The Federal Trade Commission recently announced that the reporting thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 will be increased, effective February 17, 2006. The Act requires all parties to mergers or acquisitions that meet or exceed the Act's jurisdictional thresholds to notify the FTC and the Antitrust Division of the Department of Justice and wait a designated period of time before consummating the merger or acquisition. The 2000 amendments to the Act require the FTC to revise the Act's jurisdictional and filing fee thresholds annually, based on the change in gross national product. Certain related thresholds and limitation values in the H-S-R rules will also be adjusted. The increased thresholds will apply to all transactions that close on or after February 17, 2006.

This Update summarizes the key elements of the revised thresholds.

Reporting Thresholds

Current Reporting Thresholds.  Acquisitions of voting securities or assets are subject to the H-S-R Act if the transaction meets a two-part test based on the size of the transaction and the size of the parties. The Size-of-Transaction test is met if the transaction is valued at more than $53.1 million. The Size-of-Parties test is met if the ultimate parent entity of one of the parties to the transaction has $10.7 million in total assets or annual net sales, and another party to the transaction has $106.2 million in total assets or annual net sales. However, the Size-of-Parties test does not apply to transactions valued at more than $212.3 million.

Increased Reporting Thresholds. Under the new thresholds, the Size-of-Transaction test is met if the transaction is valued at more than $56.7 million. The increased Size-of-Parties test is met if the ultimate parent entity of one of the parties has $11.3 million in total assets or annual net sales, and another party to the transaction has $113.4 million in total assets or annual net sales. The threshold at which the Size-of-Parties test does not apply is increased to transactions valued in excess of $226.8 million.

Filing Fees

The transaction values on which the tiered H-S-R filing fee schedule is based will also be revised as shown in the chart below.

Additional Information

You can find discussion of other recent laws, regulations and rule proposals of interest to public companies on our website.