FTC Announces Revised Hart-Scott-Rodino Thresholds and Filing Fees Effective Feb. 27, 2023

The Federal Trade Commission (FTC) has announced this year's revisions to the thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR), which will apply to all transactions closing on or after Feb. 27, 2023. The FTC is required under the Clayton Act to revise the HSR thresholds annually based on changes in the gross national product. These revisions represent an increase of approximately 10.3 percent over the current thresholds.

A new six-tiered HSR filing fee structure, including significant fee increases particularly for certain large transactions with fees now ranging from $30,000 to $2.25 million, will also take effect on Feb. 27, 2023, replacing the current three-tiered structure that has been in place since its adoption in 2000. In addition, the Consolidated Appropriations Act, 2023 requires that the FTC increase filing fees annually based on the percentage increase in the consumer price index (CPI) as determined by the U.S. Department of Labor if such increase is greater than 1 percent for the prior year as compared to the CPI for the fiscal year ended Sept. 30, 2022. Going forward, adjusted fee amounts will be published by the FTC no later than Jan. 31 of each year. Although the HSR filing fee thresholds under the current three-tier system have historically been revised annually, the three current fee amounts of $45,000, $125,000 and $280,000 were not indexed and have not changed since their 2000 adoption. Funds generated by the fee increases are designed to provide additional resources to the FTC and the U.S. Department of Justice's (DOJ) antitrust enforcement efforts.

HSR requires parties intending to merge, purchase or sell voting securities, non-corporate interests or assets, or engage in certain other acquisition transactions to provide both the FTC and the DOJ's Antitrust Division with information regarding their operations and the proposed transaction if certain minimum jurisdictional thresholds are met. HSR stays the consummation of a covered transaction for the waiting period specified by law based on HSR's purpose to allow the FTC and DOJ time to detect and potentially address any perceived anti-competitive effects of a transaction.

Revised HSR Jurisdictional Thresholds

HSR filings are generally required if both the size of transaction and size of person jurisdictional thresholds are met and no exemption is available under the HSR regulations. As of Feb. 27, 2023, the size of transaction threshold will be met if, as a result of the transaction, the buyer will hold voting securities, assets and/or non-corporate interests of the seller valued in excess of $111.4 million, up from the current threshold of $101 million.

The size of person threshold will generally be met as of Feb. 27, 2023, if one party to the transaction has total assets or net sales of $222.7 million or more and the other party to the transaction has total assets or net sales (if a manufacturer) of $22.3 million or more – provided that this threshold will not apply to transactions valued at $445.5 million or more. The size of person threshold is measured at the ultimate parent entity level of each party and includes all entities controlled by each such ultimate parent entity.

New HSR Filing Fee Structure and Amounts

Each buyer is required to pay a filing fee in connection with any required filing under HSR. The applicable filing fee varies based on the value of the voting securities, assets and/or non-corporate interests to be held as a result of the transaction as determined pursuant to HSR requirements.

The current three-tiered HSR filing fee thresholds are as follows:

The new six-tiered filing fee schedule reflects slight decreases for some transactions (particularly some transactions valued at less than $500 million) with significant increases for most larger transactions (including a more than eight-fold filing fee increase from $280,000 to $2.25 million for transactions valued at $5 billion or more).

As of Feb. 27, 2023, the new six-tiered HSR filing fee schedule will be as follows:

Increased Penalties for HSR Noncompliance

Noncompliance with HSR requirements may subject a person – or any officer, director or partner of such person – to civil penalties of up to $50,120 per day for each day of violation, which became effective Jan. 11, 2023 (an increase from $46,517 per day in 2022). In addition to any monetary penalties, courts may also order compliance with HSR requirements and an extension of the HSR waiting period until substantial compliance has occurred. Courts may also grant certain other equitable relief for any failure by a person to substantially comply with either the HSR premerger notification requirements or with a request by regulators for additional information once an HSR filing has been made.

For more information regarding the revised HSR thresholds and filing fees as well as the penalties for noncompliance, contact Holland & Knight Partner John Dierking.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.