FTC Revises Thresholds for HSR Act Filings and Interlocking Directorates Violations
The FTC announced revised thresholds under the Hart-Scott-Rodino (HSR) Act. These thresholds determine whether an HSR filing is necessary. Also announced were revisions to the thresholds under Section 8 of the Clayton Act that trigger a violation for interlocking directorates.
On January 19, 2017, the Federal Trade Commission (FTC) issued a press release announcing revised thresholds for premerger notification filings under the Hart-Scott-Rodino (HSR) Act. The HSR thresholds are revised annually based on changes to the gross national product and will become effective 30 days after their publication in the Federal Register.
If the HSR thresholds are triggered and no exemption applies, parties to a merger or acquisition must:
Make a premerger notification filing with both the FTC and the Antitrust Division of the Department of Justice.
Wait a statutory period of time before closing the transaction.
The minimum size-of-transaction threshold increased from $78.2 million to $80.8 million. The size-of-parties thresholds increased from $15.6 million and $156.3 million to $16.2 million and $161.5 million, respectively.
The FTC also announced revisions to the thresholds under Section 8 of the Clayton Act dealing with illegal interlocking directorates. Section 8 prohibits a person from serving as a director or officer of two competing corporations if certain thresholds are met. Section 8 violations require, among other things, that both of the following revised thresholds are triggered:
The combined capital, surplus, and undivided profits of each of the corporations exceeds $32,914,000 (up from $31,841,000 in 2016).
The competitive sales of each corporation are at least $3,291,400 (up from $3,184,000 in 2016).
The revisions to Section 8 of the Clayton Act become effective on the date of publication in the Federal Register.
For an overview of the HSR Act, see Practice Note, Hart-Scott-Rodino Act: Overview ( www.practicallaw.com/9-383-6234) . For an explanation on how to determine whether a transaction is reportable under the HSR Act, see Practice Note, Determining Hart-Scott-Rodino Applicability ( www.practicallaw.com/9-516-9560) . For more information on interlocking directorates, see Practice Note, Interlocking Directorates ( www.practicallaw.com/w-002-9202) .
For a comprehensive list of adjustments to the HSR thresholds since March 2, 2005, see Annual HSR Threshold Adjustments Chart ( www.practicallaw.com/0-554-5005) .