News

New HSR and interlocking directorate thresholds announced for 2023

24 January 2023

On 23 January 2023, the Federal Trade Commission (FTC) announced 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). The FTC also published an updated HSR filing fee schedule. The new filing thresholds and fees for HSR notification will become effective on 27 February 2023 (30 days after publication in the Federal Register).

HSR Thresholds

Under the HSR Act, certain acquisitions of assets, voting securities, or interests in noncorporate entities (such as partnerships or limited liability companies) are subject to preclosing notification to the U.S. antitrust agencies 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 principal changes to the HSR jurisdictional thresholds will be as follows:

Filing thresholds
	Current thresholds	New thresholds
Size-of-transaction	Notification may be required if acquiring person will acquire and hold certain assets, voting securities, or interests in noncorporate entities valued at more than US$101 million.	US$111.4 million
Size-of-person	For transactions valued at more than US$101 million but less than or equal to US$403.9 million, one “person” to the transaction must have at least US$202 million in total assets or annual net sales and the other must have at least US$20.2 million in total assets or annual net sales.	For transactions valued at more than US$111.4 million but less than or equal to US$445.5 million At least US$222.7 million and US$22.3 million in total assets or annual net sales.
Size-of-person	Transactions valued at more than US$403.9 million are not subject to the size-of-person threshold test and are therefore reportable unless exempt.	US$445.5 million

Notification thresholds

Current thresholds

New thresholds

When completing an HSR filing, the acquiring person in a voting securities acquisition must indicate which notification threshold it will cross:

US$101 million,
US$202 million,
US$1.0098 billion,
25 percent (if the value of the voting securities to be held is greater than US$2.0196 billion), or
50 percent.

These notification thresholds are also relevant to a certain HSR exemption.

The new notification thresholds are:

US$111.4 million,
US$222.7 million,
US$1.1137 billion,
25 percent (if the value of the voting securities to be held is greater than US$2.2274 billion), or
50 percent.

HSR Filing Fees

On 29 December 2022, President Biden signed the Merger Filing Fee Modernization Act of 2022, which contained significant changes to the HSR filing fee schedule. These new filing fees will become effective on 27 February 2023. Beginning in 2024, the filing fees will be adjusted based on changes in the consumer price index.

The 2023 HSR filing fees will be as follows:

Transaction Value	Filing Fee
More than $111.4 million but less than $161.5 million	$30,000
$161.5 million or more but less than $500 million	$100,000
$500 million or more but less than $1 billion	$250,000
$1 billion or more but less than $2 billion	$400,000
$2 billion or more but less than $5 billion	$800,000
$5 billion or more	$2,250,000

HSR Civil Penalties

On 6 January 2023 the FTC announced that the maximum civil penalties for violations of the HSR Act, which are assessed per day for each violation, were increasing to US$50,120 from US$46,517. This change became effective upon publication in the Federal Register on 11 January 2023.

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 exemption 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 threshold, which became effective 20 January 2023 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$45,257,000, unless one of the corporations has competitive sales of less than US$4,525,700. Previously, a person was prohibited from serving as a director or officer of competing corporations if each corporation had capital, surplus, and undivided profits aggregating more than US$41,034,000 unless one of the corporations had competitive sales of less than US$4,103,400.

As we previously reported, the U.S. antitrust agencies have recently cracked down on interlocking directorates. The Antitrust Division of the Department of Justice (the Division) announced late last year that seven directors agreed to resign from the boards of directors of five companies in response to the Division’s “competition concerns” related to the Section 8 prohibition on interlocking directorates. We expect this will continue to be an enforcement priority for the agencies in the coming year.

The FTC's announcement can be found here.

Authored by Robert Baldwin, Michele Harrington, and John Hamilton