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FTC Announces 2024 Increase in HSR Notification Thresholds and Filing Fees

The Federal Trade Commission (FTC) has announced the annual revisions to the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act) thresholds and HSR filing fees, which will become effective on March 6, 2024. The revised thresholds will apply to any merger or acquisition closing on or after the effective date.

The FTC is required to adjust the HSR thresholds annually based upon the change in gross national product. This year, the change in the “size of transaction” threshold has increased from $111.4 million to $119.5 million.

Under the HSR Act, when a deal satisfies the “size of person” and “size of transaction” thresholds, and no exemption from reporting is available, the deal must be reported to the FTC and the US Department of Justice, and the parties must wait for a designated period of time before closing the transaction.

Size of Person. The revised size of person thresholds will generally be met if one party involved in the deal has assets or annual sales totaling $239 million or more and one other party involved in the deal has assets or annual sales of at least $23.9 million. Satisfaction of the size of person thresholds is not required, however, if the transaction is valued at more than $478 million.

Size of Transaction. The revised size of transaction threshold will be met if the buyer will hold an aggregate amount of stock, non-corporate interests and/or assets of the seller valued at more than $119.5 million as a result of the deal.

The notification thresholds applicable to purchases of voting securities will increase as follows:

February 1, 2001 Thresholds (Original)	Current Thresholds as of February 27, 2023	New Thresholds Effective March 6, 2024
$50 million	$111.4 million	$119.5 million
$100 million	$222.7 million	$239 million
$500 million	$1.1137 billion	$1.195 billion
25% if worth more than $1 billion	25% if worth more than $2.2274 billion	25% if worth more than $2.39 billion
50% if worth more than $50 million	50% if worth more than $111.4 million	50% if worth more than $119.5 million

The thresholds applicable to many exemptions, including those governing foreign acquisitions, also will increase. However, the $500 million threshold applicable to acquisitions of producing oil and gas reserves and associated assets will not change.

The civil penalty for failing to comply with the notification and waiting period requirements of the HSR Act has also increased to up to $51,744 per day for each day a party is in violation.

HSR Filing Fees. Additionally, the HSR filing fee thresholds and filing fee amounts have increased as follows:

Original Filing Fee	Original Applicable Size of Transaction	2024 Adjusted Filing Fee	2024 Adjusted Applicable Size of Transaction
$30,000	Less than $161.5 million	$30,000	Less than $173.3 million
$100,000	Not less than $161.5 million but less than $500 million	$105,000	Not less than $173.3 million but less than $536.5 million
$250,000	Not less than $500 million but less than $1 billion	$260,000	Not less than $536.5 million but less than $1.073 billion
$400,000	Not less than $1 billion but less than $2 billion	$415,000	Not less than $1.073 billion but less than $2.146 billion
$800,000	Not less than $2 billion but less than $5 billion	$830,000	Not less than $2.146 billion but less than $5.365 billion
$2,250,000	$5 billion or more	$2,335,000	$5.365 billion or more

The new fees also will become effective on March 6, 2024.

Tempur Sealy Acquisition of Mattress Firm: A Vertical Bridge Too Far for the FTC?

In a deal announced on May 9, Tempur Sealy International, Inc., the world’s largest mattress manufacturer, has agreed to acquire Houston-based Mattress Firm Group, Inc., the largest U.S. brick-and-mortar bedding retailer, with more than 2,300 locations and a robust e-commerce platform. The companies hope to finalize the $40 billion deal in the second half of 2024.

Following pre-merger notification of the deal last October, the FTC is reportedly taking a deep dive into the mattress industry to assess whether the transaction is likely to harm competition. The depth of the investigation itself signals a departure from the antitrust agencies’ traditional approach to “vertical” mergers in which firms in the same industry but in non-overlapping market segments (such as manufacturing and retailing the same product category) benefit from a soft presumption of legality. Customarily, vertical integration was perceived to be benign, if not somehow “efficiency enhancing.”

