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FTC Announces New Hart-Scott-Rodino and Clayton Act Section 8 Thresholds for 2024
The Federal Trade Commission (the “FTC”) has revised the jurisdictional and filing fee thresholds of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) and the Premerger Notification Rules (the “Rules”), based on changes in the Gross National Product (“GNP”), as required by the 2000 amendments to the HSR Act. For 2024, the thresholds will increase as a result of the increase in GNP and will apply to transactions that close on or after the effective date, which will be 30 days after the change’s publication in the Federal Register. Additionally, the FTC’s newly increased thresholds pertaining to interlocking directorates under Section 8 of the Clayton Act are now in effect, as of January 22, 2024.
The HSR Act requires parties intending to merge or to acquire new assets, voting securities, or certain non-corporate interests to notify the FTC and the Department of Justice, Antitrust Division, and to observe required waiting periods before consummating an acquisition if certain filing thresholds are met. Notification and Report forms must be submitted by the parties to a transaction if both the size of the transaction and size of party thresholds are met, unless an exemption applies.
1. Revised Size of Transactions Threshold
In 2024, the minimum size of transaction threshold has increased to $119.5 million, compared to the 2023 threshold of $111.4 million.
2. Revised Size of Parties Thresholds
The size of party threshold is inapplicable if the value of the transaction exceeds $478 million (up from $445.5 million in 2023). As for transactions valued between $119.5 million and $478 million, the size of the party threshold may be satisfied in any one of the following three ways:
| |
I |
II |
III |
|---|---|---|---|
| Acquiring Person | $239 million annual net sales or total assets | $239 million annual net sales or total assets | $23.9 million annual net sales or total assets |
| |
+ |
+ |
+ |
| Acquired Person | $23.9 million total assets | a manufacturer with $23.9 million annual net sales or total assets | $239 million annual net sales or total assets |
A comparison of the revised 2024 thresholds and the current 2023 thresholds is depicted below:
| Relevant Section of HSR Act or Rules |
Original Thresholds |
2023 Thresholds |
2024 Thresholds |
|---|---|---|---|
| § 7A(a)(2)(A) size of transaction test | $200 million | $445.5 million | $478 million |
| § 7A(a)(2)(B)(i) size of transaction test | $50 million | $111.4 million | $119.5 million |
| § 7A(a)(2)(B)(ii)(i) size of parties test | $10 million | $22.3 million | $23.9 million |
| § 7A(a)(2)(B)(ii)(i) size of parties test | $100 million | $222.7 million | $239 million |
| Thresholds and Limitation values in the Rules (16 C.F.R. Parts 801-803) | $10 million $50 million $100 million $110 million $200 million $500 million $1 billion |
$22.3 million $111.4 million $222.7 million $245 million $445.5 million $1.1137 billion $2.2274 billion |
$23.9 million $119.5 million $239 million $262.9 million $478 million $1.195 billion $2.39 billion |
3. Filing Fees
The FTC also announced changes to the filing fee structure under the HSR Act in accordance with the Merger Filing Fee Modernization Act that President Biden signed into law on December 29, 2022. The Act requires the FTC to revise filing fee thresholds annually. This year, the FTC has revised filing fees, based on the percentage change in GNP and percentage increase in the Consumer Price Index, as follows:
| 2024 Filing Fee | Size of Transaction |
|---|---|
| $30,000 | less than $173.3 million |
| $105,000 | not less than $173.3 million but less than $536.5 million |
| $260,000 | not less than $536.5 million but less than $1.073 billion |
| $415,000 | not less than $1.073 billion but less than $2.146 billion |
| $830,000 | not less than $2.146 billion but less than $5.365 billion |
| $2,335,000 | $5.365 billion or more |
The FTC also announced that as of January 10, 2024, the maximum civil penalty for HSR Act violations, raised from $50,120 per day to $51,744 per day.
4. Revised Thresholds for Interlocking Directorates
The FTC’s revised jurisdictional thresholds, for Section 8 of the Clayton Act, which prohibits interlocking directorates, took effect on January 22, 2024, the same day the FTC announced the revised HSR Act thresholds and filing fees. Section 8 provides that no person shall, at the same time, serve as a director or officer in any two competitor corporations, such that the elimination of competition by agreement between them would constitute a violation of the antitrust laws.
There are several safe harbors that may apply in certain situations, including when the corporations’ size or the extent of competitive sales falls below specified thresholds. The revised Section 8 precludes an individual’s ability to serve as an officer or director in two competing corporations. This limitation now applies when (1) both corporations collectively have capital, surplus, and undivided profits exceeding $48.599 million (increased from $45.257 million in 2023), and (2) each of the competing corporations reports competitive sales of at least $4.8559 million (up from $4.5257 million in 2023). Furthermore, the competitive sales of either corporation must constitute 2% or more of the respective corporation’s total sales, or alternatively, the competitive sales of each corporation must surpass 4% or more of the respective corporation’s total sales.