FTC Increases HSR Notification Thresholds for 2023
January 25, 2023On January 23, 2023, the Federal Trade Commission (“FTC”) 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 take effect 30 days from publication in the Federal Register, which is expected shortly. The previously announced filing fee increases are also expected to take effect on the same date, discussed in more detail here.
Size-of-Transaction Thresholds
For 2023, the minimum size-of-transaction notification threshold will increase. Unless otherwise exempted, acquisitions that will result in the acquiring person holding more than $111.4 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 $30,000 and $2,250,000 depending on the size of the transaction.
| 2022 Minimum Threshold | 2023 Minimum Threshold |
| $101 million | $111.4 million |
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 2023, the size-of-person notification thresholds will increase as follows:
| 2022 Threshold | 2023 Threshold |
| $20.2 million | $22.3 million |
| $202 million | $222.7 million |
The size-of-person test will be met if one party to the proposed transaction has assets or annual net sales totaling $222.7 million or more and the other party to the proposed transaction has assets or annual net sales totaling $22.3 million or more. The size-of-person test need not be met, however, if the total value of the proposed transaction exceeds $445.5 million (this is an increase from the 2022 threshold of $403.9 million).
Filing Fees and Penalties
As discussed in more detail here, the filing fees required in connection with an HSR notification will significantly change as follows:
| Size-of-Transaction Threshold | Updated Filing Fee |
|---|---|
| Less than $161.5 million | $30,000 |
| At or greater than $161.6 million | $100,000 |
| At or greater than $500 million but less than $1 billion | $250,000 |
| At or greater than $1 billion but less than $2 billion | $400,000 |
| At or greater than $2 billion but less than $5 billion | $800,000 |
| At or greater than $5 billion | $2,250,000 |
The FTC separately announced that the maximum civil penalties for failure to comply with the notification and waiting period requirements of the HSR Act will increase from $46,517 to $50,120 per each day of non-compliance. These new penalties took effect on January 11, 2023.
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 a member of our Antitrust Practice Group.
