[Federal Register Volume 81, Number 170 (Thursday, September 1, 2016)]
[Rules and Regulations]
[Pages 60257-60272]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-20950]
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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.
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SUMMARY: The Commission is amending the Hart-Scott-Rodino (``HSR'')
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'') (together
the ``Antitrust Agencies'' or ``Agencies'') and to wait a specified
period of time before consummating such transactions. These amendments
update the Rules to allow for submission of the Premerger Notification
and Report Form (``Form'') and accompanying documents (together the
``HSR Filing'') on digital video/versatile disc (``DVD''), and clarify
the Instructions to the Form.
DATES: Effective September 1, 2016.
FOR FURTHER INFORMATION CONTACT: Robert L. Jones, Assistant Director,
Premerger Notification Office, Bureau of Competition, Room 5301,
Federal Trade Commission, 400 7th Street SW., Washington, DC 20024.
Telephone: (202) 326-3100, Email: [email protected].
SUPPLEMENTARY INFORMATION:
Introduction
Section 7A of the Clayton Act (the ``Act'') requires the parties to
certain mergers or acquisitions to file with the Commission and DOJ to
allow the Agencies to conduct their initial review of a proposed
transaction's competitive impact and requires the parties to wait a
specified period of time before consummating such transactions. The
reporting requirement and the waiting period that it triggers are
intended to enable the Antitrust 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, pursuant to Section 7 of the
Act.
Section 7A(d)(1) of the Act, 15 U.S.C. 18a(d)(1), directs the
Commission, with the concurrence of the Assistant Attorney General, in
accordance with the Administrative Procedure Act, 5 U.S.C. 553, to
require that premerger notification be in such form and contain such
information and documentary material as may be necessary and
appropriate to determine whether the proposed transaction may, if
consummated, violate the antitrust laws. Section 7A(d)(2) of the Act,
15 U.S.C. 18a(d)(2), grants the Commission, with the concurrence of the
Assistant Attorney General, in accordance with 5 U.S.C. 553, the
authority to define the terms used in the Act and prescribe such other
rules as may be necessary and appropriate to carry out the purposes of
Section 7A.
Pursuant to that authority, the Commission, with the concurrence of
the Assistant Attorney General, developed the Rules, codified in 16 CFR
parts 801, 802 and 803, and the Form and its associated Instructions,
codified at part 803--appendix, to govern the form of premerger
notifications to be provided by merging parties.
HSR Filings provide the Agencies with the information and
documentary material necessary for an initial evaluation of the
potential anticompetitive impact of significant mergers, acquisitions
and certain similar transactions. Currently, all HSR Filings are
submitted in paper. Through these amendments to the Rules, the Agencies
will allow the submission of HSR Filings digitally on DVD (``DVD
filings''). The acceptance of DVD filings requires certain conforming
changes to the Instructions to the Form, so the Commission is also
taking this opportunity to clarify the Instructions and make them
easier to use.
Statement of Basis and Purpose for the Commission's Revision of Its
Premerger Notification Form, Instructions and Rules
Since the inception of the HSR program, the HSR Form and its
attachments have been submitted in paper. In 2006, an electronic filing
option was introduced that would allow filers to upload HSR Filings
directly to the Agencies but that option failed to gain traction due to
the limitations of the underlying technology, and it was soon
discontinued. While the Agencies continue to explore an electronic
filing option, they have decided to accept the submission of HSR
Filings digitally on DVD. Accordingly, the Commission amends part 803
to delete references to the discontinued electronic filing option and
revises these sections and the Instructions to the Form found in the
appendix to part 803 to allow for DVD filings. Documents submitted by
the parties with the filing are typically created and stored in digital
format. Allowing parties to submit these digital files on electronic
media will be more efficient and cost-effective, providing benefits to
filing parties as well as the Agencies:
--Currently, those submitting HSR Filings must provide five paper
copies of their Form, consisting of one original and one copy to the
FTC, and three copies to DOJ, as well as one set of Documentary
Attachments to each Agency. DVD filing will eliminate the expensive and
time-consuming printing and duplication of documents, and allow for a
more efficient filing process for filing parties.
--DVD filing will ease the physical delivery of voluminous HSR Filings
to the Agencies, and facilitate the processing and review of filings
within each Agency.
--DVD filing will allow for more efficient and less costly storage
options for the Agencies
To provide maximum flexibility, filing parties will still have the
traditional option of submitting HSR Filings in paper. Submitting an
HSR Filing partially on DVD and partially in paper will not be
permitted, however. Additionally, DVD submissions must be accompanied
by original hard copies of the cover letter, certification and
affidavit. The individual rule amendments associated with DVD filing
are described more fully below.