Whatever the merits of applying such leniency to traditional supply chains of widgets, it does not serve competition policy well in an economy dominated by technology-driven platforms that serve several enormous groups of customers at once. In today’s markets, non-overlapping vertical arrangements can severely affect whether rival firms can gain access to inputs, markets, or prospective customers.

Evidence of the FTC’s awareness of the potential for vertical mergers to cause competitive harm abounds. On September 15, 2021, the FTC withdrew the FTC/Department of Justice 2020 Vertical Merger Guidelines and Commentary. The Commission’s majority said that the 2020 Guidelines included a “flawed discussion of the purported procompetitive benefits (i.e., efficiencies) of vertical mergers, especially its treatment of the elimination of double marginalization” and by failing to address “increasing levels of consolidation across the economy.”

Mattresses and Widgets

A course correction is borne out by the Commission’s recent challenges to several proposed vertical mergers, including Nvidia Corp.’s attempted acquisition of Arm Ltd., Lockheed Martin Corporation’s attempted acquisition of Aerojet Rocketdyne Holdings, Inc., Microsoft Corp.’s acquisition of Activision Blizzard Inc., and Illumina, Inc.’s acquisition of GRAIL, Inc. After the parties abandoned the Nvidia/Arm acquisition, the FTC’s press release was effusive: “This result is particularly significant because it represents the first abandonment of a litigated vertical merger in many years,” the Commission said.

Enter the Tempur Sealy/Mattress Firm transaction, a vertical acquisition in a product category whose markets resemble widgets more than online merchandising or payment networks. Tempur Sealy became the world’s largest mattress manufacturer in 2012, when Tempur-Pedic acquired Sealey Corp. for $1.3 billion. The company currently earns revenues of $5 billion a year, almost a third of the $17 billion U.S. mattress market. Mattress Firm, the largest mattress retailer in the U.S. with annual revenues of $2.5 billion a year, has been owned since 2016 by German retail holding company Steinhoff International Holdings NV. The firm filed for Chapter 11 bankruptcy protection in October 2018, but quickly emerged the following month after closing 700 stores.

The merging parties are no strangers to one another, having engaged in a commercial relationship for the past 35 years. In 2017, Tempur Sealy sued Mattress Firm for selling mattresses that infringed on the Tempur-Pedic line-up, but in 2019, after its emergence from bankruptcy, Mattress Firm and Tempur Sealy struck a long-term partnership agreement. A merger of the two firms has been under discussion in one form or another for most of the past decade.

Public statements by the parties stress the complementarity of the deal, which they describe as combining “Tempur Sealy’s extensive product development and manufacturing capabilities with vertically integrated retail.” The merged entity will end up with about 3,000 retail stores, 30 e-commerce platforms, 71 manufacturing facilities, and 4 R&D facilities around the world. It is the kind of combination of complementary businesses that not long ago might not have even earned a Second Request from the antitrust agencies.

The FTC, which at least since last December has been investigating the potential effects on the mattress industry of a merger between the two market leaders, issued a Second Request earlier this month. By February, the Commission had already interviewed executives from the top 20 mattress manufacturers, according to a report in Furniture Today (February 2, 2023).

Disruptors and Goliaths

The FTC is likely to discover a large and growing global industry undergoing significant changes in how mattresses are designed, marketed, and sold in reaction to changing consumer preferences.

Several online mattress-in-a-box companies have disrupted the industry. Today, nearly half of all consumers purchases are online. They will also find fairly low barriers to entry into both brick-and-mortar and online retailing and mattress manufacturing. Their review of the Tempur Sealy/Mattress Firm transaction will also encounter two players in the market with a long history of cooperation.

With 20 manufacturers significant enough to interview, the Commission would appear to be faced with a fairly competitive market – one in which little or no foreclosure of rivals to the ability to obtain inputs or the availability of channels of distribution to reach consumers will result from the proposed transaction. Additional competitive pressure comes from Amazon, which began selling its own mattresses in 2018 as part of the Amazon Essentials line, and Walmart, which introduced its own mattress-in-box brand, Allswell, available online and in stores.

