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Client Alert: Winter 2025 Antitrust M&A Law Developments

HSR Act “Size of Transaction” Test Increases by 5.8% to $126.4 Million

Barring Last Minute FTC Action, Separate Enhanced HSR Reporting Rules to Take Effect on February 10, 2025

The Federal Trade Commission, the agency that administers the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”), has announced the annual adjustments to its coverage, filing fee, and other dollar-denominated thresholds. The HSR Act applies to mergers, asset, and stock acquisitions and other transactions that satisfy specified “size-of-transaction” and “size-of-person” dollar thresholds. If triggered, the HSR Act requires parties to a proposed transaction to make pre-closing filings with both the Federal Trade Commission (“FTC”) and Department of Justice (“DOJ”) and provide detailed information about the transaction. The HSR Act’s jurisdictional dollar thresholds change from year to year, based on changes in the U.S. gross national product for the government’s fiscal year ending September 30. The 2025 revisions have been published in the Federal Register and become effective without further action on February 21, 2025.  The new thresholds will remain in effect until the next annual adjustment,  which is expected early next year. 
 
The new thresholds are independent of the new HSR Act enhanced reporting rules, finalized and approved in October 2024. Those rules significantly overhauled the entire HSR Act notification and reporting process and will dramatically increase the time and cost required for many HSR filings.  These new reporting rules (as we previously summarized) are scheduled to take effect on February 10, 2025. However, within hours of taking office on January 20, 2025, President Trump signed an Executive Order entitled “Regulatory Freeze Pending Review” directing all executive departments and agencies to “consider postponing for 60 days ... any rules that have been published in the Federal Register, or any rules that have been issued in any manner but have not taken effect, for the purpose of reviewing any questions of fact, law, and policy that the rules may raise.” Separately, on January 10, 2025, the U.S. Chamber of Commerce and others filed suit in the U.S. District Court for the Eastern District of Texas to set aside the new reporting rules alleging administrative overreach. As of the date of this Alert, the FTC has not issued a statement indicating its response to President Trump’s Executive Order, and barring last-minute FTC action, the new HSR Act enhanced reporting rules will take effect on Monday, February 10, 2025.
 
Revised Dollar Thresholds to Determine Initial HSR Filing Obligation

 Effective February 21, 2025, the minimum notification threshold under the HSR Act will increase to $126.4 million. Thus, an acquisition will potentially trigger an HSR Act filing only if, as a result of the acquisition, the acquirer will hold assets, voting securities, or non-corporate interests of the acquired person valued in excess of $126.4 million. The complete revised 2025 initial thresholds are as follows:
 
 

Threshold Type	2024 Threshold (Effective for transactions closing before February 21, 2025)	2025 Threshold (Effective for transactions closing on or after February 21, 2025)
Minimum “Size-of-Transaction” test	$119.5 million	$126.4 million
“Size-of-Person” Test (applicable only to transactions valued at less than the “Alternative Size-of-Transaction” test below)	Person #1: $25.3 million Person #2: $239 million	Person #1: $25.3 million Person #2: $252.9 million
Alternative “Size-of-Transaction” test (requiring HSR filing regardless of “Size-of-Person” test above)	$478 million	$505.8 million

 
Until February 21, 2025, the current $119.5 million minimum “size-of-transaction” and other thresholds remain in effect.  
To summarize, applying these new thresholds results in the following reporting obligations:
 

Transaction Size	HSR Act Reporting Obligation?
$126.4 million or less	No
Greater than $126.4 million and less than $505.8 million	Yes, but only if the above “Size-of-Person” test is satisfied
$505.8 million or more	Yes, without regard to the above “Size-of-Person” test

 
Annual Update to HSR Act Filing Fees   
 
The HSR Act employs a multi-tiered filing fee structure, based on the size of the transaction. Effective February 21, 2025, the new filing fee structure is as follows:
 

Transaction Ranges	Filing Fees
Transactions less than $126.4 million	$30,000
$126.4 million to less than $555.5 million	$105,000
$555.5 million to less than $1.111 billion	$265,000
$1.111 billion to less than $2.222 billion	$425,000
$2.222 billion to less than $5.555 billion	$850,000
Transactions of $5.555 billion or more	$2,390,000

 
This fee schedule remains subject to annual adjustment based on changes in the Consumer Price Index. The new dollar thresholds for determining HSR Act filing requirements are effective for all transactions closing on or after February 21, 2025, and the new dollar thresholds for determining the applicable filing fee become effective for all filings first made on or after February 21, 2025.
 
