Hart-Scott-Rodino Act

On February 1, 2001, several significant revisions to the premerger notification requirements under the Hart-Scott-Rodino Act ("HSR Act") will take effect. These changes, enacted and signed into law late last month as part of the Justice Department appropriations bill for Fiscal Year 2001, are the first significant revisions to the HSR Act since its creation in 1976. As summarized below, these changes will:

• Reduce the number of reportable transactions by focusing solely on the dollar value of the transaction and raising that threshold to $50 million (from the current $15 million). Merely acquiring 15% or more of a company`s stock or assets will no longer trigger an HSR filing. Increase the filing fees substantially for larger transactions, based on the following graduated scale:

  Transaction Value Filing Fee Less than $100 million $45,000 $100 million to less than $500 million $125,000 $500 million or more $280,000
  

• Extend the waiting period following substantial compliance with a second request to 30 days (from the current 20 days).
  
• Streamline the filing process by reducing the scope of required information.

Other noteworthy revisions, according to the FTC, are:

• The Size-of-the-Parties test (which generally requires one side of the transaction to have sales or assets in excess of $100 million and the other $10 million) will continue in place for transactions valued between $50 million and $200 million. However, transactions valued at more than $200 million will be reportable without regard to the size-of-the-parties test.
  
• The filing fee tiers will be adjusted annually, beginning with FY 2005, based on changes in the GNP during the previous year.

It is anticipated that the FTC`s Premerger Notification Office will soon release an Emergency HSR Rules Package outlining additional changes necessary to implement the amended HSR Act. It is uncertain what effect these emergency rules might have on current filing practices. The FTC has also indicated that some additional changes in the Rules are likely to be proposed in the very near future as well.

This memorandum is intended to be only a general discussion and summary of these rules. For more information on the topics in this memorandum, please contact your attorney at Andrews Kurth LLP.