On balance, the acquisition of Mattress Firm by Tempur Sealy would not appear to raise significant antitrust issues. A challenge to this transaction by the FTC may be a vertical bridge too far. That is no doubt the assessment reached by Scott Thompson, chairman and CEO of Tempur Sealy, who expressed confidence in clearing the FTC’s antitrust review, “either in the traditional sense or through litigation.”

For more Antitrust and FTC news, click here to visit the National Law Review.

Exporting U.S. Antitrust Law: Are We Really Ready for NOPEC?

The year is 1979. Inflation and lines at the gas pumps caused by a revolution in Iran have stunned Americans. Driven to action, the International Association of Machinists (IAM) files suit in the Central District of California against OPEC and its 14 member countries for participating in a cartel that controls the worldwide price of oil. None of the defendants made any kind of appearance before the court. Nonetheless, the union lost, and its case was dismissed.

Under the Constitution, federal courts are courts of limited jurisdiction. A district court has no power to decide a case over which it has no subject matter jurisdiction. The requirement cannot be waived or avoided; a court that lacks subject matter jurisdiction has no legal authority to entertain the matter. A federal statute known as the Foreign Sovereign Immunity Act of 1976 (FSIA) limits the court’s jurisdiction in cases involving foreign sovereigns and, subject to a few specific exceptions, grants foreign states immunity from the jurisdiction of U.S. courts. The court in IAM v. OPEC raised the FSIA on its own (there being no defendants present) and, finding the OPEC states immune (OPEC itself could not be served), dismissed the case. Thusly did the IAM lose its antitrust case against defendants who never even showed up in court.

The judiciary has resisted the innumerable attempts since 1979 to hold the OPEC cartel accountable for violating U.S. antitrust laws, even though the court’s IAM decision has proven erroneous. Acts by a sovereign “based upon a commercial activity” in the U.S., or affecting U.S. commerce, do not enjoy immunity under FSIA. Although the district court in IAM didn’t think so, the Ninth Circuit on appeal made clear that pricing of oil on world markets is indeed commercial activity that affects the U.S. economy and, therefore, not entitled to sovereign immunity. But the Appeals Court nonetheless sidestepped the case, taking refuge in the judge-made Act-of-State doctrine. The doctrine is prudential, as opposed to jurisdictional, and amounts to a voluntary renunciation of jurisdiction by a court when its decision could interfere with the conduct of foreign policy by the executive branch. Indeed, it is easy to see how a suit against the members of OPEC for price fixing might intrude into a sensitive foreign policy area.

In the four decades since IAM, these considerations have obstructed U.S. courts from holding OPEC accountable for a cartel formed for the purpose of and with the effect of stabilizing the price of a commodity in interstate or foreign commerce, which is illegal per se. As recently as 2010, the Obama administration urged the Fifth Circuit to dismiss an antitrust suit brought by private plaintiffs on Act-of-State grounds, it being up to the executive branch and not the courts to conduct foreign policy and protect national security interests.

Since 2000, when the first No Oil Producing and Exporting Cartels (NOPEC) Act was introduced in the House, the same legislation has been introduced no less than four times. NOPEC came closest to passage in 2007, when different versions of the bill passed the House and the Senate but were not reconciled. The House and Senate judiciary committees have now both approved the bill, and the latest version is on the Senate’s legislative calendar. Congress could act quickly if there is bipartisan support, otherwise it will take several months and require reintroduction in 2023.

NOPEC consists of three operative parts.

