Understanding the Merger Filing Fee Modernization Act of 2021

The Merger Filing Fee Modernization Act of 2021 is a significant piece of legislation that aims to revamp the fees associated with mergers and acquisitions. The Act was enacted on December 29, 2021.

The Act's primary goal is to simplify and modernize the fee structure for mergers and acquisitions. This is achieved by eliminating the complex fee schedules and replacing them with a more straightforward system.

One of the key changes introduced by the Act is the elimination of the $125 million cap on merger fees. This cap was previously in place to limit the amount of fees that could be charged to merging companies.

A fresh viewpoint: Meme Stocks 2021

The Merger Filing Fee Modernization Act of 2021 is a significant development for companies involved in mergers and acquisitions. The Bill, sponsored by Senators Amy Klobuchar and Chuck Grassley, aims to raise the filing fees under the Hart-Scott-Rodino Act for large mergers and adjust them annually based on changes in the Consumer Price Index.

A unique perspective: What Is a Ucc Filing

Currently, there are three levels of filing fees for HSR filings: $45,000 for transactions valued at more than the filing threshold but less than $100 million AA, $125,000 for transactions valued at $100 million AA or more but less than $500 million AA, and $280,000 for transactions valued at more than $500 million AA.

The Bill proposes to decrease the filing fees for smaller acquisitions as follows: the fee would be reduced from $45,000 to $30,000 for transactions valued at more than the filing threshold but less than $161.5 million AA, from $125,000 to $100,000 for transactions valued at more than $161.5 million AA but less than $500 million AA, and from $280,000 to $250,000 for transactions valued at more than $500 million AA but less than $1 billion AA.

However, the Bill imposes increased fees on transactions valued at more than $1 billion. The new fees would be $400,000 for transactions valued between $1 billion AA and $2 billion AA, $800,000 for transactions between $2 billion AA and $5 billion AA, and $2.25 million for transactions valued at $5 billion AA or more.

Here's a breakdown of the proposed filing fee changes:

The Bill aims to increase transparency and fairness in the merger and acquisition process. By adjusting the filing fees annually based on changes in the Consumer Price Index, the Bill seeks to ensure that the fees remain relevant and effective in promoting competition and preventing anti-competitive practices.

Discover more: Bill of Exchange Act 1882

The Merger Filing Fee Modernization Act of 2021 proposes significant changes to the way antitrust agencies are funded. The FTC's budget would increase to $418 million, a 19% increase over current levels.

This increase is substantial, and it's interesting to note that it's almost $29 million more than President Biden's proposed budget. The DOJ's budget would also rise to $252 million, 36% more than current levels.

That's a significant boost in funding for the DOJ, and it's worth noting that this increase is $51 million more than the Biden budget. The increased budget appropriations for both agencies could lead to more robust enforcement and oversight.

The Merger Filing Fee Modernization Act of 2021 has gained significant momentum, passing the Senate with a super-majority and strong bipartisan support.

This legislation is likely to pass in the House of Representatives and be signed into law by President Biden in the near future.

The bipartisan support for the bill underscores a broader consensus emerging around stronger U.S. antitrust enforcement, which is also reflected in several other proposals pending on Capitol Hill aimed at antitrust reform.

The Competition and Antitrust Enforcement Reform Act of 2021, introduced by Democratic Senator Amy Klobuchar, proposes major changes to the laws governing merger review, among other reforms.

Several bills have been introduced in the House of Representatives targeted at regulating large technology companies and digital platforms, highlighting the growing concern around antitrust issues.

The Tougher Enforcement Against Monopolists (TEAM) Act, introduced by Republican Senators Mike Lee and Chuck Grassley, would modify merger review standards, increase penalties for antitrust violations, and consolidate antitrust enforcement in the DOJ.

Companies undertaking mergers and acquisitions will need to factor increased fees into their deal structures and budgets if the Merger Filing Fee Modernization Act of 2021 passes.

These fees could even be triggered by routine or incremental investments that present no competition concerns, where the aggregate holdings of the buyer, as a result of the transaction, cross an applicable threshold.

Here are some key points to consider about the Merger Filing Fee Modernization Act of 2021:

The Federal Antitrust Package and Mergers & Acquisitions. On September 29, 2022, the United States House of Representatives passed a three-bill package of bipartisan antitrust bills. This package includes the Merger Filing Fee Modernization Act, the Foreign Merger Subsidy Disclosure Act, and the State Antitrust Enforcement Venue Act.

The Merger Filing Fee Modernization Act would raise filing fees for companies making Hart-Scott-Rodino Antitrust Improvement Act of 1976 (HSR) transaction filings. According to the Congressional Budget Office, future legislation that further increases HSR filing fees is likely.

Companies making large transactions will see increased HSR fees. This includes transactions valued at $1 billion or higher. The Congressional Budget Office expects future legislation to further increase these fees.

The State Antitrust Enforcement Venue Act ensures that state attorneys general can remain in the court they select, rather than having their cases moved to a court preferred by the defendant. Exceptions include states that file antitrust cases under federal antitrust laws.

Here are the key points from the bill:

The Merger Filing Fee Modernization Act of 2021 is a significant development in U.S. antitrust enforcement.

This change marks the government's first merger filing fee increase in more than two decades, reflecting a broader push for tougher antitrust enforcement.

The Act was incorporated in a bipartisan bill authored by Sen. Amy Klobuchar (D-Minn.) and signed into law by President Joe Biden on Dec. 29.

The FTC published a Federal Register notice with the effective date on Jan. 26, signaling the start of the new fee structure.

M&A activity slumped in North America in 2022 after record numbers in 2021, with the aggregate value of M&A deals in the U.S. and Canada dropping to $1.477 trillion, down 41.4% from 2021.

Antitrust lawyers expect the increased scrutiny of merger transactions, but it's unlikely to deter dealmaking entirely.

Parties will need to pay close attention to their pre-filing antitrust analysis to understand the risks involved.

Readers also liked: What Were Mortgage Rates in 2021