The HSR Act Applies to People Too: “Merger Control” Filing Obligations for Individual Investors, Family Offices, and Trusts

Every year, the U.S. Federal Trade Commission (“FTC”) investigates high net worth individuals for failure-to-file violations of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) — the “merger control” filing law of the United States.¹ The FTC sometimes refers these matters for civil penalties to the Department of Justice Antitrust Division (“DOJ”), such as a recent matter resolved with a penalty of $486,900²; other times, the FTC resolves the matter with a warning or costs of investigation. In early 2026, the fine for failure to file increased to a maximum of $53,088 per day that the transaction remains unfiled and the waiting period remains incomplete. In other words, this potentially amounts to a fine of nearly $2 million for filing just a week after a transaction has closed.³ Individual investors and corporate compliance departments have taken note.

Individual investors may be required to file for HSR Act clearance when they plan to make acquisitions of voting securities, assets, or control of a non-corporate entity if the acquisition will result in holdings that exceed a filing threshold under the HSR Act; the lowest of these thresholds is currently $133.9 million, adjusted annually (see our HSR Act filing thresholds article for an explanation of all of the thresholds). The rules are complex and technical, so investors should consult with their own counsel, but this note provides a brief overview.

Basics of the HSR Act for Individuals

Acquisitions above certain size thresholds are subject to pre-closing review and a waiting period under the HSR Act. Filings under the HSR Act are reviewed and enforced by the FTC and DOJ. A transaction is described as “reportable” if it is large enough to be subject to this premerger review process and is not otherwise exempt. If a transaction is reportable, then both the acquirer and the acquired entity (which, if the acquisition is of voting securities, is the issuing corporation) must make a filing, and a filing fee is required. The acquirer must then observe a waiting period of 30 days⁴ before consummating the transaction. If the waiting period expires or the agency earlier terminates the waiting period, the acquisition may proceed. If the FTC or DOJ issues a request for additional information, the transaction is further stayed until the parties comply with the agency’s request. The FTC or DOJ also may sue to block the transaction or may demand other relief, although this is rare (fewer than one percent of reportable transactions).

Generally, there are four steps to determining reportability: the commerce test (whether the transaction affects commerce in or into the United States); the size of transaction test; the size of person test; and whether any exemptions apply. For purposes of this note, we will focus only on the two steps that usually require the most analysis for individuals’ investments: size of transaction and exemptions.

Key Exemptions for Individuals

If an individual already controls an entity (typically by owning 50% or more), acquisitions of additional interests in that entity are not reportable.⁵ “Intraperson” transactions are exempt⁶; these include transfers between spouses or between parents and minor children, all of whom are deemed simultaneously to own each other’s holdings.⁷ Acquisitions also may be exempt due to the acquirer’s intentions. For example, an acquisition of voting securities is exempt if made solely for the purpose of investment and if, as a result of the acquisition, the acquiring person would hold ten percent (10%) or less of the outstanding voting securities of the issuer, regardless of the dollar value of voting securities so acquired or held. An intention to influence the direction of management, or to participate directly as a manager or director, typically disqualifies an investor from relying on this exemption.

Acquisitions of non-voting shares in corporations and non-controlling shares in noncorporate entities are not reportable.⁸ Further, acquisitions of certain asset types (e.g., raw land of any value, or oil & gas productive assets having a value of $500 million or less) are exempt and the acquisition of voting shares or interests in an entity is exempt to the extent that the entity’s assets consist of exempt assets. Minority acquisitions of the shares of foreign corporations are exempt, and even majority acquisitions of foreign corporations often are exempt unless the foreign corporation has substantial U.S. sales or assets.⁹ Other such exemptions exist that may cover certain transactions.

Transaction Values, What is “Held,” and Filing Fees

Under the HSR Act rules, valuation of acquisitions often is complex. For publicly traded voting securities, the value of shares to be acquired is either market price or acquisition price, whichever is greater. For transactions that are subject to rule 801.30¹⁰ (e.g., open market purchases, tender offers, conversions, or exercises of options or warrants) and involve publicly traded voting securities, “market price” generally means the lowest closing quotation during the 45 calendar days prior to closing. For transactions not subject to rule 801.30 (generally, acquisitions pursuant to a contract or letter of intent), “market price” is the lowest closing quotation during that portion of the same 45-day period that begins one day before execution of the contract or letter of intent. For transactions involving other types of interests or assets, the value is the acquisition price or, if the acquisition price is not determined, the buyer’s reasonable calculation of fair market value, subject to some interpretations by the FTC (such as how to assess the value of earnouts). For more detailed guidance on valuation of acquisitions, see the FTC’s “Valuation of Transactions” web page.¹¹

The following table explains the voting shares valuation thresholds and their corresponding filing fees. If a transaction is properly valued below the first threshold, then it is not reportable.

Note that the valuation applies to shares or interests “held,” not merely what is acquired. This is an important term of art and a trap for the unwary. The valuation must be applied to the entirety of the position to be held by an individual at the close of the transaction, which requires aggregating, for example, previously acquired voting shares with the shares newly acquired in the transaction. If an investor already owns $132 million of voting shares in a corporation, and seeks to acquire $2 million more, the transaction value is $134 million (not merely $2 million), and the valuation has crossed the first threshold below.

The acquiring person must file each time they acquire voting shares to a higher value or percentage tier. Non-voting shares, options, or warrants are not subject to filing until they are proposed to be converted to voting.¹²

Family- and Controlled-Entity Aggregation Rules

Individuals must aggregate the holdings of a spouse and any minor children. This creates a potential compliance headache: individual investors should consider monitoring acquisitions made by relevant family members.

