[Federal Register Volume 67, Number 52 (Monday, March 18, 2002)]
[Rules and Regulations]
[Pages 11904-11906]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-6252]


-----------------------------------------------------------------------

FEDERAL TRADE COMMISSION

16 CFR Part 802


Premerger Notification; Reporting and Waiting Period Requirements

AGENCY: Federal Trade Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Federal Trade Commission is amending the premerger 
notification rules, which require the parties to certain mergers or 
acquisitions to file reports with the Commission and with the Assistant 
Attorney General in charge of the Antitrust Division of the Department 
of Justice and to wait a specified period of time before consummating 
such transactions, pursuant to section 7A of the Clayton Act. The 
filing and waiting period requirements 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. 
This rule amendment is necessary to address public comments regarding a 
previously published interim rule provision, and will increase the 
clarity and improve the effectiveness of the rule.

EFFECTIVE DATES: This final rule is effective on March 18, 2002 and 
will be applied retroactively to February 2, 2002, as explained in 
SUPPLEMENTARY INFORMATION.

FOR FURTHER INFORMATION CONTACT: Marian R. Bruno, Assistant Director, 
Karen E. Berg, Attorney, or B. Michael

[[Page 11905]]

Verne, Compliance Specialist, Premerger Notification Office, Bureau of 
Competition, Room 303, Federal Trade Commission, 600 Pennsylvania 
Avenue, NW., Washington, DC 20580. Telephone: (202) 326-3100.

SUPPLEMENTARY INFORMATION: On February 1, 2001, the Commission 
published in the Federal Register and sought comment on Interim and 
Proposed Rules to amend the Hart-Scott-Rodino rules (``HSR rules'') 
contained in 16 CFR parts 801, 802 and 803. See 66 FR 8679-8721. The 
Interim Rules took effect upon publication and implemented amendments 
to Section 7A of the Clayton Act enacted on December 21, 2000 (``2000 
Amendments''). The Commission has decided that it needs more time to 
consider whether to make the Interim Rules final. A primary focus of 
this analysis is whether the Commission should make final the dollar-
based reporting thresholds that were newly introduced by the Interim 
Rules. In light of the public comments, however, the Commission has 
determined to make final at this time an amendment to interim 
Sec. 802.21(b), containing a transitional filing rule that was 
scheduled to expire on February 1, 2002, as explained below.

Background

    Interim Sec. 802.21 (Acquisitions of voting securities not meeting 
or exceeding greater notification threshold) contained paragraph (b), 
which addressed acquisitions of voting securities up to the next 
notification threshold by ``transitional'' filers, i.e., acquiring 
persons who filed using the 1978 notification thresholds and who have 
met or crossed the threshold for which they filed within a year of the 
waiting period's expiration, but whose five-year period for making 
additional acquisitions under Sec. 802.21(a) had not expired as of 
February 1, 2001 (the effective date of the 2000 Amendments).
    Section 802.21(b), as published in the Interim Rules, allowed these 
transitional filers until February 1, 2002 (one year from the effective 
date of the 2000 Amendments) to acquire up to what was the next 
reporting threshold at the time that they filed, and permitted them to 
do so without filing another notification, even though they might cross 
a new 2001 threshold. Thereafter, these acquiring persons, along with 
any other acquiring persons filing on or after February 1, 2001, were 
required to observe the 2001 thresholds contained in Sec. 801.1(h). 
Interim Sec. 802.21(b) was an effort to strike a balance between the 
reliance of transitional filers on rules that were in effect when they 
filed, and minimizing the agency's burden of administering two 
different sets of notification thresholds after February 1, 2001.
    The Commission received five comments on this transition rule.\1\ 
Comment 3 stated that any burden imposed on the Commission in 
maintaining two sets of thresholds is vastly outweighed by the burden 
on the parties who are required to prepare filings and pay additional 
filing fees, and the burden on the agencies in reviewing these 
additional filings, which were previously exempt for up to an 
additional four years. Comment 8 similarly claimed that the burden to 
the parties would outweigh the burden on the Commission and also 
expressed concern that the short notice prior to effecting the rule was 
unfair to parties who had filed recently with the good faith 
expectation that they would have five years to acquire additional 
securities. Comment 9 suggested that the transition rule remain 
unchanged, but that the full five-year period should be extended to 
acquisitions where a filing was made for an acquisition valued in 
excess of a 2001 threshold and the subsequent acquisition would not 
cross another 2001 threshold. For example, if ``A'' acquired $60 
million of B's voting securities and filed indicating the $15 million 
notification threshold, ``A'' should be able to acquire up to $100 
million of B's voting securities during the five-year period without a 
new filing. Comments 13 and 15 recommended elimination of the 
transition rule as an adjunct to restoring intermediate percentage 
notification thresholds.
---------------------------------------------------------------------------

    \1\ Ford Motor Company (Bolerjack, Stephen D.) (Comments 3, 3/
19/01); National Association of Manufacturers (NAM) (Comment 8, 3/
29/01); O'Melveny and Myers (Beddow, David T.) (Comment 9, 3/19/01); 
Section of Antitrust Law of the American Bar Association (Comment 
13, 3/19/01); Skadden, Arps, Slate, Meagher & Flom, LLP (Stoll, Neal 
R., Esq., et al.) (Comment 15, 3/19/01).
---------------------------------------------------------------------------

    The Commission agrees that any burden in administering two sets of 
notification thresholds for five years may well be outweighed by the 
burden to transitional filers. Therefore, the final rule restores to 
parties who filed prior to February 1, 2001, the full five-year period 
following expiration of the waiting period to acquire up to the next 
notification threshold that was in effect at the time of filing. With 
this modification, the change suggested by Comment 9 becomes 
unnecessary.

