[Federal Register Volume 71, Number 121 (Friday, June 23, 2006)]
[Rules and Regulations]
[Pages 35995-36007]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-5638]
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FEDERAL TRADE COMMISSION
16 CFR Part 803
Premerger Notification; Reporting and Waiting Period Requirements
AGENCY: Federal Trade Commission.
ACTION: Final rule amendments.
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SUMMARY: The Commission is amending the premerger notification rules
(``the rules'') that require the parties to certain mergers and
acquisitions to file reports with the Federal Trade Commission (``the
Commission'' or ``FTC'') and the Assistant Attorney General in charge
of the Antitrust Division of the Department of Justice (``the Assistant
Attorney General'' or ``DOJ'') and to wait a specified period of time
before consummating such transactions. The reporting and waiting period
requirements are intended to enable these enforcement agencies to
determine whether a proposed merger or acquisition may violate the
antitrust laws if consummated and, when appropriate, to seek a
preliminary injunction in Federal court to prevent consummation. These
amendments will update and improve the effectiveness of the rules by
allowing submission of notification and report forms electronically via
the Internet.
DATES: These final rules are effective on June 23, 2006.
FOR FURTHER INFORMATION CONTACT: Comments or questions may be directed
to Robert L. Jones, Deputy Assistant Director, Premerger Notification
Office, Bureau of Competition, Room 302, Federal Trade Commission,
Washington, DC 20580. Telephone: (202) 326-2740. E-mail:
HSRHelp@hsr.gov.
SUPPLEMENTARY INFORMATION:
Background
Section 7A of the Clayton Act (``the act''), 15 U.S.C. 18a, as
added by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, Pub.
L. 94-
[[Page 35996]]
435, 90 Stat. 1390, requires all persons contemplating certain mergers
or acquisitions to file notification with the Commission and the
Assistant Attorney General and to wait a designated period of time
before consummating such transactions. Congress empowered the
Commission, with the concurrence of the Assistant Attorney General, to
require ``that the notification * * * be in such form and contain such
documentary material and information * * * as is necessary and
appropriate'' to enable the agencies ``to determine whether such
acquisitions may, if consummated, violate the antitrust laws.''
Congress similarly granted rulemaking authority to, inter alia,
``prescribe such other rules as may be necessary and appropriate to
carry out the purposes of this section.'' 15 U.S.C. 18a(d).
Pursuant to that section, the Commission, with the concurrence of
the Assistant Attorney General, developed the Antitrust Improvements
Act Rules (``the rules'') and the Notification and Report Form for
Certain Mergers and Acquisitions (``the Form''). The rules and Form
have been amended or revised on numerous occasions. These rule changes
amend Section 803 and the Instructions to the Form to provide the
option of filing the Form electronically.
Statement of Basis and Purpose for the Commission's Revision of Its
Premerger Notification Rules
The Commission, with the concurrence of the Assistant Attorney
General, is adopting and implementing these rule changes to allow the
submission of HSR filings electronically via the Internet. Computer
technology has reached the level of sophistication necessary, through
the growth of the Internet, near universal access to the Internet, and
increased speed and sophistication of both computer hardware and
software, to allow electronic submission of the Form. Electronic filing
will provide several benefits to the companies filing the Form as well
as to the reviewing agencies:
--Filing the Form electronically will eliminate expensive and time-
consuming duplication of submitted documents. Currently, companies
filing HSR notification must submit five paper copies of their filing,
consisting of one original and one copy to the FTC, and three copies to
DOJ.
--Electronic filing will ease the delivery of completed filings to the
agencies and will facilitate circulation of filings within the
agencies, reducing the cost and delay associated with traditional
delivery methods. Electronic filings may be submitted quickly and
easily at any time.
--Electronic filing will enhance the data entry of filing information
into the information systems of the agencies. Some filing data will be
electronically entered directly into the agency databases rather than
by the more time-consuming method of hand data entry by agency staff.
Direct data entry will be less prone to data entry error and
potentially more accurate.
In addition to the above benefits, electronic filing complies with
the mandate of the Government Paperwork Elimination Act, Pub. L. 105-
277, title XVII (Oct. 21, 1998), which requires that agencies, to the
extent practicable, provide electronic filing and signature options.
HSR filings are highly confidential. Every step of the electronic
filing process has been designed to ensure the confidentiality and
security of submitted information--from requiring a valid electronic
signature before submission of the package and encrypting the signed
package, to securely transmitting the package over the Internet to a
secure FTC server and providing a return e-mail that the Form has been
received. Once an electronic Form is received, multiple security
measures such as authentication via digital certificates, unique
permanent ID tags, and secure storage, will maintain a high level of
security.
