FTC Announces New Thresholds for HSR Filings and Director Interlocks for 2024

On January 23, 2024, the Federal Trade Commission (“FTC”) announced revised thresholds for determining whether transactions need to be filed under the Hart-Scott-Rodino (“HSR”) Act. The higher thresholds become effective March 6, 2024. Earlier, the FTC announced new thresholds for Section 8 of the Clayton Act, which governs interlocking directorates. These thresholds are adjusted annually based on the change in gross national product.

The maximum daily civil penalty for violations of the HSR Act, which is tied to inflation, has also increased. In addition, the HSR filing fees and filing fee thresholds have been adjusted for 2024.

HSR Act Thresholds

The HSR Act jurisdictional thresholds for 2024 are included in the table below. The new minimum “size of transaction” threshold for acquisitions of voting securities, assets, or controlling interests in non-corporate entities will be $119.5 million. The thresholds will apply to transactions consummated on or after March 6, 2024.

Size of Person Thresholds

For transactions valued at less than $478 million, the parties will also need to meet the “size of person” test for the HSR Act to apply. This test will require one “person” to have annual net sales or total assets of at least $239 million and the other “person” to have at least $23.9 million in annual net sales or total assets. However, if the “acquired person” is not “engaged in manufacturing,” the smaller size of person test will only be met if it has assets valued at more than $23.9 million.

The FTC has announced the following revised HSR filing fees and filing fee thresholds:

Section 8 Thresholds (“Interlocking Directorates”)

With certain exceptions, Section 8 of the Clayton Act prohibits a person from serving as a director or officer of two competing corporations at the same time, if each corporation has capital, surplus and undivided profits above an annually adjusted threshold. Effective January 22, 2024, this threshold is $48,559,000.

However, this prohibition does not apply if:

• the “competitive sales” (as defined by the statute) of either corporation are less than 2 percent of that corporation’s total sales;
• the “competitive sales” of each corporation are less than 4 percent of that corporation’s total sales; or

• the “competitive sales” of either corporation are less than an annually adjusted threshold. Effective January 24, 2024, this threshold is $4,855,900.

Civil Penalties

Finally, the FTC has announced the maximum daily civil penalty amount for HSR violations. The amount increased from $50,120 to $51,744 per day of the violation. The new maximum applies to civil penalties assessed on or after January 10, 2024, regardless of when the underlying violation occurred.

How Covington Can Help

Application of the HSR Act and its implementing rules and Section 8 of the Clayton Act can be complex. Our antitrust practice group includes attorneys, including several who served at the Federal Trade Commission or the Antitrust Division of the U.S. Department of Justice, with decades of experience in advising on HSR matters. Our team can provide detailed and practical insight into how these rules apply to various types of entities and transactions.

For information and resources on key changes by antitrust and related regulators and authorities, explore Covington’s Merger Enforcement Hub.

If you have any questions concerning the material discussed in this client alert, please contact the members of our Antitrust/Competition practice.