Administrative Procedure Act

    The Commission has previously solicited public comment on this rule 
provision. Since the Commission believes that this final rule 
adequately addresses the commenters' concerns, the Commission finds 
that further public comment is unnecessary. See 5 U.S.C. 552(b)(3). 
Although the Commission believes this rule is strictly procedural in 
nature, to the extent, if any, that it is substantive, the Commission 
believes it grants or recognizes an exemption and relieves a 
restriction that would have taken effect upon expiration of the time 
period that was set forth in interim Sec. 802.21(b). See 5 U.S.C. 
553(b)(B). Accordingly, the Commission is adopting this rule as final 
and effective upon publication and will apply it retroactively to 
February 2, 2002, in order to ensure the continuity and clarity of the 
filing procedures that apply to transitional filers, as explained 
above.

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.
    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. Further, this rule amendment does not expand 
the coverage of the premerger notification rules in a way that would 
affect small business. Accordingly, the Commission certifies that this 
rule will not have a significant economic impact on a substantial 
number of small entities. This document serves as the required notice 
of this certification to the Small Business Administration.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (``PRA''), 44 U.S.C. 3501-3518, 
requires agencies to submit requirements for ``collections of 
information'' to the Office of Management and Budget (``OMB'') and 
obtain clearance prior to instituting them. Such collections of 
information include reporting, recordkeeping, or disclosure 
requirements contained in regulations. The HSR premerger notification 
rules and Form contain information collection requirements as defined 
by the PRA that have been reviewed and approved by OMB under OMB 
Control No. 3084-0005. This final rule implements amendments to sction 
7A of the Clayton Act, which reduces the burden of the premerger 
reporting

[[Page 11906]]

program by exempting all transactions valued at $50 million or less. 
Because this final rule does not affect the information collection 
requirements of the premerger notification program as implemented by 
the interim rules, it has not been resubmitted to OMB under the PRA for 
review.

List of Subjects in 16 CFR Part 802

    Antitrust, Reporting and recordkeeping requirements.


    Accordingly, for the reasons stated in the preamble, the Federal 
Trade Commission amends 16 CFR part 802 as follows:

PART 802--EXEMPTION RULES

    1. The authority citation for part 802 continues to read:

    Authority: 15 U.S.C. 18a(d).

    2. Amend Sec. 802.21 by revising the text of paragraph (b) 
preceding the examples; by removing example 2; by redesignating 
examples 3 and 4 as examples 2 and 3 respectively; and by revising 
examples 1 and newly redesignated examples 2 and 3 to read as follows:


Sec. 802.21  Acquisitions of voting securities not meeting or exceeding 
greater notification threshold.

* * * * *
    (b) Year 2001 transition. For transactions filed using the 1978 
thresholds where the waiting period expired after February 1, 1996, an 
acquiring person may, during the five-year period following expiration 
of the waiting period, acquire up to what was the next percentage 
threshold at the time it made its filing without filing another 
notification, even if in doing so it crosses a 2001 notification 
threshold in Sec. 801.1(h) of this chapter. However, after the end of 
that period, any additional acquisition will be the subject of a new 
notification if it meets or exceeds a 2001 threshold in Sec. 801.1(h) 
of this chapter.

    Examples: 1. Corporation A filed to acquire 20 percent of the 
voting securities of corporation B and indicated the 15 percent 
threshold. The waiting period expired on October 3, 1999. ``A'' 
acquired the 20 percent within the year following expiration of the 
waiting period. ``A'' has until October 3, 2004, to acquire 
additional securities up to 25 percent of ``B'''s voting securities, 
and need not make another filing before doing so, even though such 
acquisition by ``A'' may cross the $50 million, $100 million or $500 
million notification threshold in Sec. 801.1(h) of this chapter. 
After October 3, 2004, ``A'' and ``B'' must observe the 2001 
notification thresholds set forth in Sec. 801.1(h) of this chapter.
    2. Prior to February 1, 2001, ``A'' filed to acquire 12 percent 
of the voting securities of corporation B, valued at $120 million, 
and indicated the $15 million notification threshold. After February 
1, 2001, ``A'' determines that it will make an additional 
acquisition which will result in its holding 16 percent of the 
voting securities of B, valued at $160 million. ``A'' is required to 
file notification at the $100 million notification threshold prior 
to making the acquisition since it is now crossing the next higher 
1978 threshold (15 percent).
    3. Prior to February 1, 2001, ``A'' filed to acquire 26 percent 
of the voting securities of ``B'' and indicated the 25 percent 
notification threshold. After the end of the five-year period 
following expiration of the waiting period, ``A'' will acquire 
additional shares of ``B'' which will result in its holding 30 
percent of the voting securities of ``B'', valued at $125 million. 
``A'' is required to file notification at the $100 million 
notification threshold prior to making the acquisition. ``A'' could, 
however, have reached this level (30 percent valued at $125 million) 
prior to the end of the five-year period without making an 
additional filing since it would not have crossed the next higher 
threshold at the time it filed (50 percent) and the acquisition 
would have been exempted by this Sec. 802.21(b).

* * * * *

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 02-6252 Filed 3-15-02; 8:45 am]
BILLING CODE 6750-01-P