2023-01584. Premerger Notification; Reporting and Waiting Period Requirements

AGENCY:

Federal Trade Commission.

ACTION:

Final rule.

SUMMARY:

The Federal Trade Commission (“Commission” or “FTC”) is amending the Hart-Scott-Rodino (“HSR”) Premerger Notification Rules (“Rules”) that require the parties to certain mergers and acquisitions to file reports with the FTC and the Assistant Attorney General in charge of the Antitrust Division of the Department of Justice (“the Assistant Attorney General”) (together the “Antitrust Agencies” or “Agencies”) and to wait a specified period of time before consummating such transactions. The Commission is amending the Rules to conform to the new filing fee tiers enacted by the Merger Filing Fee Modernization Act of 2022 (“2022 Amendments”), contained within the Consolidated Appropriations Act, 2023.

DATES:

Effective February 27, 2023.

FOR FURTHER INFORMATION CONTACT:

Robert Jones, Assistant Director, Premerger Notification Office, Bureau of Competition, Federal Trade Commission, 400 7th Street SW, Room CC-5301, Washington, DC 20024, or by telephone at [phone], Email: [e-mail].

SUPPLEMENTARY INFORMATION:

Introduction

Section 7A of the Clayton Act (the “Act”) requires the parties to certain mergers or acquisitions to file with the Commission and the Assistant Attorney General and wait a specified period before consummating the proposed transaction to allow the Antitrust Agencies to conduct their initial review of a proposed transaction's competitive impact. The reporting requirement and the waiting period that it triggers are intended to enable the Agencies to determine whether a proposed merger or acquisition may violate the antitrust laws if consummated and, when appropriate, to seek a preliminary injunction in Federal court to prevent consummation.

Section 7A(d)(1) of the Act, 15 U.S.C. 18a(d)(1), directs the Commission, with the concurrence of the Assistant Attorney General, in accordance with the Administrative Procedure Act, 5 U.S.C. 553, to require that premerger notification be in such form and contain such information and documentary material as may be necessary and appropriate to determine whether the proposed transaction may, if consummated, violate the antitrust laws. Section 7A(d)(2) of the Act, 15 U.S.C. 18a(d)(2), grants the Commission, with the concurrence of the Assistant Attorney General, in accordance with 5 U.S.C. 553, the authority to define the terms used in the Act and prescribe such other rules as may be necessary and appropriate to carry out the purposes of section 7A of the Act. Pursuant to that authority, the Commission, with the concurrence of the Assistant Attorney General, developed the Rules, codified in 16 CFR parts 801, 802 and 803, and the appendices to part 803, the Notification and Report Form for Certain Mergers and Acquisitions (“HSR Form”) and Instructions to the Notification and Report Form for Certain Mergers and Acquisitions (“Instructions”), to govern the form of premerger notification to be provided by merging parties.

The Commission is amending parts 801 and 803 of the rules and the HSR Form and Instructions to make the ministerial changes required to conform with the fees and fee tiers established by the 2022 Amendments.

Affected in Part 801, Coverage Rules:

§ 801.1 Definitions.

Affected in Part 803, Transmittal Rules:

• § 803.9 Filing fee.
• Appendix A to Part 803—Notification and Report Form for Certain Mergers and Acquisitions
• Appendix B to Part 803—Instructions to Notification and Report Form for Certain Mergers and Acquisitions

Background

In 1990, section 605 of Public Law 101-162, 103 Stat. 1031 (15 U.S.C. 18a note), first required the Federal Trade Commission to assess and collect filing fees from persons acquiring voting securities or assets under the Act. Fee tiers, rather than a single fee, were established in 2000 by section 630(b) of Public Law 106-553, 114 Stat. 2762, 2762A-109. On December 29, 2022, the President signed into law the Consolidated Appropriations Act, 2023, which included the 2022 Amendments. The 2022 Amendments, among other things, amend these fees and fee tiers. SeePublic Law 117-328, Div. GG, 136 Stat. 4459.

