International Law

By John W. Arden

FTC Announces Revised Thresholds for Premerger Notification Process

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The Federal Trade Commission announced today its revised thresholds for acquisitions and mergers subject to the report-and-wait requirements of the Hart-Scott-Rodino (HSR) Act. The new thresholds will likely be published officially in the Federal Register next week and become effective 30 days later.

Pursuant to the HSR Act, plans for large acquisitions and mergers must be disclosed to the Department of Justice and the FTC to enable the federal antitrust enforcement authorities to examine their competitive effects and have an opportunity to challenge them under the antitrust laws prior to consummation. Only the transactions that exceed the jurisdictional thresholds need to be reported on the Notification and Report Form.

Amendments to the HSR Act in 2000 imposed new thresholds and called for indexing of these thresholds for inflation annually beginning in Fiscal Year 2005. They have since been revised based on the change in Gross National Product in 2006 and 2007.

Original Thresholds for 2000

Between February 1, 2001, and March 2, 2005, all acquisitions that resulted in an acquirer holding an aggregate total amount of the voting securities and assets of the acquired party in excess of $200 million were reportable, unless otherwise exempted. On the other extreme, no transaction resulting in an acquiring person holding $50 million or less of assets or voting securities of an acquired person needed to be reported.

The reportability of transactions falling between these boundaries is based on the "size of person" test (which generally required one side of the transaction to have sales or assets in excess of $100 million and the other $10 million).

New Thresholds for 2008

Under the revised thresholds announced today, acquisitions that result in an acquirer holding an aggregate total amount of the voting securities and assets of the acquired party in excess of $252.3 million will be reportable (up from the current $239.2 million), unless otherwise exempted. And no transaction resulting in an acquiring person holding $63.1 million or less (up from $59.8 million or less) of assets or voting securities of an acquired person will need to be reported.

Under the "size of person" test, one party will have to have sales or assets in excess of $126.2 million and the other $12.6 million (up from $119.6 million and $12.0 million, respectively).

Filing Fees

Along with notifying the agencies, parties must pay premerger filing fees. The fees are based on the size of the transaction. Under the revised thresholds, a filing fee of $45,000 will be required for transactions valued at less than $126.2 million (up from $119.6 million); transactions valued at at least $126.2 million but less than $630.8 million will be subject to a $125,000 filing fee; and a $280,000 filing fee will be assessed on the largest transactions.

The notice of the "Revised Jurisdictional Thresholds for Section 7A of the Clayton Act" appears here on the FTC web site.

Full post as published by Trade Regulation Talk on January 18, 2008 (boomark / email).