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Early Changes to M&A Process Under the Biden Administration

On February 1, 2021, the U.S. Federal Trade Commission (FTC) announced an annual update to the thresholds for reporting requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). The HSR Act requires the parties to a merger or acquisition to notify the FTC’s Premerger Notification Office and the Antitrust Division of the Department of Justice (DOJ) if the size of the transaction and/or the size of the parties involved in the transaction exceeds the applicable thresholds. This allows the government to evaluate potential anticompetitive consequences of the proposed transaction. This notification process allows the FTC and DOJ a 30-day period to review the proposed transaction and raise objections in the event that anticompetitive concerns are present. While the FTC and DOJ previously allowed parties to request an early termination of this 30-day “waiting period” if the agencies concluded the transaction did not pose a substantial risk of anticompetitive consequences, the agencies have temporarily suspended early termination grants due to the COVID-19 pandemic, the Presidential transition, and an unprecedented volume of filings.

Effective March 4, 2021, the reporting requirements under the HSR Act are triggered if (i) the size of a transaction is $92 million or more, measured by either the purchase price or the fair market value of the assets acquired; and (ii) one party to the transaction has assets or sales of at least $184 million and the other party has assets or sales of at least $18.4 million. If the size of the transaction is over $368 million, the transaction must be reported to the FTC and DOJ regardless of the size of the parties in the transaction.

A violation of the reporting requirements under the HSR Act may subject the parties to monetary penalties. For 2021, the maximum penalty for an HSR Act violation is $43,792 per day. Individuals and/or businesses contemplating a transaction that may meet the HSR Act reporting thresholds should review the updated HSR Act reporting requirements with their attorneys to determine if their transaction may require an HSR Act filing prior to closing.

Early Changes to M&A Process Under the Biden Administration

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