Prior to enactment of the 2022 Amendments, filers were required to pay $45,000; $125,000; or $280,000 per transaction, depending on the total value of the transaction. While these fees have remained constant since adoption in 2000, the value of the acquisition to which they apply had adjusted annually since 2005 to reflect changes in the gross national product (“GNP”).^[1]

The new fee structure enacted by the 2022 Amendments includes six, rather than three, tiers. The filing fee has been lowered for certain transactions, but increased for others, particularly for acquisitions valued at more than $1 billion. As enacted, the fee thresholds for 2023 are as follows: ^[2]

Size (value) of transaction	Fee
<$161.5 million	$30,000
$161.5 to <$500 million	100,000
$500 million to <$1 billion	250,000
$1 billion to <$2 billion	400,000
$2 billion to <$5 billion	800,000
$5 billion or more	2,250,000

Beginning in Fiscal Year 2024, the filing tiers will be adjusted annually to reflect changes in the GNP for the previous year.^[3] Additionally, beginning in Fiscal Year 2024, the 2022 Amendments will require the filing fees to be increased annually, if the percentage increase in the consumer price index (“CPI”) for the prior year as compared to the CPI for the fiscal year ended on September 30, 2022, is greater than one percent.^[4] Such adjustments to the fees will be rounded to the nearest $5,000. The Commission, with the concurrence of the Assistant Attorney General, is making the required ministerial revisions to parts 801 and 803 of the Rules and to the HSR Form and Instructions to conform to these changes.

I. Changes to Section 801.1 Definitions

Section 801.1(m), Definition of The Act

The Commission is making a ministerial change to the definition of “the act” to include reference to the 2022 Amendments. The Commission is not making any material changes to this section.

II. Changes to Section 803.9 Filing Fee

Section 803.9 describes how fees are determined and paid. The Commission is amending all eight of the examples in § 803.9 to conform with the changes to the fees and fee tiers required by the 2022 Amendments, to update dates and dollar values to reflect more recent adjusted jurisdictional thresholds, and to add clarity to the examples. Since the fees and fee tiers will not adjust until after fiscal year 2023, references to fees and fee tiers do not include “(as adjusted).” The Commission will adopt amendments to the Rules to reference “as adjusted” fees and fee tiers at the appropriate time. Specifically, the Commission will amend the examples in § 803.9 as follows:

• Revising Example 1 to update the determination of the filing fee to be consistent with the 2022 Amendments; and eliminate “(as adjusted)” from filing fee tiers.
• Revising Example 2 to provide example dollar values more in line with current adjusted jurisdictional thresholds; update the determination of the filing fee to be consistent with the 2022 Amendments; and eliminate “(as adjusted)” from filing fee tiers.
• Revising Example 3 to provide a date and example dollar values more in line with current adjusted jurisdictional thresholds; and update the determination of the filing fee to be consistent with the 2022 Amendments.

• Revising Example 4 to update the determination of the filing fee to be consistent with the 2022 Amendments; eliminate “(as adjusted)” from filing fee tiers; and eliminate reference to an explanation of valuation, which had been eliminated in prior rulemakings.^[5]

• Revising Example 5 to update the determination of the filing fee to be consistent with the 2022 Amendments; eliminate “(as adjusted)” from filing fee tiers; and eliminate reference to an explanation of valuation, which had been eliminated in prior rulemakings.^[6]

• Revising Example 6 to update the determination of the filing fee to be consistent with the 2022 Amendments; eliminate “(as adjusted)” from filing fee tiers; and add “(as adjusted)” to jurisdictional and notification thresholds.

• Revising Example 7 to provide a date and example dollar values more in line with current adjusted jurisdictional thresholds; update the determination of the filing fee to be consistent with the 2022 Amendments; and eliminate reference to an explanation of valuation, which had been eliminated in prior rulemakings.^[7]

• Revising Example 8 to provide example dollar values more in line with current adjusted jurisdictional thresholds; and update the determination of the filing fee to be consistent with the 2022 Amendments.

III. Changes to Appendix A to Part 803—Notification and Report Form for Certain Mergers and Acquisitions

The Commission is amending appendix A to part 803, the HSR Form, to make ministerial changes to conform to the 2022 Amendments. The Commission is amending the “Fee Information” portion of the HSR Form to incorporate the six new fee tiers and fees.