In order to provide maximum flexibility, filers will now have three
options for filing: (1) Complete the Form and all attachments in hard
copy and deliver them to the designated delivery sites; (2) complete
the electronic version of the Form and submit the Form and all
attachments electronically; or (3) complete the electronic version of
the Form and submit it electronically while providing all documentary
attachments in paper copy to the FTC and DOJ as in Option 1 above.
The individual rule modifications necessary to implement electronic
filing are described more fully below.
Section 803.1 Notification and Report Form
Paragraph (a) will be amended to eliminate the outdated reference
to photostatic or equivalent reproduction in order to apply more
broadly, thus including the electronic filing option. The current
version of the Form can be obtained on the Commission's Web site,
http://www.ftc.gov, or https://www.hsr.gov.
Section 803.2 Instructions Applicable To Notification and Report Form
In response to Items 4(a) and (b) of the Form, filing persons
currently must provide copies of, or direct links to, annual reports,
annual audit reports and regularly prepared balance sheets and certain
documents, such as 10K's, filed with the Securities and Exchange
Commission (``SEC''). These documents may be attached directly to the
electronic Form.
Certain formats of electronic files cannot be viewed by the e-
filing system. To ensure the submission of compatible files and to
avoid problems and delay in processing, a new paragraph, Sec.
803.2(f), has been added, requiring the use of specific file formats
when submitting documents or attachments as part of the electronic
Form. The filing person is responsible for ensuring that all
attachments are of an appropriate file format and is subject to a
notice of a deficient filing if an unacceptable format is submitted.
See https://www.hsr.gov for a current list of acceptable file formats.
Due to technological constraints, the e-filing system has a
restriction on the size of file that can be submitted electronically.
While this limitation is high enough to make it unlikely to be
problematic for most filers, filers should be aware that such a limit
exists. See https://www.hsr.gov for the current maximum submission
size. As technology improves, the maximum submission size will increase
and become less and less problematic. New paragraph, Sec. 803.2(f),
requires that all submissions fall under the size limitation as
specified at https://www.hsr.gov.
Section 803.5 Affidavits Required
Section 803.5 requires an affidavit from the filing person
attesting to certain facts about the proposed acquisition. The
affidavit is required to be attached to the Form at the time of filing.
Paragraphs 803.5(a)(1), (a)(3) and (b) and the Instructions are amended
to address attachment of the affidavit when using the electronic filing
option.
When filing electronically, the electronic affidavit form must be
used and submitted along with the filing. The electronic affidavit form
does not specify the wording to be used, but has a blank field for the
filer to insert the appropriate language. Thus, as with paper filings,
persons filling out the electronic Form are free to produce affidavits
specific to the transaction.
Section 803.10 Running of Time
Persons required by the act to file notification must wait 30 days
(or 15
[[Page 35997]]
days in the case of a cash tender offer or bankruptcy) before
consummating the transaction. This rule provides the procedures for
determining when this waiting period begins and ends. See Sec.
803.10(a) and (b). Paragraph (c)(1) defines the ``date of receipt and
means of delivery'' concepts used in determining when the waiting
period begins. Paragraph (c)(1) has been amended to provide the date of
receipt for electronic filings as the date when delivery of the
electronic filing is effected to the Federal Trade Commission server.
Paragraph (c)(1)(i) has been updated to the current address of the
designated delivery site of the DOJ.
A matter is ``effected'' to the server when a complete electronic
Form has been received by the server maintained by the FTC for the
purpose of receiving electronic filings. When receipt of a Form is
verified, the system will send an autoreply e-mail to the filing person
to notify the person that service has been effected. If a filing is
submitted but no autoreply e-mail is received within 24 hours, the
filing person should confirm receipt with the FTC by e-mail at
``HSRHelp@hsr.gov'' or phone at (202) 326-3100. Electronic delivery
effected after 5 p.m. eastern time on a business day, or at any time on
any day other than a business day, shall be deemed effected on the next
business day.
If the FTC server is unavailable, it will not be possible to submit
a notification electronically until the server is available. A filing
person assumes the risk of the server being unavailable. It is
important to note that confirmation of the date and time of effected
service is not notice of the start of the HSR Waiting Period, but
analogous to getting a copy of the filing date-stamped on a transmittal
letter for a paper filing. Separate notice will be sent subsequently to
the parties to a transaction informing them when the waiting period has
begun. As with paper filings, if an electronic notification is deemed
deficient, the date of receipt shall be the date on which a filing that
complies with the rules is received. See Sec. 803.10(c)(2).
