The FTC’s announcement of the new HSR thresholds beat Groundhog Day this year. Of course, that means that we at DealLawyers.com are getting a jump on our own harbinger of spring – the annual inundation of law firm memos about the new HSR filing thresholds. This year’s winner of the annual “first memo in my inbox” contest is Greenberg Traurig. Here’s an excerpt from their memo with the details on the new HSR thresholds, which actually declined this year:
The initial threshold for a notification under the HSR Act will decrease from $94 million to $92 million. For transactions valued between $92 million and $368 million (lowered from $376 million), the size of the person test will continue to apply. That test will now make the transaction reportable only where one party has sales or assets of at least $184 million (lowered from $188 million), and the other party has sales or assets of at least $18.4 million (lowered from $18.8 million). All transactions valued in excess of $368 million are reportable without regard to the size of the parties. The new thresholds will apply to any transaction that will close on or after March 4, 2021.
The thresholds for Section 8 of the Clayton Act’s prohibition on interlocking directorates were also lowered this year & are effective as of January 21, 2021:
Section 8 prohibits a “person,” which can include a corporation and its representatives, from serving as a director or officer of two “competing” corporations, unless one of the following exemptions applies:
– either corporation has capital, surplus, and undivided profits of less than $37,382,000 (lowered from $38,204,000);
– the competitive sales of either corporation are less than $3,738,200 (lowered from $3,820,400);
– the competitive sales of either corporation amount to less than 2% of that corporation’s total sales; or
– the competitive sales of each corporation amount to less than 4% of each corporation’s total sales.
Changes in the HSR & Clayton Act thresholds are based on changes in GDP. The memo points out that this is the only the second time since Congress amended the HSR Act in 2000 to require the annual adjustment of notification thresholds. The last time a downward adjustment was made occurred in 2010.
-John Jenkins, DealLawyers.com February 2, 2021
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