What Is the Hart-Scott-Rodino Act?
The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) is the US federal statute that requires parties to M&A transactions exceeding certain size thresholds to file pre-merger notification forms with the Federal Trade Commission (FTC) and the Department of Justice (DOJ) Antitrust Division. The filing triggers a mandatory waiting period during which the agencies review the transaction for potential anticompetitive effects before the parties can close.
The HSR Act is the gatekeeper for M&A competition review in the United States. Failure to comply — closing a reportable transaction without filing or before the waiting period expires — can result in civil penalties of up to $50,120 per day (as of 2024, adjusted annually for inflation).
Filing Thresholds
The HSR Act uses a “size of transaction” test, supplemented by a “size of person” test for transactions in the middle range:
| Threshold (2024) | Filing Required? |
|---|---|
| Transaction value ≤ $111.4 million | No filing required |
| Transaction value > $111.4M and ≤ $445.6M | Filing required if size-of-person test met |
| Transaction value > $445.6 million | Filing required regardless of party size |
The “size of person” test requires that one party has annual net sales or total assets of at least $222.7 million and the other has at least $22.3 million. These thresholds are adjusted annually based on GDP changes.
What Counts as “Transaction Value”
- Cash consideration paid for voting securities or assets
- Fair market value of non-cash consideration (stock, debt assumption)
- Total value of all voting securities held after the acquisition (including those already owned)
The Waiting Period
Initial Waiting Period
Once both parties’ HSR forms are filed and the filing fees paid, the waiting period begins:
- Cash tender offers: 15 calendar days
- All other transactions: 30 calendar days
During this period, the FTC and DOJ review the filing to determine whether the transaction raises competitive concerns warranting further investigation.
Possible Outcomes
| Outcome | What Happens | Timeline |
|---|---|---|
| Early termination | Agencies grant early clearance before the waiting period expires | Days to weeks |
| Expiration | Waiting period expires without action — parties may close | 15 or 30 days |
| Second request | Agencies issue a formal request for additional information | Before waiting period expires |
Second Request
A second request is the agencies’ tool for conducting an in-depth investigation. It typically requires the production of millions of documents and extensive data, and extends the waiting period until 30 days after substantial compliance. Second requests are issued in only 2-4% of HSR filings but can delay closing by 6-12 months and cost the parties $10-50 million in legal and compliance costs.
Filing Process
HSR Form
The HSR notification form requires:
- Description of the transaction (structure, consideration, timeline)
- Identification of the parties and their ultimate parent entities
- Revenue by NAICS industry code for all entities controlled by each party
- Prior acquisitions in overlapping industries
- Documents provided to the board or officers evaluating the transaction (“Item 4” documents)
Filing Fees (2024)
| Transaction Value | Fee |
|---|---|
| $111.4M – $161.5M | $30,000 |
| $161.5M – $500M | $105,000 |
| $500M – $1B | $260,000 |
| $1B – $2B | $415,000 |
| $2B – $5B | $830,000 |
| Over $5B | $2,335,000 |
Exemptions
Certain transactions are exempt from HSR filing even if they exceed the thresholds:
- Acquisitions of non-voting securities (bonds, non-voting preferred stock)
- Acquisitions in the ordinary course of business (inventory purchases)
- Certain internal corporate reorganisations
- Acquisitions by foreign persons of foreign assets (if limited US nexus)
- Acquisitions of real property assets only
Strategic Considerations
Timing
HSR filing timing is a strategic decision. Filing early maximises the time available for regulatory review, but filing before the definitive agreement is signed signals deal certainty to the market.
Item 4 Documents
Board presentations, investment committee memos, and competitive analyses produced in connection with the deal are disclosed to the agencies as “Item 4” documents. These documents often contain frank assessments of competitive dynamics and market concentration that the agencies use to evaluate anticompetitive effects. Deal teams should be aware that every document characterising competitive effects may be reviewed by regulators.
APAC Context
While the HSR Act is US-specific, most Asia Pacific jurisdictions have equivalent pre-merger notification regimes:
Australia — the ACCC operates an informal (voluntary) merger review process, though legislative reform to introduce mandatory notification has been proposed. Despite the voluntary nature, failing to notify and receiving a post-completion challenge is a significant risk.
Japan — the Japan Fair Trade Commission (JFTC) requires pre-merger notification for transactions meeting specified turnover thresholds. The waiting period is 30 days, extendable for a Phase II investigation.
India — the Competition Commission of India (CCI) requires mandatory pre-merger notification for transactions exceeding asset or turnover thresholds. The CCI has 30 working days for Phase I review, extendable to 150 days for Phase II.
Singapore — the Competition and Consumer Commission of Singapore (CCCS) operates a voluntary notification regime. Parties are encouraged to notify transactions that may substantially lessen competition.
“HSR is just the US piece of what is increasingly a global regulatory puzzle,” notes Daniel Bae, founder of Amafi. “Cross-border APAC transactions frequently trigger filing obligations in five or more jurisdictions, and managing the parallel review timelines is one of the most complex aspects of deal execution.”
Navigating M&A regulatory approvals across multiple jurisdictions? Amafi helps companies and investors manage antitrust review processes globally. Learn more.