If a filing person is submitting the Form electronically but
producing hard copies of attachments to the reviewing agencies,
delivery is not effected until the Form is received by the FTC server
and all hard copy attachments have been received by both agencies as
provided in Sec. 803.10(c)(1).
In order to facilitate the disaster preparedness of the agencies
(and not specific to electronic filing), part of Paragraph (c)(1) has
been modified to allow for the designation of alternate sites for
physical delivery of the Form in the event one or both of the FTC and
DOJ offices are unexpectedly closed. Notification of the alternate
delivery sites will be made through a press release and, if possible,
on the http://www.ftc.gov and https://www.hsr.gov Web sites. The
Instructions have been amended to note this.
Appendix to Part 803--Notification and Report Form and Instructions
A number of changes have been made to the Form and Instructions.
These changes are discussed below.
Previous Instructions for the Notification and Report Form required
that all dollar amounts be rounded to the nearest thousand dollars.
When entering the dollar amounts into the Premerger tracking system,
the FTC staff rounds these numbers to one-tenth of a million. To allow
direct data entry of electronic Form information and to eliminate the
need for rounding when data is entered by hand into the Premerger
tracking system, the Instructions have been amended to require that all
dollar amounts be expressed in millions of dollars to the nearest one-
tenth of a million. For example, the value of an acquisition which is
$76,340,870 would be expressed as $76.3 on the Form. The Instructions
to the Form are amended to reflect this change.
A correction to the instructions, unrelated to the introduction of
e-filing, relates to Item 7 of the Form, which requires dollar revenue
information to be provided. In the 2005 rulemaking that implemented the
use of 2002 NAICS codes, two NAICS subsectors were inadvertently
shifted between subsections of Item 7(c) which requires certain
geographic information for overlapping NAICS codes. The earlier 1997
NAICS subsectors 513 (broadcasting) and 517 (telecommunications) were
referenced in subsection 7(c)(ii), which requires a list of states in
which the person filing notification conducts operations. The 2002
NAICS codes renumbered subsector 513 as 515 (broadcasting) and a
drafting oversight moved it and subsector 517 (telecommunications) to
subsection 7(c)(iv), which requires the additional information of
address, city, county and state of each establishment from which
revenues were derived by the person filing notification. This
correction now properly references subsectors 515 and 517 in subsection
7(c)(ii).
The section of the Instructions relating to the affidavit has been
amended to include the required elements specified in Sec. 803.5. The
Commission has often received deficient affidavits. Including this
information in the Instructions should assist filers in properly
preparing the affidavit.
Administrative Procedure Act
These amendments to the HSR rules and Form fall within the category
of rules covering agency procedure and practice that are exempt from
the notice-and-comment requirements of the Administrative Procedure Act
(``APA''). See 5 U.S.C. 553(b)(A). Because the amendments are not
substantive in nature, they are also not subject to the delayed
effective date provisions of the APA. See 5 U.S.C. 553(d) (substantive
rules may take effect no sooner than 30 days after publication).
Accordingly, the Commission has determined to make these amendments
effective on June 23, 2006.
Regulatory Flexibility Act
The Regulatory Flexibility Act, 5 U.S.C. 601-612, requires that the
agency conduct an initial and final regulatory analysis of the
anticipated economic impact of the proposed amendments on small
businesses, except where the agency head certifies that the regulatory
action will not have a significant economic impact on a substantial
number of small entities. 5 U.S.C. 605. The Regulatory Flexibility Act
requirements apply, however, only to rules or amendments that are
subject to the notice-and-comment requirements of the APA. See 5 U.S.C.
603, 604. Because these amendments are exempt from those APA
requirements, as noted earlier, they are also exempt from the
Regulatory Flexibility Act requirements. In any event, because of the
size of the transactions necessary to invoke a Hart-Scott-Rodino
filing, the premerger notification rules rarely, if ever, affect small
businesses. Indeed, amendments to the act in 2001 were intended to
reduce the burden of the premerger notification program by exempting
all transactions valued at less than $50 million. Further, none of the
proposed rule amendments expands the coverage of the premerger
notification rules in a way that would affect small business.
Accordingly, to the extent, if any, that the Regulatory Flexibility Act
applies, the Commission certifies that these proposed rules will not
have a significant economic impact on a substantial number of small
entities. This document serves as notice of this certification to the
Small Business Administration.
Paperwork Reduction Act
The rules and the Form contain information collection requirements,
as
[[Page 35998]]
defined by the Paperwork Reduction Act, 44 U.S.C. 3501-3518, that have
been reviewed and approved by OMB under OMB Control No. 3084-0005.
Providing an electronic filing option was contemplated by the FTC's
Supporting Statement and OMB's May 13, 2004 approval of the extension
of the clearance for the rules and the Form.
