On Dec. 22, 2022, and Dec. 23, 2022, the Senate and the House of Representatives, respectively, each passed the Merger Filing Fee Modernization Act of 2022 as a part of the Consolidated Appropriations Act, 2023 (the Act), which is the omnibus spending bill including all 2023 appropriations bills. President Biden signed the Act into law Dec. 29. The Act makes the first change to the HSR filing fee structure since it was modified in 2000. 

Revised HSR Filing Fee Thresholds

HSR filing fees fund antitrust enforcement by the FTC and DOJ. Congress amended the Hart-Scott-Rodino Act (HSR Act), 15 U.S.C. § 18a. in 2000 to require the annual adjustment of HSR notification thresholds and a three-tier filing fee system with corresponding size of transaction thresholds, adjusted annually, based on change in gross national product (GNP). Since then, while the filing fee thresholds have been revised annually, the actual filing fees had not been similarly indexed until now. In addition to introducing a new six tier filing fee system, HSR filing fees will also be adjusted annually.

The following is a summary chart of the filing fee adjustments:

*To be adjusted annually, starting Sept. 30, 2023.

Going forward, depending on the size of the deal, HSR filing fees could be lower in some instances, though higher in more instances, than under the previous three-tier system. For example, for transactions valued between $101 million but less than $161.5 million, HSR filing fees will decrease from $45,000 to $30,000. For transactions valued at $161.5 million or greater, but less than $202 million, filing fees will increase from $45,000 to $100,000. Transactions valued at $202 million or greater, but less than $500 million, will see a filing fee decrease from $125,000 to $100,000. Transactions valued at $500 million or greater, but less than $1 billion, will see a filing fee increase from $125,000 to $250,000. Transactions valued at $1 billion or greater, but less than $1.0098 billion, will see a filing fee increase from $125,000 to $400,000. Transactions valued at $1.0098 billion or greater, but less than $2 billion, will see a filing fee increase from $280,000 to $400,000. Transactions valued at $2 billion or greater, but less than $5 billion, will see a filing fee increase from $280,000 to $800,000. Finally, for transactions valued at $5 billion or greater, filing fees will increase from $280,000 to $2,250,000.

Some questions remain. For example, under current HSR rules, Section 802.21, once an acquiror files HSR, and the filed-for waiting period ends or terminates, it can acquire voting securities of the same issuer, up to the next notification threshold over the next five years without filing again. We will have to wait to see if these successive notification thresholds remain the same or align with the new the filing fee bands.

In terms of deal negotiation, these filing fee changes may impact a calculus on whether to file on a letter of intent, as opposed to a fully executed agreement, as well as decisions by the parties on whether to split HSR filing fees.

It is unclear when the new filing fee thresholds will go into effect. The latest we have heard is to keep watching the FTC website, for the Premerger Notification Office to post a notice of changes to the filing fee schedule.

Disclosure of Subsidiaries by Foreign Adversaries

In response to concerns that companies receiving foreign subsidies can affect competition (for example, by allowing the subsidy recipient to submit a higher bid than it would have been able to do otherwise), the Act also imposes a new reporting obligation within HSR filings, to provide information relating to foreign subsidies received from certain foreign governments “that are strategic or economic threats to the United States.” This new requirement will take effect after new rules are issued and revisions are made to the HSR form and instructions.

2023 looks to be a year of antitrust shake up. FTC Chair Lina Khan has said the antitrust agencies are also considering additional revisions to the HSR Form, such as requiring the parties to provide more customer and overlap information upfront. We also expect the agencies to release new Merger Guidelines shortly as well.