Quick Answer
The Hart-Scott-Rodino Act (HSR Act) requires premerger notification to the FTC and DOJ Antitrust Division above indexed thresholds: a size-of-transaction floor, a middle-band size-of-person test, and an upper threshold where size-of-person is waived. The waiting period is 30 calendar days, or 15 for cash tender offers. CFIUS runs a separate national-security review.
The banker coordinates with the seller's antitrust counsel to identify HSR exposure and cross-border regulatory issues before the seller commits to a bid. Antitrust risk allocation is a deal-breaker; bidders that face structural divestiture demands can be deprioritized early.
What Is the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act)?
The HSR Act requires both parties to a qualifying transaction to file a Notification and Report Form with the FTC and the DOJ Antitrust Division and observe a mandatory waiting period before closing.
Filing parties:
- Acquirer (or buyer)
- Acquired person (or seller / target)
Filed with:
- Federal Trade Commission (FTC)
- Department of Justice (DOJ) Antitrust Division
Statutory authority:
- Hart-Scott-Rodino Antitrust Improvements Act of 1976
How Do the HSR Filing Thresholds Work?
The dollar thresholds are revised every year based on changes in gross national product (GNP), so the exam tests the STRUCTURE of the test, not a memorized dollar figure. Confirm the current published schedule for any specific deal.
| Test | What it measures |
|---|---|
| Size-of-transaction (lower) | The deal value floor. Below it, no filing is required |
| Size-of-person (two parties) | The sales/assets of each side. In the middle band, a filing is required only if both the large-party and smaller-party tests are met |
| Size-of-transaction (upper) | Above this value, the size-of-person test is waived and the deal is reportable regardless of party size |
How to apply the structure:
- Deal value below the lower size-of-transaction threshold: NO filing required
- Deal value between the lower and upper thresholds: filing required only if both size-of-person tests are met
- Deal value at or above the upper threshold: filing required regardless of party size
Exam Tip: Gotchas
- HSR thresholds are indexed ANNUALLY. Do not memorize a dollar figure. Learn the structure (size-of-transaction floor, the two-party size-of-person test in the middle band, and the upper threshold where size-of-person is waived) and confirm the current published numbers for a specific deal.
- The size-of-person test is WAIVED at the upper threshold and above. A large deal between two small parties is still reportable. The size-of-person test only matters in the middle band.
What Are the HSR Waiting Periods?
The waiting period is the regulator's window to review the deal before closing.
| Transaction Type | Waiting Period |
|---|---|
| Negotiated merger / acquisition | 30 calendar days |
| Cash tender offer | 15 calendar days |
| Bankruptcy §363 sale | 15 calendar days |
| Second Request issued | Extends waiting period until 30 days after both parties substantially comply (10 days for cash tender offers) |
A Second Request (formally a "Request for Additional Information and Documentary Materials") is the FTC's or DOJ's substantive investigation trigger. It is rare in absolute terms but expected for any deal with material antitrust overlap. Compliance with a Second Request can take months and millions of dollars in document review.
Exam Tip: Gotchas
- HSR waiting periods are calendar days, NOT business days. 30 for a standard merger, 15 for a cash tender offer.
- The cash-tender shortcut is one of the structural advantages of going directly to shareholders. A buyer that wants to close fast and avoid the longer waiting period may prefer a cash tender even when a negotiated merger would otherwise be cleaner.
How Do HSR Filing Fees and Penalties Work?
Filing fees are tiered by transaction size and are indexed annually, so the exam tests the structure, not a specific dollar amount: a larger deal pays a higher fee tier. Confirm the current published fee schedule for a specific deal.
Failure to file when required:
- Civil penalties accrue for each day of non-compliance; the per-day amount is set by statute and adjusted for inflation
Exam Tip: Gotchas
- The filing fee is paid by the ACQUIRER, not the target. Negotiated engagement letters sometimes shift the fee, but the statutory obligation is on the acquirer.
- Per-day penalties compound fast. A six-month delay in filing exposes the parties to penalties in the millions.
What Regulatory Reviews Beyond HSR Can a Deal Face?
The banker's role is to flag other regulatory reviews so counsel can handle the filings:
- CFIUS (Committee on Foreign Investment in the United States): a separate national-security review of a transaction in which a foreign person could acquire control of, or certain rights in, a US business. It runs on its own track, separate from antitrust. A cross-border deal may trigger it; the banker flags it and counsel manages the filing and timeline.
- Non-US antitrust review: large cross-border deals may also need clearances from foreign competition authorities (for example the European Commission, the UK Competition and Markets Authority, or China's SAMR), each with its own thresholds and waiting periods.
The FTC's HSR form requirements have been the subject of recent rulemaking and litigation; the current FTC form and instructions control. The underlying HSR statute and threshold mechanics are unchanged.
Exam Tip: Gotchas
- HSR is antitrust review; CFIUS is national-security review. They run on separate tracks with separate filings and timelines. A single deal can trigger both, one, or neither, depending on the facts.
- The banker flags these reviews; counsel handles the filings. The exam tests the coordination role and the antitrust-versus-national-security distinction, not the detailed foreign-investment filing categories, review windows, or penalty amounts.
What Should You Check on Exam Day?
- Know the HSR threshold STRUCTURE (size-of-transaction floor, two-party size-of-person test in the middle band, upper threshold where size-of-person is waived); the dollar figures are indexed annually, so confirm the current schedule rather than memorizing a number.
- Remember the waiting periods are calendar days, not business days: 30 for a negotiated merger, 15 for a cash tender offer or a bankruptcy §363 sale.
- Know that a Second Request extends the waiting period until 30 days after both parties substantially comply (10 days for cash tender offers).
- Remember the HSR filing fee is paid by the acquirer, and civil penalties for failing to file accrue for each day of non-compliance (the per-day amount is set by statute and adjusted for inflation).
- Distinguish HSR (antitrust review) from CFIUS (national-security review); a single deal can trigger both, either, or neither, and the banker flags each for counsel.