Important Notice Re: Changes To The Hart-Scott-Rodino Premerger Notification Act
Effective February 1, 2001, the HSR Act will be revised in important respects.
On December 21, 2000, the President signed into law the first significant changes in the Hart-Scott-Rodino Act, 15 U.S.C. § 18a, since its enactment in 1976. The Act requires parties intending to merge or make acquisitions of voting securities or assets to provide the Federal Trade Commission (FTC) and the Antitrust Division of the U.S. Department of Justice with certain information, pay established filing fees, and stay consummation of the transaction until termination of the applicable waiting periods, if the parties and the proposed transaction satisfy certain minimum jurisdictional thresholds.
These long-awaited changes, which will take effect on February 1, 2001, will substantially reduce the number of transactions that must be reported under the Act by increasing reporting thresholds, and increase the filing fees for certain transactions above set valuations.
The revised Act increases the size of transactions that must be reported from $15 million to $50 million, and eliminates the "size of person" test for transactions over $200 million.
The new legislation will increase the size of reportable transactions from $15 million to $50 million. It will also eliminate the alternative 15 size of transaction threshold, so that transactions resulting in an acquiring person holding less than $50 million of an acquired person's assets or voting securities will not be reportable, regardless of the percentage of voting securities acquired in the transaction.
The revision also eliminates the "size of person" test for transactions valued at greater than $200 million. This test, which generally requires one party to the transaction to have sales or assets in excess of $100 million and the other party to have sales and assets in excess of $10 million, will continue to be applicable to transactions valued at under $200 million.
The Act will have a new three-tiered filing fee structure, ranging from the current $45,000 for transactions under $100 million to $280,000 for transactions valued at over $500 million.
Another significant change implemented by the new legislation is a three-tiered fee structure depending on the size of the transaction. Acquirors of assets or voting securities valued at less than $100 million will be subject to the current filing fee of $45,000. Acquiring persons will be required to pay higher fees, however, for larger transactions. Acquisitions valued at between $100 million and $500 million will be subject to a filing fee of $125,000, while acquisitions valued at more than $500 million will be subject to a filing fee of $280,000.
Beginning in 2005, each of the dollar thresholds and filing fee tiers set forth in the new legislation will be subject to adjustment on an annual basis, based upon the previous year's GNP.
The new legislation also increases the waiting period following substantial compliance with a second request for information from 20 days, under the current law, to 30 days for most transactions. The initial waiting periods of 30 days (for
most transactions) and 15 days (for cash tender offers) from the date of filing until the transaction may be consummated will not be changed.
Certain waiting periods will also be affected by the new legislation.
The FTC intends to publish an Emergency HSR Rules package and a revised HSR Notification Form and Instructions in January, 2001, to take effect on February 1, 2001. Additional rule changes are also planned, but these changes are not expected to substantially modify the underlying HSR rules and their implementation.
This document is intended as an informational notice and does not constitute legal advice. If you have any questions or would like to discuss a particular transaction, you should contact your usual W&D attorney or :
Robert M. Langer – 860.297.3724 or [email protected]