First, it would amend the Sherman Antitrust Act by adding a new Section 7(a) that explicitly makes it illegal for any foreign state to act collectively with others to limit production, fix prices, or otherwise restrain trade with respect to oil, natural gas, or other petroleum products. Judicial enforcement and a remedy would be available only to the Department of Justice, so the bill does not create a private right of action.
Second, it would amend FSIA to explicitly grant jurisdiction to U.S. court against foreign sovereigns to the extent they are engaged in a violation of the new Section 7(a).
Third, the legislation clarifies that the Act-of-State doctrine does not prevent U.S. courts from deciding antitrust cases against sovereigns alleged to have violated the new Section 7(a).

Calls for taking a harder line against OPEC are growing stronger in light of recent actions taken by the cartel. In May, for example, Saudi Arabia and 10 other OPEC members voted to slash oil production – resulting in high gas prices – as the U.S. and other nations imposed embargoes on Russian oil. OPEC’s production cuts provided Russia with a substantial lifeline in its increasingly difficult, costly, and prolonged invasion of Ukraine.

The Senate bill is sponsored by Senate Judiciary Committee Ranking Member Chuck Grassley and cosponsors Sens. Amy Klobuchar (D-MN) Mike Lee (R-UT), and Patrick Leahy (D-VT), who argue that OPEC’s price-fixing goes directly against the idea of fair and open markets, with current laws leaving the U.S. government “powerless” over OPEC. But are we really ready for NOPEC?

The concern over interference with foreign policy is far from trivial.

The American Petroleum Institute (API) recently sent a letter to Congress opposing the NOPEC bill, stating it would harm U.S. military, diplomatic, and business relations. API President and CEO Mike Sommers warned that while NOPEC is a noble endeavor designed to protect consumers, it would open the U.S. up to reciprocal lawsuits by foreign entities, writing that this could devastate certain political relations and trigger retaliation from OPEC countries. Other NOPEC critics say OPEC countries may limit other business dealings with the U.S., including lucrative arms deals or by pulling in their investments, as Saudi Arabia threatened to do in 2007, when the Deputy Saudi Oil Minister said the country would pull out of a multi-billion Texas oil refinery project unless the DOJ filed a statement of interest urging dismissal of an antitrust case then pending in the U.S. courts. In 2019, Saudi Arabia and OPEC threatened to start selling their oil in currencies other than the dollar, which would weaken the dollar’s position as the global vehicle currency.

For these reasons, it’s not clear what the White House would do if NOPEC passes. The Biden administration’s view of the measure seems to have shifted a bit, but it hasn’t come out strongly one way or the other. This is hardly surprising given the delicate and complex nature of the issue, the ongoing impact of Russia’s war on Ukraine, and the great importance voters place on the price of gas. Then-Press Secretary Jen Psaki said on May 5, 2022, that the “potential implications and unintended consequences of this legislation require further study and deliberation.” More recently, National Security Advisor Jake Sullivan and Brian Deese, President Biden’s Director of the National Economic Council, said that nothing is off of the table – that the administration is assessing the situation and inviting recommendations. On Oct. 5 the Department of Energy said it would release another 10 million barrels of oil from the Strategic Petroleum Reserve. In making that announcement, Sullivan and Deese said the administration will consult with Congress on “additional tools and authorities to reduce OPEC’s control over energy prices.” They also reiterated the importance of investing in clean American-made energy to reduce reliance on foreign fossil fuels.

OPEC has such tremendous sway over U.S. gas prices and national security it is no wonder Congress continues to try to do something to free U.S. from OPEC’s whims and hold it accountable for going against the ideals of free markets. But whether NOPEC is the right approach remains an open question.

The antitrust laws represent a national ideological perspective on the most beneficial way to organize an economy. Policy differences between nations are supposed to occur in the diplomatic arena, not in the courts of one country or another. And if OPEC or its members lose an antitrust case in a U.S. court, how will the court enforce its judgment?

Article By Jonathan Rubin of MoginRubin

For more antitrust and trade regulation legal news, click here to visit the National Law Review.

