The Federal Trade Commission, the agency charged with administering the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") and its filing requirements, published in the Federal Register on January 31, 2005, adjustments to the HSR Act notification thresholds. Effective March 2, 2005, the HSR Act notification thresholds will be revised as follows:

  • The $50 million "size-of-transaction" threshold will increase to $53.1 million. No HSR Act notification will be required if the value of voting securities and assets held as a result of the transaction is valued below the applicable size-of-transaction threshold.
  • The $100 million/$10 million in net annual sales or total assets "size of parties" thresholds will increase to $106.2 million/$10.7 million, respectively. For transactions valued at $212.3 million or less, no HSR Act notification will be required if the ultimate parent entities of the parties to the transaction do not satisfy the applicable size-of-parties thresholds.
  • Transactions valued at more than $212.3 million (previously $200 million) are reportable regardless of the size of the parties.

This indexing of the HSR Act thresholds results from amendments to the HSR Act made in February 2000, requiring that for each fiscal year beginning after September 30, 2004, the HSR Act thresholds be indexed to reflect changes in the U.S. gross national product. Accordingly, it is expected that the HSR Act thresholds will be adjusted annually.

The indexing of the HSR thresholds also applies to certain other thresholds and exemptions set forth in the HSR Act. For example, the acquisition of assets located outside the United States is exempt from the HSR Act notification requirements if the value of such assets is not greater than $50 million, and the acquisition of voting securities of a non U.S. company is exempt from the HSR Act notification requirements if such non-U.S. company has less than $50 million in annual sales in or into the United States. Under the revised thresholds, each of these two $50 million thresholds will increase to $53.1 million.

The HSR Act threshold indexing provisions do not affect the amount of the HSR filing fees, but the applicable filing fee will be based on the new indexed reporting thresholds as follows: $45,000 for transactions valued at less than $106.2 million; $125,000 for transactions valued from $106.2 million up to $530.7 million; and $128,000 for transactions valued at $530.7 million or more.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved