Tagged: FTC

Revised HSR Thresholds 2017

By: Jonathan M. Calla

JMC Headshot Photo 2015 (M0846508xB1386)On January 19, 2017, the Federal Trade Commission (FTC) issued its annual press release announcing revised jurisdictional thresholds for 2017 in connection with reportable transactions under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). These new HSR thresholds will go into effect 30 days after they are published in the Federal Register, which is expected to happen in late February.  The thresholds apply to transactions that satisfy the “size of transaction” test (transaction value) and the “size of person” test (either in terms of annual sales or total assets).  The thresholds are adjusted annually to reflect changes to the domestic gross national product.  The following chart reflects the increased thresholds from 2016 to 2017:

Test 2016 Threshold 2017 Increased
Threshold
Size of Transaction $78.2 million $80.8 million
Size of Person (smaller) $15.6 million $16.2 million
Size of Person (larger) $156.3 million $161.5 million
Size of Transaction (Size of Person Inapplicable) $312.6 million $323.0 million

Adjustments to the filing fees to be paid in connection with the transactions will be as follows:

  • $45,000 for transactions valued between $80.8 million but below $161.5 million.
  • $125,000 for transactions valued between $161.5 million but below $807.5 million.
  • $280,000 for transactions valued at or above $807.5 million.

Read the full text of the FTC Press Release.

Adjustments to civil penalty amounts for certain laws enforced by the FTC, including HSR, were also announced.  These new adjustments provide that any noncompliance with any requirements under HSR may subject any person, or any officer, director or partner of such person, to civil penalties of up to $40,654 for each day of violation.  This penalty was increased last August from $16,000 to $40,000 per day and will now be subject to annual adjustment to reflect changes to the domestic gross national product

All parties should carefully consider the implications of the HSR Act on all transactions and should consult with counsel to determine whether an HSR filing is required.

For more information please contact Jonathan M. Calla.

FTC Raises Civil Penalties for HSR Violations by More Than 150%

By: Carl F. Barnes

carl cropThe Federal Trade Commission announced recently that the maximum civil penalty for violations of the premerger notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 have increased from $16,000 to $40,000 per day. The increase was effective this past Monday, August 1, 2016, but will also apply to violations occurring prior to that date. The full text of the revised rules was published in the Federal Register on June 30.

The FTC last increased the maximum civil penalty in 2009, from $11,000 per day to $16,000 per day. The present increase is the result of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, which directs federal agencies to implement a “catch-up” inflation adjustment based on a prescribed formula. Starting in January 2017, the FTC will increase its maximum civil penalties annually, just as it adjusts HSR filing thresholds.

A premerger notification gives the FTC and the Department of Justice, which share jurisdiction over HSR, the ability to review a transaction for anti-competitive effects and determine whether to seek injunctive or other relief before it closes. Recent enforcement actions are good reminders of a few fundamental facts:

  • Every day of noncompliance with HSR is a separate violation, so fines can mount extraordinarily quickly.
  • “Premerger,” though that’s the word used in the title of the Act, is really a misnomer: HSR obviously applies to mergers and acquisitions of entire companies (if the filing thresholds are met), but it also applies to some transfers of assets (including patents and real estate), to some minority investments, and to certain licenses, leases and other transactions that don’t look like mergers at all.
  • Finally, the Act and the rules implementing it are highly technical and complex. Although the FTC has a long-standing practice of being lenient on first-time, inadvertent offenders, everyone involved in the purchase, sale or other transfers of business assets or equity interests should pay careful attention to the potential application of HSR and consult with skilled counsel. Now more than ever.

For more information, please contact Carl F. Barnes.

