[Federal Register Volume 60, Number 204 (Monday, October 23, 1995)]
[Notices]
[Pages 54376-54377]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-26191]



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FEDERAL TRADE COMMISSION


Notice and Request for Comment on Federal-State Cooperation in 
Merger Enforcement

AGENCY: Federal Trade Commission.

ACTION: Notice, with request for public comment, of modification to 
program for Federal-State cooperation in merger enforcement, and of 
Commission policy respecting sharing of additional information with the 
states in merger investigations.

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SUMMARY: The Commission is announcing a policy respecting information-
sharing in merger investigations, under which states will be able to 
obtain information pursuant to both a 1992 program for Federal-state 
cooperation in merger enforcement and the Commission's general rule 
governing access requests from state law enforcement agencies. The 
Commission is also revising the waiver that merging parties submit in 
order to trigger information-sharing under the 1992 program. The 
Commission is seeking public comment on these changes, which are 
intended to facilitate Federal-state cooperation in merger enforcement.

DATES: The policy is effective on October 23, 1995. Comments will be 
received until November 22, 1995.

ADDRESSES: Comments should be addressed to the Secretary, Federal Trade 
Commission, 6th & Pennsylvania Avenue NW., Washington, DC 20580. 
Comments will be entered on the public record of the Commission and 
will be available for public inspection in Room 130 during the hours of 
9 a.m. until 5 p.m.

FOR FURTHER INFORMATION CONTACT:
Marc Winerman, Office of the General Counsel, (202) 326-2451.

SUPPLEMENTARY INFORMATION:

Background on Former Policy

    In 1992, the Commission adopted a program for Federal-state 
cooperation in merger enforcement, applicable to transactions reported 
under Section 7A of the Clayton Act, 15 U.S.C. Sec. 18a. See 57 FR 
21795. Under that program, the Commission provides participating states 
with certain information when the requisite conditions, including 
consent from the merging parties, are met.\1\ In particular, Commission 
staff provides participating states with copies of second requests; 
with third party subpoenas from which the recipients' identities were 
redacted (so long as redaction is sufficient to protect the 
confidentiality of subpoena recipients); and with limited assistance in 
analyzing the merger. (The states also receive copies of the HSR 
filings, but those materials are provided to the states by the 
submitters rather than the Commission). See 57 FR 21796.

    \1\ The 1992 program operates in conjunction with the National 
Association of Attorneys General Voluntary Pre-Merger Disclosure 
Compact (``Compact''). The program is triggered when the merging 
parties: (1) Cooperate with state participants in the Compact by 
providing their HSR filings and other specified information to a 
designated ``liaison state''; and (2) provide letters waiving 
confidentiality protections under Federal law to the Assistant 
Director for Premerger Notification in the FTC's Bureau of 
Competition. (Without such waivers, the Commission cannot disclose 
HSR filings to states. See 15 U.S.C. Sec. 18a(h); Lieberman v. FTC, 
771 F.2d 32 (2d Cir. 1985); Mattox v. FTC, 752 F.2d 116 (5th Cir. 
1985)). When these conditions are met, the Commission will share 
information with Compact participants who certify that information 
obtained under the program will be maintained in confidence and used 
only for official law enforcement purposes.
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New Policy on Information Sharing

    Under the Commission's new policy, states may receive information 
previously unavailable in merger investigations, including: (1) 
Information obtained from third parties 

[[Page 54377]]
(although the identity of the submitter will continue to be protected 
unless the submitter consents to disclosure); \2\ (2) information 
obtained from merging parties who have not consented to disclosure, to 
the extent that such information is not protected by the HSR Act; \3\ 
and (3) staff analytic memoranda, once the Commission has determined 
whether or not to challenge the merger, to assist the states in 
developing their own analyses of the merger.

    \2\ The provision for consent is intended to encourage 
cooperation from third parties in merger investigations, which are 
often time-sensitive. Absent consent, third party submissions may be 
disclosed only if redactions can be made sufficient to protect the 
submitter's identity. When it is impractical for Commission staff to 
redact all third party materials obtained from submitters who have 
not consented to disclosure of their identities, the staff will 
attempt to prepare redacted versions of particularly significant 
materials.
    \3\ This category includes, for example, submissions from the 
merging parties pertaining to a transaction that is not reported 
under the HSR Act.
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    In order to invoke this new policy, states may request information 
respecting merger investigations under Commission Rule 4.11(c), 16 CFR 
Sec. 4.11(c). Under that rule, the Commission's General Counsel has 
been delegated authority to grant state access requests if the request 
certifies that responsive materials will be maintained in confidence 
and used only for official law enforcement purposes, and describes the 
nature of the law enforcement activity and the anticipated relevance of 
the materials to that activity.\4\ The General Counsel will consider 
Rule 4.11(c) requests on a case-by-case basis, and grant access to the 
extent that disclosure is permitted by law and not inconsistent with 
the Commission's enforcement mission.\5\

