[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]
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