U.S./China Trade “Deal” Short on IP/Trade Secret Specifics

With the announcement last week of a tentative partial trade agreement with China, the U.S. appears to be headed to a somewhat easing of tensions between the two superpowers. Terms of the agreement are vague, with references to a reduction in tariffs, increase in agricultural purchases by China, and agreements to return to the bargaining table.

What is missing, though, are references to increases in protection of U.S. intellectual property: trade secrets, patents, copyrights, and trademarks, long espoused by the U.S. This silence is in stark contrast to the stated goal of the U.S. that protection of U.S. intellectual property in China is among the key components to a successful and permanent trade deal.

The importance of such protection has been made manifest in several recent events. The National Association of Manufacturers was hacked over the summer and blame was placed by investigators on Chinese nationals. Earlier in the year, a former employee of a U.S. cast iron plant was sentenced to one year in prison after being arrested at the airport, en route to China with files of confidential information of his former employer. Furthermore, China’s trademark register is full of foreign trademarks registered in China by its citizens.

China apparently has verbally committed as a part of an overall trade package to tighten up enforcement efforts in the IP arena. But how does China quantify that commitment? Such requires a change in the Chinese government’s mindset, its enforcement policies, and its recognition of the protectability of foreign trade secrets and other IP rights. None of these can be reduced to tariff percentages, bushels or other common trade terms. What can China offer in the way of a concrete plan to bolster protection of foreign confidential information? Indeed, the silence of the parties as to this important issue is probably an indication of the difficulty the parties are having in reaching a verifiable agreement on IP. With trust levels between the nations at their nadir, one can easily see how resolution of the IP protection issue may be a major stumbling block to a lasting trade agreement. Will it become prohibitive? Time will tell.

ARTICLE BY W. Whitaker Rayner of Jones Walker LLP.

More on IP agreements on the National Law Review Intellectual Property law page.

3rd Annual International Trade Compliance Conference

The National Law Review is pleased to bring you information about the upcoming Marcus Evans conference – 3rd Annual International Trade Compliance Conference:

Navigating the Latest Changes in Trade Regulations and Global Controls for Improved Compliance

24-26 Apr 2013
venue to be confirmed – Chicago, IL, United States of America

Building from the success of our 2012 conference, the marcus evans 3^rd Annual International Trade Compliance Conference will bring together senior executives looking to improve processes with evolving global markets, trade agreements, technology requirements and compliance. Additionally, this conference will provide attendees with the latest updates in international trade regulations, as well as insights and tools for strengthening internal operations in order to remain compliant with critical requirements on a day-to-day basis.

The 3^rd Annual International Trade Compliance Conference features two distinct tracks; allowing attendees to fully customize their agenda.

Track one focuses specifically on advanced import & customs topics, such as identifying the latest changes to the ISA program, discovering advancements in supply chain programs and applying recent FDA regulation updates to your business plan.

Track two is entirely centered on export controls. Featured topics include evaluating the recent updates to the ECR, understanding requirements for OFAC compliance and dissecting US and global technology regulations for secure transfers.

Delegates are able to mix and match sessions from both tracks to create a complete conference experience that covers every area of interest.

Attending this conference will enable you to:

1.) Identify the latest regulatory changes within emerging markets for seamless trade operations

2.) Navigate Free Trade Agreements to increase efficiency and decrease corporate costs

3.) Institute a successful global trade compliance program to improve company procedures

4.) Conquer import and export classification for more effective business practices

5.) Tackle the latest regulations and requirements for technology transfers and determine various tactics for remaining compliant

Industry leaders attending this conference will also benefit from a dynamic presentation format consisting of workshops, panel-discussions, and industry-specific case studies that provide accurate, real-world knowledge. Attendees will experience highly interactive conference sessions, 10-15 minutes of Q&A time after each presentation, 4+ hours of networking, and exclusive online access to materials post-event.

