New HSR Act Size-of-Transaction Increasing to $126.4 Million

At a Glance

• The FTC, with the concurrence of the DOJ, has issued final rules for premerger notification that substantially revise the requirements for transacting parties under the HSR Act. Such changes will be effective for all HSR filings made after February 7, 2025. 
• The FTC also announced new 2025 thresholds for interlocking directorates under Section 8 of the Clayton Act. Federal enforcement agencies continue to raise concerns regarding detection of Section 8 interlocking directorate boards, and they have successfully pressured companies to unwind or prevent interlocks in at least two dozen cases in recent years.
• Failure to comply with the HSR Act and other antitrust laws may have serious consequences. Companies contemplating a merger, acquisition or other large transaction should review the new thresholds and consult with counsel to determine whether their transaction would require clearance from federal antitrust authorities before consummation.
• If an HSR filing is required, companies also will need to give thoughtful consideration to the new HSR rules and forms to ensure their post-February 7, 2025, filings comply with the government’s more onerous requirements.

On January 10, 2025, the Federal Trade Commission (FTC) published its adjusted reporting thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (HSR Act). The FTC revises the HSR Act thresholds annually to track year-over-year changes in gross national product. 

The new thresholds will become effective 30 days from the date of publication in the Federal Register, which we expect to occur in the coming days.

The HSR Act requires parties to certain transactions valued at more than $126.4 million to make premerger notifications with the FTC and Department of Justice (DOJ), and observe a statutory waiting period (usually 30 days) before consummation. Either the FTC or DOJ conducts a preliminary review of each transaction, though both agencies have concurrent jurisdiction to review any reportable transaction. If an agency opens an investigation into a proposed transaction’s competitive effects, or issues a request for additional information, the parties typically must cooperate if they want to close the transaction, which could require divestitures or other remedies to mitigate government officials’ antitrust concerns. 

As reported previously, the FTC, with the concurrence of the DOJ, has issued final rules for premerger notification that substantially revise the requirements for transacting parties under the HSR Act. Among other requirements, parties to reportable transactions will bear the burden of initially identifying and describing existing competitive overlaps and vertical relationships between the parties, and the rules now require disclosure of transaction-related documents shared with a “supervisory deal team lead,” as well as drafts shared with board members. 

The new updates to the HSR rules and forms were unanimously approved by all FTC commissioners, including incoming Republican FTC Chair Andrew Ferguson, and are set to take effect for all HSR filings made after February 7, 2025. However, it is possible that their implementation could be delayed if the new Trump administration issues a regulatory freeze after the inauguration later this month. In addition, the U.S. Chamber of Commerce and other businesses filed a legal challenge against the FTC and Chair Lina Khan earlier this week in Texas federal court in which they argue that the new filing requirements are unjustified and impose unnecessary burdens on filing parties. Nonetheless, companies and their counsel should begin planning for more time-consuming HSR filings to ensure the new requirements do not unnecessarily delay filings and, ultimately, consummation of their transactions.

Adjusted Threshold for Size-of-Transaction Test

The minimum size of transaction requiring an HSR Act filing has been increased from $119.5 million to $126.4 million. For most purposes, the size of the transaction is calculated as the greater of the purchase price or the fair market value of the assets, voting securities or noncorporate interests to be held as the result of the transaction. The size of transaction also includes the present value of any voting securities or noncorporate interests of the target entity already held by the buyer. If the purchase price or value of such acquired assets, voting securities, or noncorporate interests is below $126.4 million, there is no requirement to make an HSR Act filing even if the parties meet the size-of-parties test described below.

Adjusted Thresholds for Size-of-Parties Test

Where the size-of-transaction test is met, generally one party to a transaction also must have assets or annual revenues of at least $252.9 million (up from $239 million), and the other party must have assets or annual revenues of at least $25.3 million (up from $23.9 million) to trigger an HSR Act filing.

However, if the size of transaction is $505.8 million or more (up from $478 million), the size-of-parties test does not apply, and the parties will need to file an HSR Act filing regardless of the assets or annual revenues of the parties involved.

Adjusted Filing Fee Thresholds

The four highest filing fees have been slightly increased. The new filing fee thresholds are as follows:

Adjusted Thresholds for Interlocking Directorates

On January 10, 2025, the FTC also announced new 2025 thresholds for interlocking directorates under Section 8 of the Clayton Act. The statute prohibits an individual from simultaneously serving as an officer or director of two competing corporations if each corporation has capital, surplus and undivided profits of more than $51,380,000 (up from $48,559,000). Section 8 provides for several exceptions where competitive overlaps are “too small to have competitive significance.” For examples, the parties will not violate Section 8 where (1) the competing sales of either corporation are less than $5,138,000 (up from $4,855,900); (2) the competitive sales of either corporation are less than 2% of the corporation’s total sales; or (3) the competing sales of each corporation are less than 4% of the corporation’s total sales.

Federal enforcement agencies continue to raise concerns regarding detection of Section 8 interlocking directorate boards, and they have successfully pressured companies to unwind or prevent interlocks in at least two dozen cases in recent years, as described in prior alerts. Under the revisions to the HSR Form and Rules, effective February 10, 2025, filers will be required: (1) to provide detailed information about the filer’s directors and officers, and (2) to disclose other board positions held by its directors or officers outside of the filing “person.”¹ Both of these new requirements are intended to help the agencies identify offending interlocks and prevent the anticompetitive information exchanges and agreements that those interlocks can facilitate.

The revised Section 8 thresholds are effective immediately upon publication in the Federal Register.

Conclusion

Failure to comply with the HSR Act and other antitrust laws may have serious consequences for businesses and individuals. Companies contemplating a merger, acquisition or other large transaction should review the new thresholds and consult with counsel to determine whether their transaction would require clearance from federal antitrust authorities before consummation. If an HSR filing is required, companies also will need to give thoughtful consideration to the new HSR rules and forms to ensure their post-February 7, 2025, filings comply with the government’s more onerous requirements.