Choose the type of information you seek
- Merger Screening
- Merger Filing
1. What type of transactions are caught by the merger control regime?
1.1.1 Type of transactions that are caught by the merger control rules?
Any acquisition of assets, voting securities, non-corporate interests, or the formation of a joint venture is subject to merger control. However, not-for-profit joint ventures are generally exempt.
For a transaction to be caught by the merger control rules at least one of the undertakings concerned must have commercial activity in the United States or otherwise be active in a way that affects commerce in the United States.
Change of control is not a prerequisite for the applicability of United States merger control law.
The following kinds of transactions are exempt from merger control:
- certain foreign-to-foreign mergers;
- the acquisition of non-voting shares;
- certain acquisitions of ordinary voting shares solely for the purpose of investment;
- certain acquisitions that require the prior approval of another federal agency;
- certain acquisitions by securities underwriters, creditors, insurers and institutional investors;
- certain financing transactions where the acquirer contributes only cash to a non-corporate entity and does not retain control over the entity post realisation of its preferred return.
2. Establishing jurisdiction for notification of mergers
2.3 General thresholds
Merger control filing is required when:
First alternative threshold:
- the total value of the acquirer’s voting shares, assets and/or non-corporate interests that will be held in the target amount to at least USD 94,000,000 (including pre-transaction holdings); and
- the global turnover or asset value of at least one of the undertakings concerned is at least USD 188,000,000; and
- the global turnover or asset value of one of the other undertakings concerned is at least USD 18,800,000.
Second alternative threshold:
- The total value of the acquirer’s voting shares, assets and/or non-corporate interests that will be held in the target amount to at least USD 376,000,000 (including pre-transaction holdings).
For information on valuation of voting shares, assets and/or non-corporate interests, including pre-existing holdings, please see Section 3.6.1 below.
2.3.4 Are there any circumstances where transactions falling below these thresholds may be still investigated?
Even if the transaction does not reach the thresholds and trigger notification requirements, the competition authority may choose to review and prohibit it if it results in an adverse competitive effect violating the competition law.
2.4 Other national thresholds for ex ante merger control (e.g. sector-specific rules)
Certain sectors have specific rules, e.g. banking, telecommunications and media, transport and energy.
Transactions that have an element of national security may require notification to the Committee on Foreign Investment in the United States.
2.5 Foreign-to-foreign mergers
2.5.1 Do any exemptions, special thresholds etc. apply to foreign-to-foreign mergers, i.e. where none of the undertakings concerned is domiciled in the jurisdiction?
Target must have sufficient local nexus to be caught by the US merger control rules.
Acquisitions of foreign assets are exempt from filing unless the foreign assets to be held as a result of the acquisition generated turnover in the US exceeding USD 94,000,000 during the acquired person’s most recent fiscal year.
Share acquisitions of foreign entities are exempt unless the target’s asset value in the US or turnover in the US exceeds USD 94,000,000.
Even if exceeding either threshold, acquisitions are not fileable if:
- both the acquiring and acquired persons are foreign;
- both the turnover in the US in the last financial year and the total assets in the US of the acquirer and the target are less than USD 206,800,000; and
- the value of the assets (for asset acquisitions) / the value of the shares (for share acquisitions) that will be held as a result of the transaction does not exceed USD 376,000,000.
3. Calculation and allocation of turnover, asset value, transaction value etc.
3.3 Relevant undertakings for the calculation of turnover
3.3.1 The undertakings whose turnover is taken into account?
Turnover is measured on a group level.
3.3.2 Shall the turnover of the existing seller be included in the target's group turnover?
3.5 Valuation and allocation of assets
3.5.1 The principles for valuation and allocation of assets?
Asset value is measured on a group level.
3.6 Calculation of other thresholds
3.6.1 The principles for calculation of metrics for other thresholds (e.g. transaction value, market share, share of supply etc.)?
Current and pre-existing acquisitions of voting shares, assets and/or non-corporate interests are measured at fair market value. This means that the current acquisition must be aggregated with the previously acquired holdings, valuing the latter at the current market price or fair market value rather than historical cost.
1. Practical information
1.2 Deadlines for filing
1.2.3 What are the sanctions for not filing a notifiable transaction?
Failure to notify a notifiable transaction is sanctionable by a fine of up to USD 43,280 per violation per day each violation persists (adjusted annually for inflation). Fines have been seen to run into the millions of dollars.
The courts may also on application order the parties to roll the transaction back.
and last updated on 18-01-2021 by
Legal Cross Border has itself provided all input about merger control in the United States. This information has been gathered and validated by our in-house lawyers to guarantee the highest quality outcome. This said, we are currently looking for a local partner to cover Merger Control US - please contact us if you would like to be our new partner.