Hart-Scott-Rodino Antitrust Improvements Act of 1976

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Hart-Scott-Rodino Antitrust Improvements Act of 1976

Overview

The Hart‑Scott‑Rodino (HSR) Act requires certain companies to notify the Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice (DOJ) before completing specified mergers, acquisitions, or tender offers. The premerger notification gives regulators time to review transactions for potential anticompetitive effects and to seek remedies or block deals when appropriate.

How it works

  • Parties to a reportable transaction must file an HSR Notification and Report Form and observe a statutory waiting period before closing.
  • Standard waiting periods are typically 30 days; for cash tender offers and some bankruptcy acquisitions the period is 15 days.
  • During the waiting period regulators can:
  • Request additional information (a “second request”), which extends the review;
  • Negotiate remedies or divestitures with the parties to preserve competition; or
  • Seek a preliminary injunction in court to block the transaction.

Tests that determine whether a filing is required

A premerger filing is required only if all applicable tests below are met:

  1. Commerce test

  2. At least one party must be engaged in commerce or in an activity affecting commerce (a broadly construed requirement).

  3. Size‑of‑person test

  4. One party must meet a minimum size (measured by total assets or annual net sales) and the other must meet a lower-size threshold. These thresholds are adjusted periodically.

  5. Size‑of‑transaction test

  6. A filing is required if the value of assets or voting securities being acquired meets or exceeds a specified dollar threshold, or if the acquisition of voting securities meets a percentage threshold that results in control of a target with sufficient assets or sales.

Thresholds and filing fees (examples)

HSR monetary thresholds and filing fees are adjusted annually. The dollar figures used to determine whether a transaction must be reported can change, so parties should check current FTC guidance. Examples from recent adjustments include:
– Size thresholds (example year): one party with total assets or annual net sales of roughly $188 million or more and the other with roughly $18.8 million or more.
– Transaction‑size thresholds (example year): certain lower-tier tests begin around $94 million; statutory thresholds that apply regardless of the size‑of‑person test have been higher (hundreds of millions).
– Filing fees (example ranges): fees vary by transaction size (e.g., approximately $45,000 for smaller reportable deals, $125,000 for mid‑range deals, and $280,000 for very large deals in recent years).

Always consult the FTC’s current HSR filing guidance or counsel to confirm up‑to‑date thresholds and fee amounts.

Enforcement and remedies

If the agencies identify potential anticompetitive effects, they may:
– Negotiate divestitures, conduct restrictions, or other remedies with the parties;
– Issue a second request to gather more detailed information and economic analysis; or
– File suit to block the transaction or obtain a preliminary injunction.

Key takeaways

  • The HSR Act creates a premerger notification regime that gives antitrust authorities time to review certain transactions before they close.
  • Whether a filing is required depends on commerce, the sizes of the parties, and the size of the transaction—each with thresholds that are periodically adjusted.
  • Failure to file when required can result in substantial civil penalties and unwinding of transactions; careful early analysis and, if needed, filing counsel are essential.