    \4\ Under the Rule, if the General Counsel and the Bureau of 
Competition disagree about the proper disposition of a request for 
records in a merger investigation, the General Counsel must refer 
the request to the Commission.
    \5\ Additionally, if either the General Counsel or the Director 
of the Bureau of Competition recommend disclosure of internal 
memoranda before the Commission determines whether to challenge a 
merger, the General Counsel will forward the matter to the 
Commission for resolution.
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Modification of Waiver Form

    Rule 4.11(c) procedures are available whether or not the 1992 
program is available (i.e., without regard to whether the merging 
parties have provided HSR filings to the liaison state and submitted 
waivers required under the program). In circumstances where both Rule 
4.11(c) and the 1992 program are available, sharing would be 
facilitated by a modification to the form waiver used in the program. 
The Commission is therefore revising the form so that it waives HSR 
protections insofar as those protections ``in any way'' limit 
communications between the Commission and NAAG Compact members. This 
clarifies that the waiver extends to Rule 4.11(c) disclosures as well 
as to communications under the program, and thus makes clear that the 
Commission need not redact HSR information from internal memoranda 
shared under Rule 4.11(c). The revised waiver form appears as an 
appendix.
    These policies were effective as of June 16, 1995. The Commission 
will, however, consider public comments and, after reviewing such 
comments, may take such further action as appropriate.

Appendix--Model Waiver for Submitters

To: Assistant Director for Premerger Notification, Bureau of 
Competition, Federal Trade Commission, Washington, DC 20580

    With respect to [the proposed acquisition of X Corp. by Y 
Corp.], the undersigned attorney or corporate officer, acting on 
behalf of [indicate entity], hereby waivers confidentiality 
protections under the Hart-Scott-Rodino Act, 15 U.S.C. Sec. 18a(h), 
insofar as these protections in any way limit confidential 
communications between the Federal Trade Commission and members of 
the NAAG Voluntary Pre-merger Compact.

Signed:----------------------------------------------------------------

Position:--------------------------------------------------------------

Telephone:-------------------------------------------------------------

(Authority: 15 U.S.C. Sec. 46).

    By direction of the Commission, Commissioner Starek dissenting.
Donald S. Clark,
Secretary.

Dissenting Statement of Commissioner Roscoe B. Starek, III

Federal-State Cooperation in Merger Enforcement

    Following extensive deliberation and evaluation of public 
comments, in 1992 the Commission entered into its Program for 
Federal-State Cooperation in Merger Enforcement (``the 1992 
program''). The information that the Commission makes available 
pursuant to the 1992 program reflects a prudent balancing of the 
Commission's interest in conducting efficient and expeditious Hart-
Scott-Rodino (``HSR'') merger investigations with its interest in 
promoting federal-state cooperation in merger law enforcement. The 
Commission at that time considered the materials to be made 
available to the states--copies of HSR second requests, redacted 
versions of third-party subpoenas, and assistance in analyzing the 
transaction--sufficient to furnish substantial aid to requesting 
states while avoiding the risk that merging firms and third parties 
might simply cease to cooperate with FTC investigations.
    Today, however, the Commission announces a new policy that will 
supplant the 1992 program, even though no change of law or fact has 
diminished the Commission's interest in keeping its merger 
investigations efficient and expeditious. As a consequence of this 
policy change, we can surely expect state attorneys general to seek 
access to HSR investigation materials under the broader disclosure 
provisions of Commission Rule 4.11(c), obviating the 1992 Program 
(except, perhaps, as a preliminary step to a Rule 4.11(c) access 
request). Given that merging firms and third parties might well balk 
at submitting information to the Commission that we could turn over 
to the states despite the submitters' objections, there is reason to 
doubt that the new policy will improve the speed or efficiency with 
which this agency conducts merger investigations. Moreover, some 
firms might even forgo efficient--or at worst legally 
unobjectionable--transactions because of apprehension that the 
Commission will release sensitive information to the states.
    One can hardly quibble with the general proposition that the 
Commission should cooperate with state attorneys general to advance 
the public interest in avoiding wasteful duplication of effort in 
antitrust enforcement. The Commission's new policy, however, seems 
only to advance cooperation as an end in itself, without any 
apparent link to the achievement of a more tangible public benefit. 
In my view, the new policy is fated to result only in increasing the 
costs of HSR merger enforcement--costs that will fall both on the 
Commission and on the parties subject to enforcement.

[FR Doc. 95-26191 Filed 10-20-95; 8:45 am]
BILLING CODE 6750-01-M