Individuals and their relevant family members also must aggregate holdings that they possess indirectly via controlled entities, which not only include controlled corporations and Limited Partnerships (LPs) or Limited Liability Companies (LLCs), but also certain trusts.

Acquisitions by Gift, Devise, or Trust

Acquisitions resulting from a gift, intestate succession, testamentary disposition, or transfer by a settlor to an irrevocable trust are exempt from reporting under the HSR Act.¹³ However, investors should be aware that the treatment of trusts under the HSR Act rules is complex and subject to many opinion letters by the FTC’s Premerger Notification Office. Many types of trusts will not qualify for exemptions for initial contributions. If a trust seeks to acquire further shares from third parties, it may be treated like any other acquiror and be required to make an HSR Act filing.

Subsequent Acquisitions, after an HSR Act Filing

Fortunately, once an investor makes an HSR Act filing, gets clearance, and crosses a threshold, the investor is not required to file again for every subsequent purchase of voting shares. Such an investor will benefit from what is known as the “one year to meet, five years to buy” rule.

An HSR Act filing expires one year following the expiration or early termination of the HSR Act waiting period. During the first year, an investor can make the purchase that crosses the notification threshold, as well as any number of additional purchases, without filing another HSR Act notification, as long as the investor does not cross a higher notification threshold (see table above). As long as the investor makes the acquisition and crosses the threshold as predicted in the HSR Act filing (this is “one year to meet”), the investor then may acquire additional voting securities in the target issuer for the following four years, for a total of “five years to buy” after expiration or early termination of the waiting period, as long as the additional stock does not result in meeting or exceeding a higher notification threshold.

What about the European Union and United Kingdom Merger Control Regimes?

While the European Union (“EU”) and the United Kingdom (“UK”) have merger control regimes similar to the U.S. HSR Act, the treatment of individual investors under these regimes is different from the U.S. approach. The EU merger control regime is relevant where an individual can be considered to be an “undertaking” (i.e., an entity engaged in economic activity) or is in control of an undertaking. In these circumstances, provided that one of the two revenue-based jurisdictional tests is met, an acquisition of control by the individual investor over the whole or part of another undertaking would be reportable.¹⁴ Similarly, the UK merger control regime captures transactions where two or more “enterprises” are brought under common ownership or control. Transactions meeting one of the three jurisdictional tests (which are based on UK-revenues or a combination of UK-revenues and supply shares) can be notified to the UK regulator prior to closing, although there is no mandatory requirement to do so.

Note that even if there is no reportable transaction at the EU level, merger filings under the national rules of the individual EU member states, such as Austria, France, and Germany, may apply.

Compliance Considerations – Have a Plan

If an investor completes a reportable acquisition without first making an HSR Act filing and receiving clearance or expiration of the waiting period, the investor can be hit with a fine of a maximum of $53,088¹⁵ per day that the acquisition remains un-filed and the waiting period has not been observed. In practice, the fine is not usually the maximum amount, but large fines are common. A first-time violator (if shown to be inadvertent) often receives only a warning and a directive to make a corrective filing; repeat violators, however, can face fines in the hundreds of thousands of dollars, and sometimes over one million dollars.

Investors are well advised to create a protocol under which their acquisitions (and those of relevant family members or entities) are evaluated for HSR Act reportability, well before those acquisitions are consummated.

¹15 U.S.C. § 18a.

²See United States v. Clarence L. Werner, Final Judgment (April 20, 2022), https://www.justice.gov/atr/case/us-v-clarence-l-werner.

³Most of these enforcement actions come from a corrective filing submitted after the deal has closed. The agencies do not grant early termination of the HSR waiting period (typically 30 days) for corrective filings, so the penalty period may be however long after closing the corrective filing was made, plus 30 days.

⁴Or 15 days in the case of a tender offer or certain bankruptcy transactions, but these situations usually do not apply to individual investors’ filings.

⁵Control for HSR Act purposes is a term of art. For a non-corporate entity, control is an economic test (not a management test) that generally means 50 percent of rights to current distributions or 50 percent of rights to assets upon dissolution. For a corporation, control means ownership of 50 percent or more of the voting shares. If shares have different values of voting rights (e.g., founders shares with twice the voting power of common shares), this may require additional calculations.

⁶16 C.F.R. § 802.30.

⁷16 C.F.R. § 801.1(c)(2). Note, however, that the FTC Premerger Notification Office has issued guidance that the intraperson exemption does not apply to trusts to controlled by the individual. See https://www.ftc.gov/legal-library/browse/hsr-informal-interpretations/0710012.

⁸Non-voting shares must be genuinely non-voting. If shares do not have normal voting rights, but do confer the right to seat corporate directors, they may be non-exempt. If non-voting shares are convertible to voting shares, then their proposed conversion to voting shares may be reportable.

⁹16 C.F.R. § 802.51.

¹⁰16 C.F.R. § 801.30.

¹¹Valuation of Transactions Reportable under The Hart-Scott-Rodino Act, Fed. Trade Comm’n, https://www.ftc.gov/enforcement/premerger-notification-program/hsr-resources/valuation-transactions-reportable-under.

¹²Non-voting shares, options, and warrants also are not aggregated with a person’s other holdings unless they will be converted to voting securities prior to consummation of the transaction.

¹³16 C.F.R. § 802.71.

¹⁴For example, when Michael Dell and his family investment firm acquired control of computer maker Dell Inc. in 2013, they filed a notification. See Commission Decision, Case No COMP/M.6912.

¹⁵For 2026. Like the filing thresholds, this figure is adjusted annually by the FTC.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.