Hart-Scott-Rodino Antitrust Improvements Act of 1976

What Is the Hart-Scott-Rodino Antitrust Improvements Act of 1976?

The Hart-Scott-Rodino Antitrust Improvements Act of 1976 requires large companies to file notices with the Federal Trade Commission and the counter trust division of Department of Justice prior to certain mergers and acquisitions or tender offers.

The law requires companies proposing to merge to file a HSR Form, likewise called a "Warning and Report Form for Certain Mergers and Acquisitions" and generally known as a premerger notice report. This offers regulators a chance to audit the proposed merger based on antitrust laws.

President Gerald Ford marked the act into law as a set of amendments to existing antitrust laws, including the Clayton Antitrust Act. The Hart-Scott-Rodino Antitrust Improvements Act of 1976 is otherwise called the "HSR Act" or Public Law 94-435.

How the Hart-Scott-Rodino Antitrust Improvements Act of 1976 Works

When companies file the required forms, a waiting period starts. The waiting period is typically 30 days, or 15 days for cash tender offers or an acquisition in bankruptcy.

The transaction can continue once the waiting period closes or on the other hand assuming the government ends the waiting period early. In the event that regulators see expected enemy of serious issues with the proposed merger, they will request extra information from the companies in question and broaden the waiting period; they will arrange an agreement with the companies to enact measures to reestablish contest; or they will try to stop the transaction by filing a preliminary injunction in court.

Premerger Tests

Under the HSR Act, the accompanying tests must be met to require a pre-merger filing:

• The commerce test: Any party to a proposed transaction must be participated in commerce or be engaged with any activity that influences commerce. This requirement is wide to the point that it will be met in practically all cases.
• The size-of-person test: As of 2020, either the procuring or acquired person must have total assets or annual net sales of $188 at least million. The other party must have total assets or annual net sales of $18.8 at least million.
• The size-of-transaction test: This test is met if a certain amount of assets or voting securities — no less than $94 million starting around 2020 — is being acquired. It is likewise met in the event that 15% or a greater amount of voting securities are acquired and, thus, the getting party oversees a substance with annual net sales or total assets of $94 at least million.

For 2020, the base filing threshold for the HSR Act, which decides if a transaction requires a premerger notice, is $904 million. The statutory size-of-person threshold is between $18.8 million and $188 million. On the other hand, the statutory transaction size test that applies to all transactions (even if the "size-of-person" threshold isn't met) is $376 million.

Special Considerations

HSR forms carry a filing fee that changes relying upon the size of a transaction. For instance, transactions worth more than $94 million however under $188 million require a $45,000 filing fee. Transactions valued at more than $188 million however under $940.1 million cause a $125,000 filing fee. The filing fee is $280,000 for transactions greater than $940.1 million.

Features

• The necessity of premerger notices relies upon three factors: the idea of the commerce, the size of the gatherings in question, and the size of the transaction.
• Assuming that regulators see expected enemy of cutthroat issues, they could arrange concessions with the companies or look to for starters urge the transaction.
• The Hart-Scott-Rodino Antitrust Improvements Act of 1976 expects companies to file premerger notices with the Federal Trade Commission and the Justice Department for certain acquisitions.