IV. Changes to Appendix B to Part 803—Instructions to the Notification and Report Form for Certain Mergers and Acquisitions

The Commission is amending appendix B to part 803, the Instructions, to make ministerial changes to conform to the 2022 Amendments. Specifically, the Commission is changing the “Fee Information” section of the Instructions to reflect the new fee tiers and introduction of adjustments to the fees. Additionally, because the 2022 Amendments will require the relevant valuation of the acquisition and the fees themselves to be adjusted annually, the Commission is eliminating the table on page III of the instructions, leaving the web link that will update each time the fees and fee tier valuations change.

V. Administrative Procedure Act

The Commission finds good cause to adopt these changes without prior public comment. Under the Administrative Procedure Act (“APA”), notice and comment are not required “when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefore in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.” 5 U.S.C. 553(b)(3)(B).

In this case, the Commission finds that public comment on these changes is unnecessary. The Commission is amending the HSR Rules to conform with the new fee tiers and fees enacted by Congress. These updates do not involve any substantive changes in the HSR Rules' requirements for entities subject to the Rules. Rather, they are conforming updates to the definition of the HSR Act and examples of how to calculate the appropriate fee.

In addition, these amendments fall within the category of rules covering agency procedure and practice that are exempt from the notice-and-comment requirements of the APA. See 5 U.S.C. 553(b)(3)(A).

For these reasons, the Commission finds that there is good cause under 5 U.S.C. 553(b)(3) for adopting this final rule as effective on February 27, 2023, without prior public comment.

VI. Regulatory Flexibility Act

The Regulatory Flexibility Act, 5 U.S.C. 601-612, requires that the agency conduct an initial and final regulatory analysis of the anticipated economic impact of the proposed amendments on small businesses, except where the agency head certifies that the regulatory action will not have a significant economic impact on a substantial number of small entities. 5 U.S.C. 605. Because of the size of the transactions necessary to invoke an HSR filing, the premerger notification rules rarely, if ever, affect small businesses. Indeed, amendments to the Act in 2001 were intended to reduce the burden of the premerger notification program further by exempting all transactions valued at less than $50 million (as adjusted annually).^[8] Likewise, none of the rule amendments expand the coverage of the premerger notification rules in a way that would affect small business. In addition, the Regulatory Flexibility Act requirements apply only to rules or amendments that are subject to the notice-and-comment requirements of the APA. See 5 U.S.C. 603, 604. Because these amendments are exempt from those APA requirements, as noted earlier, they are also exempt from the Regulatory Flexibility Act requirements. In any event, to the extent, if any, that the Regulatory Flexibility Act applies, the Commission certifies that these rules will not have a significant economic impact on a substantial number of small entities. This document serves as notice of this certification to the Small Business Administration.

VII. Paperwork Reduction Act

The Commission has existing Paperwork Reduction Act clearance for the HSR Rules (OMB Control Number 3084-0005). The Commission has concluded that these technical amendments do not change the substance or frequency of the pre-existing information collection requirements and, therefore, do not require further OMB clearance.

VIII. Other Matters

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), the Office of Information and Regulatory Affairs designated this rule as not a “major rule,” as defined by 5 U.S.C. 804(2).

List of Subjects in 16 CFR Parts 801 and 803

• Antitrust

For the reasons stated in the preamble, the Federal Trade Commission is amending 16 CFR parts 801 and 803 as set forth below:

PART 801—COVERAGE RULES

1. The authority citation for part 801 continues to read as follows:

Authority: 15 U.S.C. 18a(d).

2. Amend § 801.1 by revising paragraph (m) to read as follows:

§ 801.1

Definitions.

* * * * *

(m) The act. References to “the act” refer to Section 7A of the Clayton Act, 15 U.S.C. 18a, as added by section 201 of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, Public Law 94-435, 90 Stat. 1390, and as amended by Public Law 106-553, 114 Stat. 2762, and Public Law 117-328, Div. GG, 136 Stat. 4459. References to “Section 7A()” refer to subsections of Section 7A of the Clayton Act. References to “this section” refer to the section of these rules in which the term appears.

