On Jan. 24, 2022, the Federal Trade Commission announced the 2022 adjusted thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”). The HSR Act notification requirements apply to transactions that satisfy the specified “size of transaction” and “size of person” dollar thresholds. These thresholds, however, change from year to year. The HSR Act requires an annual threshold adjustment based on changes in the U.S. gross national product for each fiscal year. The newly announced 2022 thresholds are expected to become effective Feb. 23, 2022 (30 days following publication in the Federal Register), and will be applicable until recalculated in early 2023.
The key HSR Act threshold adjustments are summarized in the following chart:
|
Test
|
2021 Threshold
|
2022 Adjusted Threshold
|
|
Size of Transaction
|
$92.0 million
|
$101.0 million
|
|
Size of Person (lower)
|
$18.4 million
|
$20.2 million
|
|
Size of Person (higher)
|
$184.0 million
|
$202.0 million
|
|
Size of Transaction Where Size
of Person Is Not Relevant
|
$368.0 million
|
$403.9 million
|
The “size of transaction” threshold is determined based on the value of voting securities, non-corporate interests and/or assets held as a result of the transaction. Under the new 2022 thresholds, there will be no HSR Act notification requirements for transactions valued at less than $101 million.
For deals with an acquisition price of $101 million or more but less than $403.9 million, the parties will need to consider the “size of person” test. Under the “size of person” test, for a deal in this range there must a larger party and a smaller party for the test to be satisfied. As adjusted for 2022, the larger party must have total assets or annual net sales of $202 million or more. The smaller party must have total assets or annual net sales of $20.2 million or more (if it is a manufacturer) or, alternatively, total assets of $20.2 million or annual net sales of $202 million (if it is not engaged in manufacturing).
|
“Size of Person” Test as adjusted for 2022
|
|
Larger Party
|
Smaller Party
|
|
Total assets1 or annual net sales2 of 202.0 million
|
|
AND
|
|
Engaged in Manufacturing:
Total assets or annual net sales of $20.2 million or more
|
|
OR
|
|
Not Engaged in Manufacturing:
Total assets of $20.2 million or annual net sales of $202.0 million or more
|
1 Total assets are measured as of the last regularly prepared balance sheet of the applicable party.
2 Annual net sales are as stated on the last regularly prepared annual statement of income and expense of the applicable party.
If the ultimate parent entities of one or both parties to the transaction in this size range ($101 million but less than $403.9 million) do not satisfy the applicable “size of person” thresholds, no HSR Act notification is required. Conversely, transactions valued at more than $403.9 million (increased from $368 million in 2021) will be reportable in 2022 regardless of the size of the parties, unless an HSR Act exemption applies.
The underlying HSR Act filing fees remain unchanged, but the applicable filing fee will be based on the new thresholds, as follows:
|
Amount of the Filing Fee
|
Size of Transaction
|
|
$45,000
|
Greater than $101.0 million but less than $202.0 million
|
|
$125,000
|
$202.0 million or greater but less than $1.0098 billion
|
|
$280,000
|
$1.0098 billion or greater
|
When the FTC announced the 2022 thresholds, Commissioner Rebecca Kelly Slaughter, joined by FTC Chair Lina M. Khan, issued a statement supporting efforts in Congress, spearheaded by Sens. Amy Klobuchar (D-MN) and Chuck Grassley (R-IA), to increase merger filing fees for very large transactions. Whether such legislation will be enacted is an open question. We are monitoring this and other antitrust bills.
Penalties for violating the HSR Act remain significant. Effective Jan. 10, 2022, the maximum civil penalty for HSR Act violations increased from $43,792 to $46,517 per day.
As always, the value of a transaction is subject to certain exceptions and calculation adjustments that can affect either the obligation to make a notification filing or the amount of the filing fee required with the filing. If you have any questions regarding the matters covered in this alert, please contact Allen Grunes, Gino Maurelli, Matthew Nyberg or your regular Brownstein Hyatt Farber Schreck contact.
This document is intended to provide you with general information regarding 2022 adjusted thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.