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HSR Filing Fees to Increase Dramatically for Large Transactions, Funding Larger Budgets and More Enforcement at the Antitrust AgenciesJanuary 5, 2023
Merger Filing Fee Modernization Act of 2022
On December 29, 2022, President Biden signed into law changes to the HSR filing regime that dramatically increase filing fees for large transactions. The changes were enacted in the Merger Filing Fee Modernization Act of 2022 (the “Act”), which was passed as part of the Consolidated Appropriations Act, 2023. The Act also makes one change to the HSR form requiring disclosure of subsidies from foreign entities of concern.
New Filing Fee Tiers and Increased Budgets for the Antitrust Agencies
The Act brings about the first changes to the merger filing fees since 2001 and will add three tiers of fees to the current three-tier structure. While the filing fee for deals in the lowest tier will fall from $45,000 to $30,000, there will be an eight-fold increase in the fees for deals in the highest tier.
The increase in fees is intended to provide the antitrust agencies with additional funding and resources with which to enforce the antitrust laws,1 which is expected to result in more active and aggressive enforcement. To that end, the Act also includes a 16% increase in the budget for the Antitrust Division of the Department of Justice (“DOJ”) (to $225 million) and a 14% increase for the Federal Trade Commission (“FTC”) (to $430 million).
Currently, filing fees are based on the following thresholds.
|CURRENT FILING FEE||
CURRENT SIZE-OF-TRANSACTION THRESHOLDS
|$45,000||valued in excess of $101 million but less than $202 million|
|$125,000||valued at $202 million or greater but less than $1.0098 billion|
|$280,000||valued at $1.0098 billion or greater|
The new fees will continue to be based on a transaction’s value, as set out in the following table. Filing fees now will be adjusted annually based on the Consumer Price Index as determined by the Department of Labor. Previously, only the thresholds were adjusted annually for inflation based on changes in Gross National Product. The Act requires the FTC to publish annual adjustments by January 31 of each year.
|NEW FILING FEE||
NEW SIZE-OF-TRANSACTION THRESHOLDS
|$30,000||valued in excess of $101 million but less than $161.5 million|
|$100,000||valued at $161.5 million or more but less than $500 million|
|$250,000||valued at $500 million or more but less than $1 billion|
|$400,000||valued at $1 billion or more but less than $2 billion|
|$800,000||valued at $2 billion or more but less than $5 billion|
|$2,250,000||valued at $5 billion or greater|
The new filing fees will take effect in 2023 after the FTC publishes notice of the change in the fee schedule.
Changes to HSR Form: Disclosure of Subsidies from a “Foreign Entity of Concern”
The Act also adds a requirement that parties making HSR filings disclose subsidies received from foreign governments that are “foreign entities of concern,” which includes entities controlled by China, Iran, North Korea, and Russia, and entities included on the Specially Designated Nationals list.2 These new notification requirements will be effective after the FTC and DOJ follow an official rulemaking procedure, which could take several months or more.
If you have any questions about these changes to the HSR filing regime or HSR and antitrust/competition regulations and rulemaking more generally, please contact our Antitrust & Competition team.
1 Merger Filing Fee Modernization Act (“The updated fee structure would provide the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) with additional resources to review mergers and enforce the antitrust laws. The updated filing fee structure would also better reflect that reviews of larger mergers generally consume more agency resources”).
2 42 U.S.C. § 18741(a).
This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Courtney C. Byrd, an O'Melveny counsel licensed to practice law in the District of Columbia and Maryland, Julia Schiller, an O'Melveny partner licensed to practice law in the District of Columbia, New York, and New Jersey, and Courtney Dyer, an O'Melveny partner licensed to practice law in the District of Columbia and New York, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.
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