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HSR and Interlocking Directorate Thresholds Announced for 2017

23 January 2017

Antitrust and Competition Alert

On 19 January 2017, the Federal Trade Commission (FTC) released the annual jurisdictional adjustments for premerger notification filings made pursuant to Section 7A of the Clayton Act, known as the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act), as well as for Section 8 of the Clayton Act. The new filing thresholds for HSR notification will become effective 30 days after publication in the Federal Register, while the revisions to Section 8 will become effective immediately upon publication in the Federal Register.

HSR notification thresholds

Under the HSR Act, certain acquisitions of assets, voting securities, or interests in non-corporate entities are subject to pre-closing notification and waiting period requirements if the applicable jurisdictional thresholds are satisfied and no exemption applies.

Each year the FTC adjusts the HSR jurisdictional threshold tests based on changes to the U.S. gross national product. The threshold changes do not affect the amount of the applicable HSR filing fees to be paid, but do affect the threshold levels applicable to each of the filing fees.

The principal changes to the HSR jurisdictional thresholds will be as follows:

Chart

In addition, the civil penalty for premerger filing notification violations under the HSR Act will increase from US$40,000 to US$40,654 effective 24 January 2017.

Interlocking directorates threshold

Section 8 of the Clayton Act prohibits a person from serving as a director or officer of two competing corporations if certain thresholds are satisfied and no exception applies. The FTC is required to adjust annually certain thresholds related to Section 8 based on changes to the gross national product.

Under the new thresholds that will be effective upon publication in the Federal Register, a person may not serve as a director or officer of competing corporations if each corporation has capital, surplus, and undivided profits aggregating more than US$32,914,000, unless one of the corporations has competitive sales of less than US$3,291,400. Previously, a person was prohibited from serving as a director or officer of competitive corporations if each corporation had capital, surplus, and undivided profits aggregating more than US$31,841,000 unless one of the corporations had competitive sales of less than US$3,184,100.

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