Revised HSR Thresholds 2016

By Jonathan M. CallaJMC Headshot Photo 2015 (M0846508xB1386)

On January 21, 2016, the Federal Trade Commission (FTC) issued its annual press release announcing revised jurisdictional thresholds for 2016 in connection with reportable transactions under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act).  These new HSR thresholds will go into effect 30 days after they are published in the Federal Register, which is expected to happen prior to the end of January, 2016.  The thresholds apply to transactions that satisfy the “size of transaction” test (transaction value) and the “size of person” test (either in terms of annual sales or total assets).  The thresholds are adjusted annually to reflect changes to the domestic gross national product.  The following chart reflects the increased thresholds from 2015 to 2016:

Test 2015 Threshold 2016 Increased Threshold
Size of Transaction $76.3 million $78.2 million
Size of Person (smaller) $15.3 million $15.6 million
Size of Person (larger) $152.5 million $156.3 million
Size of Transaction (Size of Person Inapplicable)  $305.1 million  $312.6 million

Adjustments to the filing fees to be paid in connection with the transactions will be as follows:

  • $45,000 for transactions valued between $78.2 million but below $156.3 million.
  • $125,000 for transactions valued between $156.3 million but below $781.5 million.
  • $280,000 for transactions valued at or above $781.5 million.

Read the full text of the FTC Press Release here.

All parties should carefully consider the implications of the HSR Act on all transactions and should consult with counsel to determine whether an HSR filing is required.

For more information please contact Jonathan M. Calla.

Non M&A Transactions Can Trigger HSR Filing Obligations

Corproate By: Mark J. Tarallo

The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (typically referred to as “HSR”) was enacted to enable government regulators to review business combination transactions prior to completion, to insure that the transaction didn’t have an anti-competitive impact on consumers.  Typically, the parties to the transaction would file a notice with the Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) prior to the anticipated closing date, the agencies would review the transaction, and then would either bless the transaction or ask for more information.  In some cases the regulators would file a lawsuit to block the transaction, on the grounds that there would be a significant anti-competitive impact in the marketplace.

Most companies and practitioners focus on HSR as part of the M&A process.  However, it is becoming increasingly necessary to review transactions that don’t fall into typical M&A structures.  In August 2014, Berkshire Hathaway was fined $896,000 for failing to file an HSR notification prior to exercising its conversion rights with respect to convertible debt it held in USG Corporation.  Upon conversion of the debt, Berkshire Hathaway was issued 21.4 million shares of USG stock, with a value in excess of $283.6 million, the reporting threshold at that time for certain HSR filings.  Berkshire Hathaway self-reported the failure to file, but were still hit with the maximum civil penalty for failure to file.

In addition to conversions, other transactions that may require HSR filings are “private” IPOs and stock grants to executives.  Transactions that approach the HSR filing thresholds need to be reviewed even if they don’t resemble traditional M&A transactions, to confirm that a filing is not required.  The FTC and DOJ have shown that even where the party at fault self-reports, they are willing to impose significant penalties, highlighting the need to review transactions for HSR requirements well before they happen.

For more information please contact Mark Tarallo.

Revised HSR Thresholds 2015

By Joseph C. MarrowSecurities and Corporate Attorney Joseph Marrow

On January 15, 2015, the Federal Trade Commission (FTC) issued its annual press release announcing revised jurisdictional thresholds for 2015 in connection with reportable transactions under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act).  The new thresholds apply to transactions that close on or after February 20, 2015.  The thresholds apply to transactions that satisfy the “size of transaction” test (transaction value) and the “size of person” test (either in terms of annual sales or total assets).  The thresholds are adjusted annually to reflect changes to the domestic gross national product.  The following chart reflects the increased thresholds from 2014 to 2015:

Test 2014 Threshold 2015 Increased Threshold
Size of Transaction $75.9 million $76.3 million
Size of Person (smaller) $15.2 million $15.3 million
Size of Person (larger) $151.7 million $152.5 million
Size of Transaction (Size of Person Inapplicable)  $303.4 million  $305.1 million

The FTC made no adjustment to the filing fees to be paid in connection with transactions, but did, however, adjust the thresholds for application of the filing fees:  for transactions valued between $76.3 million and up to $152.5 million, the filing fee is $45,000; for transactions valued at $152.5 million and up to $762.7 million, the filing fee is $125,000; and for transactions valued at $762.7 and above, the filing fee is $280,000.

Read the full text of the FTC press release.

All parties should carefully consider the implications of the HSR Act on all transactions and should consult with counsel to determine whether an HSR filing is required.

For more information please contact Joseph C. Marrow.