David W. Brown, Member

On February 1, 2021, the Federal Trade Commission (“FTC”) for the first time since 2010 lowered the HSR notification thresholds when it announced annual revisions for premerger filings required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”). The HSR Act generally requires parties to transactions—e.g., mergers, joint ventures, acquisitions of assets, or voting securities—that meet certain thresholds to file premerger notifications with both the FTC and the United States Department of Justice (“DOJ”), and observe a statutory waiting period prior to closing. The FTC revises the notification thresholds annually based on changes in the gross national product (“GNP”). The newly announced thresholds will apply to transactions consummated on or after March 4, 2021. The FTC also slightly raised maximum civil penalties for HSR Act noncompliance.

Size-of-Transaction Thresholds

For 2021, the size-of-transaction notification thresholds will decrease as indicated below. Importantly, unless otherwise exempted, acquisitions that will result in the acquiring person holding more than $92 million of the acquired person’s voting securities, assets, or non-corporate interests, will require an HSR filing (assuming the size-of-person thresholds are also met). As detailed further below, required filing fees will vary between $45,000 and $280,000 depending on the size of the transaction.

2020 Threshold	2021 Threshold
$94 million	$92 million
$188 million	$184 million
$940.1 million	$919.9 million

The size-of-transaction test will be met if, as a result of the transaction, the acquiring party’s aggregate holdings in the acquired party (as calculated under the HSR Act) will exceed any one of the notification thresholds. A proposed transaction that satisfies the size-of-transaction test may require an HSR notification if the size-of-person test (discussed below) is also met and no exemptions apply.

Size-of-Person Thresholds

For 2021, the size-of-person notification thresholds will decrease as follows:

2020 Threshold	2021 Threshold
$18.8 million	$18.4 million
$188 million	$184 million

The size-of-person test will be met if one party to the proposed transaction has assets or annual net sales totaling $184 million or more and the other party to the proposed transaction has assets or annual net sales totaling $18.4 million or more. The size-of-person test need not be met, however, if the total value of the proposed transaction exceeds $368 million (this is a decrease from the 2020 threshold of $376 million).

Filing Fees and Penalties

The filing fees required in connection with an HSR notification will not change in 2021, and will remain set at $45,000 for transactions valued above the first tier of $92 million but less than the second tier of $184 million; $125,000 for transactions valued at $184 million or more but less than $919.9 million; and $280,000 for transactions valued at or above $919.9 million.

The FTC separately announced on January 11, 2021 that the maximum civil penalties for failure to comply with the notification and waiting period requirements of the HSR Act will increase from $43,280 to $43,792 per each day of non-compliance. These new penalties took effect on January 13, 2021.

Conclusion

Determining whether an HSR notification is required in connection with a transaction can be complicated, and requires an in-depth understanding of the HSR Act, the implementing regulations, and the applicable exemptions.

If you have any questions regarding the HSR Act, including whether or not a contemplated transaction will require an HSR notification, please contact Richard B. Walsh, Jr., David W. Brown, Oliver H. Thomas, Sarah A. Milunski, or a member of our Antitrust Practice Group.