* * * * *

PART 803—TRANSMITTAL RULES

3. The authority citation for part 803 continues to read as follows:

Authority: 15 U.S.C. 18a(d).

4. Amend § 803.9 by revising paragraph (a) to read as follows:

§ 803.9

Filing fee.

(a) Each acquiring person shall pay the filing fee required by the act to the Federal Trade Commission, except as provided in paragraphs (b), (c), and (f) of this section. No additional fee is to be submitted to the Antitrust Division of the Department of Justice. Examples:

(1) “A” wishes to acquire voting securities issued by B, where the greater of the acquisition price and the market price is in excess of $50 million (as adjusted) but less than $100 million (as adjusted) pursuant to § 801.10 of this chapter. When “A” files notification for the transaction, it must indicate the $50 million (as adjusted) threshold. If the value of the voting securities is less than $161.5 million, “A” must pay a filing fee of $30,000 because the aggregate total amount of the acquisition is greater than $50 million (as adjusted) but less than $161.5 million. If the aggregate total value of the voting securities is at least $161.5 million, but less than $500 million, “A” must pay a filing fee of $100,000.

(2) “A” acquires $75 million of assets from “B.” The parties meet the size of person criteria of section 7A(a)(2)(B) of the act, but the transaction is not reportable because it does not exceed the $50 million (as adjusted) size of transaction threshold of that provision. Two months later “A” acquires additional assets from “B” valued at $175 million. Pursuant to the aggregation requirements of § 801.13(b)(2)(ii) of this chapter, the aggregate total amount of “B's” assets that “A” will hold as a result of the second acquisition is $250 million. Accordingly, when “A” files notification for the second transaction, “A” must pay a filing fee of $100,000 because the aggregate total amount of the acquisition is less than $500 million, but not less than $161.5 million.

(3) In 2023, “A” acquires $115 million of voting securities issued by B after submitting its notification and $30,000 filing fee and indicates the $50 million (as adjusted) threshold. Two years later, “A” files to acquire additional voting securities issued by B valued at $114.4 million because it will exceed the next higher reporting threshold ( see § 801.1(h) of this chapter). Assuming the second transaction is reportable, and the value of its initial holdings is unchanged ( see §§ 801.13(a)(2) and 801.10(c) of this chapter), the provisions of § 801.13(a)(1) of this chapter require that “A” report that the total value of the second transaction is $229.4 million, which is in excess of $100 million (as adjusted) notification threshold. This is because “A” must aggregate previously acquired securities in calculating the value of B's voting securities that it will hold as a result of the second acquisition. “A” should pay a filing fee of $100,000 because the total value is greater than $161.5 million but less than $500 million.

(4) “A” signs a contract with a stated purchase price of $162 million, subject to adjustments, to acquire all of the assets of “B.” If the amount of adjustments can be reasonably estimated, the acquisition price—as adjusted to reflect that estimate—is determined. If the amount of adjustments cannot be reasonably estimated, the acquisition price is undetermined. In either case the board or its delegee must also determine in good faith the fair market value. (§ 801.10(b) of this chapter states that the value of an asset acquisition is to be the fair market value or the acquisition price, if determined and greater than fair market value.) “A” files notification and submits a $30,000 filing fee. “A” 's decision to pay that fee may be justified on either of two bases. First, “A” may have concluded that the acquisition price can be reasonably estimated to be less than $161.5 million, because of anticipated adjustments— e.g., based on due diligence by “A's” accounting firm indicating that one third of the inventory is not saleable. If fair market value is also determined in good faith to be less than $161.5 million, the $30,000 fee is appropriate. Alternatively, “A” may conclude that because the adjustments cannot reasonably be estimated, the acquisition price is undetermined. If so, “A” would base the valuation on the good faith determination of fair market value. The acquiring party's execution of the Certification also attests to the good faith valuation of the value of the transaction.