Who Should Attend

marcus evans invites Heads, Vice Presidents, In-House Counsel, and government agencies with responsibilities in the following areas:

-Global/International Trade Compliance
-Import/Export Trade Compliance
-Global Customs Compliance
-Import/Export Operations
-Export Controls

3rd Annual International Trade Compliance Conference

The National Law Review is pleased to bring you information about the upcoming Marcus Evans conference – 3rd Annual International Trade Compliance Conference:

Navigating the Latest Changes in Trade Regulations and Global Controls for Improved Compliance

24-26 Apr 2013
venue to be confirmed – Chicago, IL, United States of America

The 3^rd Annual International Trade Compliance Conference features two distinct tracks; allowing attendees to fully customize their agenda.

Delegates are able to mix and match sessions from both tracks to create a complete conference experience that covers every area of interest.

Attending this conference will enable you to:

1.) Identify the latest regulatory changes within emerging markets for seamless trade operations

2.) Navigate Free Trade Agreements to increase efficiency and decrease corporate costs

3.) Institute a successful global trade compliance program to improve company procedures

4.) Conquer import and export classification for more effective business practices

5.) Tackle the latest regulations and requirements for technology transfers and determine various tactics for remaining compliant

Who Should Attend

marcus evans invites Heads, Vice Presidents, In-House Counsel, and government agencies with responsibilities in the following areas:

-Global/International Trade Compliance
-Import/Export Trade Compliance
-Global Customs Compliance
-Import/Export Operations
-Export Controls

3rd Annual International Trade Compliance Conference

The National Law Review is pleased to bring you information about the upcoming Marcus Evans conference – 3rd Annual International Trade Compliance Conference:

Navigating the Latest Changes in Trade Regulations and Global Controls for Improved Compliance

24-26 Apr 2013
venue to be confirmed – Chicago, IL, United States of America

The 3^rd Annual International Trade Compliance Conference features two distinct tracks; allowing attendees to fully customize their agenda.

Delegates are able to mix and match sessions from both tracks to create a complete conference experience that covers every area of interest.

Attending this conference will enable you to:

1.) Identify the latest regulatory changes within emerging markets for seamless trade operations

2.) Navigate Free Trade Agreements to increase efficiency and decrease corporate costs

3.) Institute a successful global trade compliance program to improve company procedures

4.) Conquer import and export classification for more effective business practices

5.) Tackle the latest regulations and requirements for technology transfers and determine various tactics for remaining compliant

Who Should Attend

marcus evans invites Heads, Vice Presidents, In-House Counsel, and government agencies with responsibilities in the following areas:

-Global/International Trade Compliance
-Import/Export Trade Compliance
-Global Customs Compliance
-Import/Export Operations
-Export Controls

3rd Annual International Trade Compliance Conference

The National Law Review is pleased to bring you information about the upcoming Marcus Evans conference – 3rd Annual International Trade Compliance Conference:

Navigating the Latest Changes in Trade Regulations and Global Controls for Improved Compliance

24-26 Apr 2013
venue to be confirmed – Chicago, IL, United States of America

The 3^rd Annual International Trade Compliance Conference features two distinct tracks; allowing attendees to fully customize their agenda.

Delegates are able to mix and match sessions from both tracks to create a complete conference experience that covers every area of interest.

Attending this conference will enable you to:

1.) Identify the latest regulatory changes within emerging markets for seamless trade operations

2.) Navigate Free Trade Agreements to increase efficiency and decrease corporate costs

3.) Institute a successful global trade compliance program to improve company procedures

4.) Conquer import and export classification for more effective business practices

5.) Tackle the latest regulations and requirements for technology transfers and determine various tactics for remaining compliant

Who Should Attend

marcus evans invites Heads, Vice Presidents, In-House Counsel, and government agencies with responsibilities in the following areas:

-Global/International Trade Compliance
-Import/Export Trade Compliance
-Global Customs Compliance
-Import/Export Operations
-Export Controls

Tag: trade regulations

FTC Announces 2024 Increase in HSR Notification Thresholds and Filing Fees

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