The filing thresholds and timelines for the Hart-Scott-Rodino Act (HSR) have undergone two key changes in 2021: (1) the HSR filing thresholds have been reduced; and (2) there has been a temporary suspension of the early termination of the statutory waiting period. Below we discuss these 2021 changes to the HSR filing thresholds.
Reduced HSR Filing Thresholds
The HSR requires parties to certain transactions to notify the Federal Trade Commission (FTC) and Department of Justice (DOJ) of a deal and then wait for a specified holding period before closing. During this holding period, the agencies evaluate and determine how a transaction will affect competition in the market. The FTC must revise threshold amounts annually to adjust for changes in gross national product. Since the last year has brought a decrease in production, the FTC has decreased thresholds for 2021. The decreased thresholds took effect on March 4, 2021. The FTC has also temporarily suspended the option for early termination of the statutory waiting period.
Unless an exemption applies, certain holdings in excess of the size-of-transaction and size-of-person thresholds set forth below may be reportable to the U.S. antitrust authorities. The threshold values have decreased from the 2020 threshold amounts, and transactions valued at more than $92 million but less than $368 million must meet the “size of person” test, and those transactions valued in excess of $368 million will be automatically reportable unless an exemption applies.
The size-of-person test is satisfied where the ultimate parent entity (UPE) as defined under the Act, has total assets or annual net sales of $184 million or more, and the UPE of the secondary party has total assets or annual net sales of $18.4 million or more.
| Size of Transaction | ||
| Base | 2020 | 2021 |
| $50 million | $94 million | $92 million |
| $200 million | $376 million | $368 million |
| Transactions valued at more than $92 million but $368 million or less must also meet the “size of person” test. |
| Size of Person | ||
| Base | 2020 | 2021 |
| $10 million | $18.8 million | $18.4 million |
| $100 million | $188 million | $184 million |
| Voting Securities | ||
| Base | 2020 | 2021 |
| $50 million | $94 million | $92 million |
| $100 million | $188 million | $184 million |
| $500 million | $940.1 million | $919.9 million |
| $1 billion (if acquiring 25%) | $1.8802 billion | $1.8398 billion |
The new thresholds will not affect the amount of filing fees due under the HSR Act. However, applicable fees will be based on the new thresholds, as follows:
| HSR Filing Fees | |
| Transactions valued at less than $184 million | $45,000 |
| Transactions valued at $184 million or more but less than $919.9 million | $125,000 |
| Transactions valued at $919.9 million or more | $280,000 |
*Data from https://www.ftc.gov/news-events/blogs/competition-matters/2021/02/hsr-threshold-adjustments-reportability-2021
Temporary Suspension of Early Termination
Parties looking to request an early termination of the statutory waiting period (30 days) must file an HSR notification in the Early Termination program. Organizations that qualify for Early Termination, and do not present risks to competition, can proceed with the merger or acquisition before the 30-day waiting period. Of the 75% who requested Early Termination, 75% were accepted (in fiscal year 2019), according to the FTC and DOJ.
Baer Reed works with organizations to support the Merger and Acquisition due diligence process. Contact us today to see how we can be of service.
Mr. Reyes graduated with honors from the Ateneo de Manila University, where he received the Procter and Gamble Student Excellence Award. He obtained his Juris Doctor degree from the Ateneo de Manila School of Law. During law school, Mr. Reyes was part of the Philippine delegation to the Willem C. Vis International Commercial Arbitration Moot held in Vienna, Austria. He was also a member of the Ateneo Society of International Law and the St. Thomas More Debate Society. He completed his internship at the Public Attorney’s Office. He wrote a thesis entitled: “To Kill A White Elephant: An Analysis of the Fiduciary Exception to the Corporate Attorney-Client Privilege”. Mr. Reyes is admitted to practice law in the Philippines and the State of New York.
Ms. Lardizabal-Manzano is a graduate of San Sebastian College-Recoletos, where she earned her B.A. in Political Science. In 2003, she received her law degree from Lyceum of the Philippines and was admitted to practice law in 2004.
Matthew Hersh earned a B.A. in Political Science from Columbia University in 1990 and graduated cum laude from Georgetown University Law Center in 1999. He also holds a master’s degree in international relations from the Georgetown University School of Foreign Service.
Cap. Avi Levak (Res. IDF) graduated from from Israel’s prestigious Ben-Gurion University of the Negev with a Bachelor of Science in Computer Science and Mathematics. He is also a Leadership and Communication coach trained in TuT coaching by Alon gal in Israel. Avi specializes in high-level, in-depth analysis of business and client needs, within systems and software strategy and architecture.
Ms. Tyler graduated cum laude from Georgetown University and received her law degree, cum laude, from Georgetown University Law Center. During law school, she interned at the United Nations Economic Commission for Europe. She also worked on The Tax Lawyer journal and was a member of the award-winning Barristers’ Council Mock Trial Team. Ms. Tyler is admitted to practice law in the State of California and the District of Columbia.
Ms. Cruz-Anonuevo graduated cum laude and top nine in her batch from Miriam College with a degree of Bachelor of Arts in InternationalStudies. She obtained her Juris Doctor degree from Ateneo de Manila University School of Law in Rockwell. During law school, she interned in Rivera, Santos, Maranan & Associates. She was also part of Ateneo’s Labor Law Bar Operations. She wrote her thesis on, “Stealing Privacy: Limitations on Media’s Photographic Invasion.,” Ms. Cruz-Anonuevo is admitted to practice law in the Philippines.
Ms. Aquino-Batallones obtained a Bachelor of Arts degree in Development Studies (with Minors in Global Politics and Hispanic Studies) from the Ateneo de Manila University. In 2011, she received her Juris Doctor degree from Ateneo de Manila University School of Law. During law school, she interned at Romulo Mabanta Buenaventura Sayoc & de los Angeles then became an intern of Ateneo Legal Services Center’s Clinical Legal Education Program.
Mr. De Guzman graduated from San Beda College with a degree of Bachelor of Arts Major in Economics and received his law degree from San Beda College of Law. He is multilingual and is fluent in three languages: Chinese, Filipino, and English. He was admitted to the Philippine Bar in 2003.