(5) “A” contracts to acquire all of the assets of “B” for in excess of $500 million. The assets include hotels, office buildings, and rental retail property, all of which are exempted by § 802.2 of this chapter. Section 802.2 directs that these assets are exempt from the requirements of the act and that reporting requirements for the transaction should be determined by analyzing the remainder of the acquisition as if it were a separate transaction. Furthermore, § 801.15(a)(2) of this chapter states that those exempt assets are never held as a result of the acquisition. Accordingly, the aggregate amount of the transaction is in excess of $161.5 million), but less than $500 million. “A” will be liable for a filing fee of $100,000, rather than $250,000, because the value of the transaction is not less than $161.5 million but is less than $500 million.

(6) “A” acquires coal reserves from “B” valued at $150 million. No notification or filing fee is required because the acquisition is exempted by § 802.3(b) of this chapter. Three months later, A proposes to acquire additional coal reserves from “B” valued at $500 million. This transaction is subject to the notification requirements of the act because the value of the acquisition exceeds the $200 million limitation on the exemption in § 802.3(b). As a result of § 801.13(b)(2)(ii) of this chapter, the prior $150 million acquisition must be added because the additional $500 million of coal reserves were acquired from the same person within 180 days of the initial acquisition. Because aggregating the two acquisitions exceeds the $200 million exemption limitation, § 801.15(b) of this chapter directs that “A” will also hold the previously exempt $150 million acquisition; thus, the aggregate amount held as a result of the $500 million acquisition exceeds $500 million. Accordingly, “A” must file notification to acquire the coal reserves valued in excess of $500 million), but less than $1 billion and pay a filing fee of $250,000.

(7) In 2023, “A” intends to acquire 20 percent of the voting securities of B, a non-publicly traded issuer. The agreed upon acquisition price is $160.5 million subject to post-closing adjustments of up to plus or minus $2 million. “A” estimates that the adjustments will be minus $1 million. In this example, since “A” is able in good faith to reasonably estimate the adjustments to the agreed-on price, the acquisition price is deemed to be determined and the appropriate filing fee threshold is $50 million (as adjusted). Even if the post-closing adjustments cause the final price actually paid to exceed $161.5 million, “A” would be deemed to hold $159.5 million in B voting securities as a result of this acquisition. Note, that any additional acquisition by “A” of B voting may trigger another filing and require the appropriate fee.

(8) “A” intends to make a cash tender offer for a minimum of 50 percent plus one share of the voting securities of B, a non-publicly traded issuer, but will accept up to 100 percent of the shares if they are tendered. There are 12 million shares of B voting stock outstanding and the tender offer price is $100 per share. In this instance, since there is no cap on the number of shares that can be tendered, the value of the transaction will be the value of 100 percent of B's voting securities, and “A” must pay the $400,000 fee for the $1 billion filing fee threshold. Note that if the tender offer had been for a maximum of 50 percent plus one share the value of the transaction would be $600 million, and the appropriate fee would be $250,000, based on the $500 million filing fee threshold. This would be true even if the tender offer were to be followed by a merger which would be exempt under section 7A(c)(3) of the act.

* * * * *

5. Revise appendix A to part 803 to read as follows:

Appendix A to Part 803—Notification and Report Form for Certain Mergers and Acquisitions

6. Revise appendix B to part 803 to read as follows:

Appendix B to Part 803—Instructions to the Notification and Report Form for Certain Mergers and Acquisitions

By direction of the Commission.

April J. Tabor,

Secretary.

Footnotes

1.   SeePublic Law 106-553, 114 Stat. at 2762A-109 to -110, amending Section 605 of title VI of Public Law 101-162 (15 U.S.C. 18a note).

2.  See the notice “Revised Jurisdictional Thresholds,” published in the January 26, 2023, issue of the Federal Register (88 FR 5004).

3.  Public Law 117-328, 136 Stat. 4459, Div. GG, Title I.

4.   Id.

5.   See,82 FR 32123 (July 12, 2017); 76 FR 42471 (July 19, 2011).

6.   Id.

7.   Id.

8.  By comparison, the dollar thresholds established for total annual receipts of a small business under the applicable small business size standards fall well under $50 million. See13 CFR 121.201.