# Hart-Scott-Rodino Antitrust Improvements Act Of 1976 Overview

## What Is the Hart-Scott-Rodino Antitrust Improvements Act of 1976?

The Hart-Scott-Rodino Antitrust Improvements Act of 1976 requires large companies to file notifications with the [Federal Trade Commission](https://www.investopedia.com/terms/f/ftc.asp) and the anti-trust division of Department of Justice prior to certain [mergers and acquisitions](https://www.investopedia.com/terms/m/mergersandacquisitions.asp) or tender offers.﻿﻿

The law requires companies intending to [merge](https://www.investopedia.com/terms/m/merger.asp) to file an HSR Form, also called a "Notification and Report Form for Certain Mergers and Acquisitions" and generally known as a premerger notification report.﻿﻿ This gives regulators an opportunity to review the proposed merger based on [antitrust laws](https://www.investopedia.com/terms/a/antitrust.asp).

President Gerald Ford signed the act into law as a set of amendments to existing antitrust laws, including the [Clayton Antitrust Act](https://www.investopedia.com/terms/c/clayton-antitrust-act.asp).﻿﻿ The Hart-Scott-Rodino Antitrust Improvements Act of 1976 is also known as the "HSR Act" or Public Law 94-435.﻿﻿

### key takeaways

*   The Hart-Scott-Rodino Antitrust Improvements Act of 1976 requires companies to file premerger notifications with the Federal Trade Commission and the Justice Department for certain acquisitions.﻿﻿
*   The necessity of premerger notifications depends on three factors: the nature of the commerce, the size of the parties involved, and the size of the transaction.﻿﻿
*   If regulators see potential anti-competitive issues, they could negotiate concessions with the companies or seek to preliminarily enjoin the transaction.﻿﻿

## How the Hart-Scott-Rodino Antitrust Improvements Act of 1976 Works

Once companies file the required forms, a waiting period begins. The waiting period is usually 30 days, or 15 days for cash [tender offers](https://www.investopedia.com/terms/t/tenderoffer.asp) or an acquisition in [bankruptcy](https://www.investopedia.com/terms/b/bankruptcy.asp).﻿﻿

The transaction can proceed once the waiting period ends or if the government terminates the waiting period early. If regulators see potential anti-competitive issues with the proposed merger, they will request additional information from the companies involved and extend the waiting period; they will negotiate an agreement with the companies to enact measures to restore competition; or they will seek to stop the transaction by filing a preliminary [injunction](https://www.investopedia.com/terms/i/injunction.asp) in court.﻿﻿

### Premerger Tests

Under the HSR Act, the following tests must be met to require a pre-merger filing:

*   **The commerce test**: Any party to a proposed transaction must be engaged in [commerce](https://www.investopedia.com/terms/c/commerce.asp) or be involved in any activity that affects commerce. This requirement is so broad that it will be met in nearly all cases.
*   **The size-of-person test:** As of 2020, either the acquiring or acquired person must have total [assets](https://www.investopedia.com/terms/a/asset.asp) or annual [net sales](https://www.investopedia.com/terms/n/netsales.asp) of $188 million or more. The other party must have total assets or annual net sales of $18.8 million or more.
*   **The size-of-transaction test:** This test is met if a certain amount of assets or voting securities—at least $94 million as of 2020—is being acquired. It is also met if 15% or more of voting securities are acquired and, as a result, the acquiring party gains control of an entity with annual net sales or total assets of $94 million or more.﻿﻿ ﻿﻿

For 2020, the base filing threshold for the HSR Act, which determines whether a transaction requires a premerger notification, is $904 million. The statutory size-of-person threshold is between $18.8 million and $188 million. Alternatively, the statutory transaction size test that applies to all transactions (even if the "size-of-person" threshold is not met) is $376 million.﻿﻿ 

## Special Considerations

HSR forms carry a filing fee that varies depending on the size of a transaction. For example, transactions worth more than $94 million but less than $188 million require a $45,000 filing fee. Transactions valued at more than $188 million but less than $940.1 million incur a $125,000 filing fee. The filing fee is $280,000 for transactions greater than $940.1 million.﻿﻿

> **Article Sources**
>
> 1.  Federal Trade Commission. "[Hart-Scott-Rodino Antitrust Improvements Act of 1976](https://www.ftc.gov/enforcement/statutes/hart-scott-rodino-antitrust-improvements-act-1976)." Accessed Dec. 21, 2020.
>     
> 2.  Federal Trade Commission. "[Antitrust Improvements Acts Notification and Report Form for Certain Mergers and Acquisitions](https://www.ftc.gov/system/files/attachments/form-instructions/hsr_form_instructions_9-25-19.pdf)," Pages 1-11. Accessed Dec. 21, 2020.
>     
> 3.  Ford Library Museum. "[9/30/76 HR8532 Hart‑Scott‑Rodino Antitrust Amendments Act of 1976 (1)](https://www.fordlibrarymuseum.gov/library/document/0055/1669524.pdf)," Page 27. Accessed Dec. 21, 2020.
>     
> 4.  U.S. Congress. "[Public Law 94-435](https://www.govinfo.gov/content/pkg/STATUTE-90/pdf/STATUTE-90-Pg1383.pdf)," Pages 1-15. Accessed Dec. 21, 2020.
>     
> 5.  Federal Trade Commission. "[Steps for Determining Whether an HSR Filing is Required](https://www.ftc.gov/enforcement/premerger-notification-program/hsr-resources/steps-determining-whether-hsr-filing)." Accessed Dec. 21, 2020.
>     
> 6.  Federal Trade Commission. "[Premerger Notification and the Merger Review Process](https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/mergers/premerger-notification-merger-review)." Accessed Dec. 21, 2020.
>     
> 7.  Federal Register. "[Vol. 85, No. 18 - Tuesday, January 28, 2020](https://www.govinfo.gov/content/pkg/FR-2020-01-28/pdf/2020-01423.pdf)," Pages 4984 and 4985. Accessed Dec. 21, 2020.
>     
> 8.  Federal Trade Commission. "[Filing Fee Information](https://www.ftc.gov/enforcement/premerger-notification-program/filing-fee-information)." Accessed Dec. 21, 2020.