US Merger Control Notification Threshold Increases to $111.4 Million

The Federal Trade Commission (FTC) announced 2023 adjustments to the Hart-Scott-Rodino (HSR) thresholds. These thresholds determine which mergers and acquisitions must be reported to United States federal antitrust agencies for review before consummation. The FTC also updated the filing fees associated with HSR filings. The FTC is required by statute to update the thresholds and filing fees annually, adjusted for inflation. The new thresholds and filing fees will take effect on or around February 24, 2023 (30 days after being published in the Federal Register) and remain in effect through early 2024. All transactions closing on or after the effective date will be governed by the new thresholds and filing fees.

HSR Thresholds

The threshold for a notifiable transaction under the HSR Act has increased from $101 million to $111.4 million. This substantial increase will likely result in fewer notifiable transactions, lessening the current burden on the FTC and Department of Justice, who conduct their review of most transactions within a 30-day window.

Size of Transaction Threshold. Under the new thresholds, the parties to a merger, consolidation, or acquisition of voting securities or substantial assets will, in most cases, need to file pre-acquisition notifications with the FTC and the DOJ and observe the HSR Act’s waiting periods before closing if the transaction will result in either of the following:

• The acquiring person will hold more than $111.4 million worth of voting securities and assets of the acquired person and the parties meet the “size of person” requirements below; or
• Regardless of the parties’ sizes, the acquiring person will hold more than $445.5 million worth of voting securities and assets of the acquired person (size of person test is not applicable).

Size of Person Threshold. Meeting any one of the following three subtests satisfies the size of person test:

• A person with $222.7 million or more of total assets (on its most recent regularly prepared balance sheet) or annual net sales (from its most recently completed fiscal year) proposes to acquire voting securities or assets of a person engaged in manufacturing (note that software is not considered manufacturing) with $22.3 million or more of annual net sales or total assets; or
• A person with $222.7 million or more of total assets or annual net sales proposes to acquire voting securities or assets of a person not engaged in manufacturing with $22.3 million or more of total assets (net sales test does not apply); or
• A person with $22.3 million or more of total assets or annual net sales proposes to acquire voting securities or assets of a person with $222.7 million or more of annual net sales or total assets.
  

The new thresholds are detailed in the chart below.

HSR Filing Fees

On December 23, 2022, Congress passed the Merger Filing Fee Modernization Act, which decreased the filing fees for most transactions that are subject to HSR Act requirements (those valued below $500 million), but increased the filing fees for the largest transactions subject to the HSR Act.

The new filing fees are detailed in the chart below.