FTC Adjusts New 2021 HSR Reporting Thresholds Downward

On February 2, 2021, the Federal Trade Commission (the “FTC”) announced decreases to the reporting thresholds and exemptions that, under the Hart-Scott-Rodino Act of 1976 (the “HSR Act”), dictate whether companies must notify antitrust authorities about a transaction. The HSR Act requires the FTC to adjust reporting and exemption thresholds annually based on changes in the gross national product (“GNP”).

Due to a contraction in the US economy, the HSR thresholds were revised downwards for only the second time since the thresholds were first tied to the GNP—the most recent decrease having been in 2010. The decreases will apply to all transactions that close after the effective date, which is March 4, 2021 (30 days after publication of the changes in the Federal Register).  

Under the new thresholds:

The minimum size-of-transaction threshold is US$92.0 million (down from US$94.0 million). Acquisitions below this threshold are not reportable.

Transactions exceeding the size-of-transaction threshold—but less than US$368.0 million—are reportable if the ultimate parent entity of one party has sales or assets of at least US$184.0 million and the ultimate parent entity of the other party has sales or assets of at least US$18.4 million (down from US$188.0 million and US$18.8 million, respectively) (the “size-of-person” test).

Transactions valued at more than US$368.0 million (down from US$376.0 million) are reportable regardless of the size-of-person test.

Filing fees did not change, but the size-of-transaction thresholds (on which the filing fee is based) decreased. Under the new thresholds, the filing fee is:

• US$45,000 for transactions with a value of at least US$92.0 million but less than US$184.0 million;
• US$125,000 for transactions with a value of at least US$184.0 million but less than US$919.9 million (down from US$940.1 million); and
• US$280,000 for transactions with a value of at least US$919.9 million.

The notification threshold for 25% of the outstanding voting shares is US$1,839.8 million; for 50% of the outstanding voting shares, it is US$92.0 million (down from US$1,880.2 million and US$94.0 million, respectively).

Even if a transaction is reportable based on the above thresholds, it may qualify for one of the HSR Act’s exemptions, some of which also contain changed financial thresholds. For example, a US person’s acquisition of a foreign issuer’s stock is exempt unless the foreign issuer has either US assets or sales exceeding US$92.0 million. Elaborate rules govern deal valuation and exemptions under the HSR Act. Consult HSR counsel to determine whether a deal is reportable.

To read the FTC’s notice, please click here.

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. Ben Bradshaw, an O’Melveny partner licensed to practice law in California and the District of Columbia, Ian Simmons, an O’Melveny partner licensed to practice law in the District of Columbia and Pennsylvania, Riccardo Celli, an O’Melveny partner licensed to practice law in the Capital Region of Brussels, the Law Society England & Wales, and Roma, Courtney Dyer, an O’Melveny partner licensed to practice law in the District of Columbia and New York, Andrew Frackman, an O’Melveny partner licensed to practice law in New Jersey and New York, Yoji Maeda, an O’Melveny partner licensed to practice law in Japan and New York, Stephen McIntyre, an O’Melveny partner licensed to practice law in California, Philip Monaghan, an O’Melveny partner licensed to practice law in the Capital Region of Brussels, Hong Kong, the Law Society England & Wales, and the Law Society Ireland, Anna T. Pletcher, an O’Melveny partner licensed to practice law in California, Katrina Robson, an O’Melveny partner licensed to practice law in California and the District of Columbia, Youngwook Shin, an O’Melveny partner licensed to practice law in California and New York, Michael Tubach, an O’Melveny partner licensed to practice law in California and the District of Columbia, Laura S. Aronsson, an O’Melveny counsel licensed to practice law in New York and California, Courtney C. Byrd, an O’Melveny counsel licensed to practice law in the District of Columbia and Maryland, Zhao Liu, an O’Melveny counsel licensed to practice law in the District of Columbia and California, Evan N. Schlom, an O’Melveny counsel licensed to practice law in California and the District of Columbia, Matt Schock, an O’Melveny counsel licensed to practice law in the District of Columbia and New York, Sergei Zaslavsky, an O’Melveny counsel licensed to practice law in the District of Columbia and Maryland, and Jason Yan, an O’Melveny associate licensed to practice law in the District of Columbia and Virginia, 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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