The Federal Trade Commission Issues 2018 Annual Updates to the United States Pre-Merger Notification (HSR) and Interlocking Directorates Thresholds
V&E Antitrust Transactional Update E-communication, January 30, 2018
The Federal Trade Commission (FTC) has revised the thresholds that govern pre-merger notification requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (HSR Act), as well as the thresholds for interlocking directorates under Section 8 of the Clayton Act. The new HSR Act thresholds will become effective for all transactions closing on or after February 28, 2018.
HSR Act Thresholds
The HSR Act requires
parties to transactions that meet the statutory thresholds to file notification
with the FTC and Department of Justice, and abide by a waiting period before
completing the transaction. The statutory thresholds are revised each year. On
January 26, 2018, the FTC announced the revised thresholds for 2018.
Under the revised
thresholds, parties to a transaction with a value of less than $84.4 million (increased
from the 2017 threshold of $80.8 million) need not submit a notification or
observe a waiting period. In contrast, parties must file notification with the
federal antitrust agencies and observe the HSR Act waiting period, unless
otherwise exempt, if the value of the transaction is greater than $337.6
million (increased from the 2017 threshold of $323 million). Further, parties
to a transaction valued between $84.4 million and $337.6 million must file
notification, unless otherwise exempt, if one party to the transaction has
annual net sales or assets of $168.8 million and the other party to the
transaction has annual net sales or assets of $16.9 million (increased from 2017
thresholds of $161.5 million and $16.2 million, respectively).
Clayton Act Section 8 Thresholds
Section 8 of the Clayton
Act prohibits corporations that compete from having common directors if the
companies have revenue that exceeds the statutory threshold, which is revised
annually. Under the new thresholds for 2018, companies will have to abide by
the prohibitions of Section 8 if each has capital, surplus, and undivided
profits aggregating more than $34,395,000.
statute provides an exemption if either of the corporations’ “competitive
sales,” which is defined as revenue from products/services sold in competition
with the other corporation, is below an annually adjusted threshold. Under the
2018 thresholds, corporations will be exempt from the requirements of Section 8
of the Clayton Act if either corporation has competitive sales less than
$3,439,500. We also remind you that Section 8 does not apply if either
corporation has competitive sales of less than 2 percent of its total revenue;
or each corporation has competitive sales of less than 4 percent of total
revenue. These percentage thresholds are not adjusted annually.
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