2011 threshold triggers for federal scrutiny of mergers and acquisitions announced

Broadcasters and telecommunications operators contemplating possible deals for the coming year should remember that, as far as the federal government is concerned, there may be such a thing as Too Big. The Feds will step in to review an anticipated deal for potential antitrust problems if the deal exceeds certain threshold dollar amounts.  The law mandates that those threshold amounts be revised every year for inflation. The 2011 thresholds have just been announced, and will take effect on February 24, 2011. If your deal exceeds one of the revised thresholds, you should plan for increased government scrutiny, with all the additional hassle, expense and delay that such scrutiny entails.

Under federal antitrust law, certain mergers or acquisitions which exceed the specified thresholds must be submitted to the Federal Trade Commission (FTC) and the Department of Justice for Uncle Sam’s review before the transaction can be consummated.  (The theoretical basis for federal concern here: any transaction big enough to pass the thresholds is presumably big enough to affect interstate commerce.) The government’s internal process for adjusting these thresholds – based on the traditional measure of the gross national product – has been on the books for decades.

The newly-adjusted thresholds require pre-transaction notification if either:

  • the total value of the transaction exceeds $263,800,000; or
  • the total value of the transaction exceeds $66 million and one party to the deal has total assets of at least $13.2 million (or, if a manufacturer, has $13.2 million in annual net sales) and the other party has net sales or total assets of at least $131.9 million.

When negotiating deals, all parties would be well-advised to bear these thresholds in mind. Once those lines are crossed, the prospect of additional time, expense and hassle to navigate the federal review process is a virtual certainty.