FTC revises HSR and interlocking directorate thresholds

Last week, the Federal Trade Commission (FTC) announced the annual changes to the notification thresholds for filings under the Hart-Scott-Rodino Antitrust Improvements Act (HSR), as well as certain other values under the HSR rules. As background, the HSR Act requires that acquisitions of voting securities or assets that exceed certain thresholds be disclosed to U.S. antitrust authorities for review before they can be completed. The “size-of-transaction threshold” requires that the transaction exceed a certain value. Under certain circumstances, the parties involved also have to exceed “size-of-person thresholds.” This year’s values, which are adjusted annually based on changes in the GNP, take effect in mid-to-late February 2015. The FTC also adjusted the safe harbor thresholds that govern interlocking directorates in competing companies.

HSR revisions
The most important change is that the minimum size-of-transaction threshold will increase from the current $75.9 million to $76.3 million. The size-of-person thresholds will also increase as follows:

• For transactions valued between $76.3 million and $305.1 million, one party to the transaction must have $15.3 million in sales or assets and the other party must have $152.5 million in sales or assets, as reported on the last regularly prepared balance sheet or income statement.
• For transactions valued at greater than $305.1 million, no size-of-person threshold must be met to require an HSR filing.

The filing fee thresholds have similarly increased as follows:

Interlocking directorates
Section 8 of the Clayton Act generally prohibits one person from serving as a director or officer of two competing corporations if two thresholds are met – one relates to the companies’ profitability and one relates to the amount of competitive sales between the companies. The statute requires the FTC to revise these thresholds annually, also based on changes to the GNP. Effective immediately, only companies with capital, surplus and undivided profits aggregating more than $31,084,000 are covered by Section 8, and a violation can be found only if the competitive sales of each company are $23,108,400 or greater.