List of Subjects in 16 CFR Part 803
Antitrust.
0
For the reasons stated in the preamble, the Federal Trade Commission
amends 16 CFR part 803 as set forth below:
PART 803--TRANSMITTAL RULES
0
1. The authority citation for part 803 continues to read as follows:
Authority: 15 U.S.C. 18a(d).
0
2. Amend Sec. 803.1 by revising paragraph (a) to read as follows:
Sec. 803.1 Notification and Report Form.
(a) The notification required by the act shall be the Notification
and Report Form set forth in the appendix to this part (803), as
amended from time to time. All acquiring and acquired persons required
to file notification by the act and these rules shall do so by
completing and filing the Notification and Report Form, in accordance
with the instructions thereon and these rules. The current version of
the Form can be obtained at http://www.ftc.gov or https://www.hsr.gov.
* * * * *
0
3. Amend Sec. 803.2 by adding paragraph (f) to read as follows:
Sec. 803.2 Instructions applicable to Notification and Report Form.
* * * * *
(f) Filings made electronically, including documents or other
attachments submitted as part of such filings, must comply with all
format and size requirements set forth at https://www.hsr.gov. The use
of any format or size not specified as acceptable, or any other failure
to comply with the applicable format requirements, shall render the
entire filing deficient within the meaning of Sec. 803.10(c)(2).
0
4. Amend Sec. 803.5 by revising the text of paragraph (a)(1)
introductory text, paragraph (a)(3), and paragraph (b) to read as
follows:
Sec. 803.5 Affidavits required.
(a)(1) Section 801.30 acquisitions. For acquisitions to which Sec.
801.30 applies, the notification required by the act from each
acquiring person shall contain an affidavit, attached to the front of
the notification, or attached as part of the electronic submission,
attesting that the issuer whose voting securities are to be acquired
has received notice in writing by certified or registered mail, by wire
or by hand delivery, at its principal executive offices, of:
* * * * *
(3) The affidavit required by this paragraph must have attached to
it a copy of the written notice received by the acquired person
pursuant to paragraph (a)(1) of this section. For electronic filing, an
electronic copy of the written notice must be attached as part of the
electronic submission.
(b) Non-section 801.30 acquisitions. For acquisitions to which
Sec. 801.30 does not apply, the notification required by the act shall
contain an affidavit, attached to the front of the notification, or
attached as part of the electronic submission, attesting that a
contract, agreement in principle or letter of intent to merge or
acquire has been executed, and further attesting to the good faith
intention of the person filing notification to complete the
transaction.
* * * * *
0
5. Amend Sec. 803.10 by revising paragraph (c)(1) to read as follows:
Sec. 803.10 Running of time.
* * * * *
(c)(1) Date of receipt and means of delivery. For purposes of this
section, these procedures shall apply.
(i) For paper copy filings, the date of receipt shall be the date
on which delivery is effected to the designated offices (Premerger
Notification Office, Room 303, Federal Trade Commission, 600
Pennsylvania Avenue, NW., Washington, DC 20580, and Director of
Operations, Antitrust Division, Department of Justice, 950 Pennsylvania
Avenue, NW., Room 3335, Washington, DC 20530) during normal
business hours. Delivery should be effected directly to the designated
offices, either by hand or by certified or registered mail. In the
event one or both of the delivery sites are unavailable, the FTC and
DOJ may designate alternate sites for delivery of the filing.
Notification of the alternate delivery sites will normally be made
through a press release and, if possible, on the http://www.ftc.gov and
https://www.hsr.gov Web sites.
(ii) For electronic filings, the date of receipt shall be the date
on which delivery of the electronic filing package is effected to the
server maintained by the FTC for the purpose of receiving electronic
filings.
(iii) For electronic filings with paper copy submission of all
attachments, the date of receipt shall be either the date on which
delivery of the electronic filing package is effected to the Federal
Trade Commission's server or the date on which delivery of the
attachments is effected to the designated offices as provided in
paragraph (c)(1)(i) of this section, whichever is later.
(iv) Delivery effected after 5 p.m. eastern time on a business day,
or at any time on any day other than a business day, shall be deemed
effected on the next following business day. If delivery of all
required filings to all offices required to receive such filings is not
effected on the same date, the date of receipt shall be the latest of
the dates on which delivery is effected.
Example: * * *
* * * * *
0
6. Amend the Appendix to part 803 to revise the instructions applicable
to the Notification and Report Form and page 1 of the Notification and
Report Form to read as follows:
Appendix to Part 803
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By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 06-5638 Filed 6-22-06; 8:45 am]
BILLING CODE 6750-01-C