Additional Notification Thresholds 
 
As stated above, effective February 21, 2025, an acquisition that results in an acquirer holding more than $126.4 million worth of the voting securities of an acquired person crosses the first of five staggered “notification thresholds.” The HSR Act rules identify four additional thresholds that determine whether a subsequent acquisition of voting securities from the same acquired person will require additional HSR filings. These additional notification thresholds have been revised as follows:
 

Original Additional Notification Thresholds	2024 Additional Notification Thresholds	2025 Additional Notification Thresholds
$100 million	$239 million	$252.9 million
$500 million	$1.1195 billion	$1.264 billion
25% of the Voting Securities of an issuer	(if the 25% stake is valued at greater than $2.39 billion)	(if the 25% stake is valued at greater than $2.529 billion)
50% of the Voting Securities of an issuer	(if the 50% stake is valued at greater than $126.4 million)	(if the 50% stake is valued at greater than $126.4 million)

 
In effect, these staggered thresholds are designed to act as exemptions to relieve parties of the burden of making additional filings each time additional shares of the same person are acquired. Once a filing is made, the acquiring person is allowed one year from the end of the waiting period to cross the threshold stated in the filing; if it reaches the stated threshold within that period, it may continue acquiring shares up to the next threshold for five years from the end of the waiting period. These additional notification thresholds apply only to acquisitions of voting securities.
 
Once parties have made their required HSR Act filings, the enforcement agencies have up to 30 days (15 days in the case of certain bankruptcy sales) to decide whether to seek additional information – an unwelcome and taxing process commonly known as a “second request” – or to take no action and allow the 30 or 15 day waiting period to automatically terminate. Once the new enhanced HSR Act reporting rules take effect, parties will again have the option at the time of filing to request an “early termination” of the relevant waiting period which, if granted by the agencies, typically shortens the 30-day waiting period to approximately 10 to 14 days. 
 
Failure to comply with HSR Act requirements can result in significant civil and other penalties. The monetary penalties are substantial because each day of non-compliance is an independent violation and can result in a separate penalty up to the maximum civil penalty. Effective January 17, 2025, the maximum civil penalty amount for violations of the HSR Act increased from $51,744 per day to $53,088 per day. Additional annual changes to the maximum daily civil penalty are expected, as such adjustments are required to be made each January.
 
Clayton Act Section 8 “Interlocking Directorate” Thresholds Also Increased
 
The FTC also recently announced revised dollar thresholds that trigger a prohibition preventing companies from having interlocking memberships on their corporate boards of directors. Section 8 of the Clayton Act generally prohibits, with certain exceptions, a person from serving as a director or officer of two competing companies if certain dollar thresholds are met. As revised, the prohibition against interlocking directors applies if each company has more than $51,380,000 (up from $48,559,000 for 2024) in capital, surplus, and undivided profits; however, the prohibition generally does not apply if either company has less than $5,138,000 (up from $4,855,900 for 2024) in competitive sales. The revised Clayton Act dollar thresholds became effective immediately upon publication in the Federal Register on January 22, 2025.
 
What does all of this mean?
 
Obviously, the new enhanced HSR Act reporting rules scheduled to take effect on Monday, February 10, 2025, remain subject to agency or executive action, as well as legal proceedings. Moreover, a third avenue of possible legal challenge is the invocation of the Congressional Review Act (“CRA”), though that seems politically unlikely at present as it would require a joint congressional resolution.  In any event, subsequent developments on this front merit careful watching.
 
Over the past several years, in light of the increasingly pro-enforcement posture of the FTC and DOJ, the suspension of early termination grants and the increase in second requests issuances, M&A and other deal makers have engaged in significantly more advanced HSR Act and antitrust law compliance planning, including conducting more thorough, detailed advance competitive review screens for proposed transactions and budgeting more time for HSR Act clearance to be obtained. Although the Trump administration has clearly articulated notably different enforcement priorities, it is too early to discern the practical effect of such policy shifts; consequently, careful advance planning remains highly recommended.
 
Companies and their investors and advisors should pay particular attention to the increased dollar thresholds in assessing HSR Act filing obligations – particularly for deals with either a filing date or closing date that straddles February 21, 2025. First, parties may be relieved from the obligation to make an HSR Act filing for a transaction closing on or after February 21, 2025, that falls under the revised $126.4 million initial filing threshold. In addition, for HSR Act filings made on or after February 21, 2025, parties may realize the benefit of a lower filing fee for smaller transactions that straddle one of the new filing fee dollar thresholds.
 
Companies and others should be mindful that HSR Act filing obligations are often triggered by a wide variety of non-M&A or “merger” transactions, including asset acquisitions, bankruptcy sales, real estate deals, patent or other IP licensing activities, initial and follow-on investment transactions (including non-controlling investments),  joint ventures or other NewCo formations, transactions by nonprofits and tax-exempt entities, as well as the exercise, exchange or conversion of options or other convertible securities. 
 
Finally, deal parties should be mindful that a transaction will not escape antitrust scrutiny because either an HSR Act filing is not required or, even if a filing is required and made, a transaction receives HSR Act clearance. Non-reportable deals are still challenged by the FTC and the DOJ, as each of those agencies regularly file suit seeking to unwind previously consummated mergers. Even small transactions with a purchase price below the filing thresholds have been challenged.  Finally, over the past four years, the FTC and DOJ have increasingly issued “warning letters” notifying merger parties that, despite the expiration of the HSR Act’s waiting period, the agencies specifically retain the power to challenge both proposed and consummated transactions. 

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This Alert has been prepared for general informational purposes and a service to our clients and friends. It has been prepared in a summary manner only and is not intended as legal advice.  The HSR and Clayton Acts are highly technical and complex and readers are urged to consult their legal counsel concerning any particular situation and specific legal questions.
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