202 million | $45,000 |
| $202 million < X < $1.0098 billion | $125,000 |
| X ≥ $1.0098 billion | $280,000 |
| Value of Holding Securities and Assets to Be Held | Fee Amount |
| 2023 Threshold | |
| $111.4 million < X < $161.5 million | $30,000 |
| $161.5 million < X < $500 million | $100,000 |
| $500 million < X < $1 billion | $250,000 |
| $1 billion < X < $2 billion | $400,000 |
| $2 billion < X < $5 billion | $800,000 |
| X ≥ $5 billion | $2,250,000 |
The new filing fees are subject to their own annual adjustment, with the fees increased by an amount equal to the percentage increase in the Consumer Price Index, if any, over the previous year’s established level.
Penalty
Any person (or officer, director or partner) who fails to notify the FTC and DOJ of a reportable transaction faces a civil penalty of $50,120 for each day of noncompliance.
If you have any questions or would like additional information about this topic, please contact one of the following members of Hall Render’s Antitrust Practice Group:
- Nathan Chubb at (202) 780-2991 or nchubb@hallrender.com;
- William Berlin at (202) 370-9582 or wberlin@hallrender.com;
- Michael Greer at (317) 977-1493 or mgreer@hallrender.com;
- John Bowen at (317) 429-3629 or jbowen@hallrender.com;
- Hannah Clarke at (317) 429-3615 or hclarke@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot give legal advice outside of an attorney-client relationship.