Additionally, this rulemaking makes minor changes to the Form
Instructions,
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many of which are unrelated to DVD filing, to reduce the burden on
filing parties by making it easier to prepare the Form and comply with
the HSR Filing requirements. These changes are not substantive in
nature, and involve formatting, clarification, and simplification, as
well as the deletion of immaterial language, with the goal of
eliminating confusion for filing parties, as noted below.
Section 803.1 Notification and Report Form
The internet portal established in 2006, www.hsr.gov, to allow the
electronic filing of HSR Filings is no longer technologically viable,
and references to HSR.gov are removed from all Rules in which they
appear and the Instructions.
Section 803.2 Instructions Applicable to Notification and Report Form
Section 803.2(e)(1) currently allows filers to forego the physical
production of documents responsive to Item 4(b) by incorporating by
reference documents previously filed with the Agencies in other
transactions. The purpose of the rule was to avoid the costly
duplication of responsive documents that were already in the possession
of the Agencies. However, given Sec. 803.2(e)(2), which allows parties
to cite to an Internet address rather than provide hard copies of
responsive documents, and the ease of copying documents onto a DVD
without any expensive hard copy duplication, Sec. 803.2 is being
amended to delete Sec. 803.2(e)(1). The existing, current, Sec.
803.2(e)(2) will be renumbered to Sec. 803.2(e), and the new Sec.
803.2(e) has been amended for clarity.
To ensure the submission of compatible and readable electronic
files, and to avoid problems and delays in processing HSR Filings,
paragraph (f) of Sec. 803.2 has been amended to require the use of
specific formatting when submitting an HSR Filing on DVD, and to remove
the reference to www.hsr.gov. The filing person is responsible for
ensuring that the formatting requirements are observed and is subject
to a notice of deficient filing if an unacceptable format is submitted.
See http://www.ftc.gov/enforcement/premerger-notification-program for
all current DVD Filing format requirements.
Section 803.3 Statement of Reasons for Noncompliance
Section 803.3 identifies the specific information that a filing
person must provide when not responding to an Item on the Form.
Paragraph (d) identifies the specifics of making a claim of privilege.
Paragraph (d) is amended to require the titles and/or positions of the
author of a document, the addressee, and all recipients of the document
being withheld or redacted under a claim of privilege to enable the
Agencies to better assess if the privilege applies.
Section 803.5 Affidavits Required
Section 803.5 requires an affidavit from the filing person
attesting to the good faith intention of the person filing to proceed
with the transaction. The affidavit must be attached to the Form at the
time of filing. Paragraphs (a)(1), (a)(3), and (b) are amended to
address inclusion of the affidavit when using the DVD filing option. If
only a scanned version of the signed affidavit is available at the time
of filing, it must be submitted on the DVD, and the original signed
hard copy should be provided to the FTC as soon as possible.
Section 803.10 Running of Time
Persons required by the Act to submit HSR Filings must comply with
specified statutory waiting periods before consummating the
transaction. Section 803.10(c)(1)(i) is amended to define the ``date of
receipt and means of delivery'' for purposes of determining when the
waiting period begins for filings submitted on DVD. Delivery is to be
effected by providing a DVD filing directly to the designated agency
offices, by either hand or certified or registered mail, FedEx or UPS,
during normal business hours.
References and paragraphs relating exclusively to ``electronic''
filing, as well as references to www.hsr.gov, have been deleted to
avoid confusion, as the submission of filings electronically is not
currently available.
Appendix to Part 803--Notification and Report Form and Instructions
A number of changes have been made to the Form Instructions,
including changes unrelated to DVD filing, that are intended to clarify
the Instructions and simplify the process of completing an HSR Form.
Many of these changes involve new formatting or the substitution or
deletion of a word, sentence or paragraph. The more significant changes
entail the following amendments:
``Filing''
Accounts for the option of filing using a DVD, including specific
formatting and submission requirements.
``Responses''
Clarifies that estimated financial information provided in the Form
should include an ``est.'' notation. Also specifies that additional
pages should be included within the Form, not with the Documentary
Attachments.
``Amount Paid''
Eliminates the requirement for an explanatory attachment regarding
valuation.
``Payer Identification'' and ``Method of Payment''
Clarifies the process and requirements for submitting HSR filing
fees.
``Item 1(g)''
Specifies that identification of a second contact person is
required.
``Item 2(d)''
Clarifies how to respond where a transaction involves a mixed deal
including voting securities, and/or non-corporate interests, and/or
assets.
``Item 3(a)''
Reorganized and reworded for clarity. Clarifies that the
description of the transaction should include a brief and simple
description of the relevant assets or business operation(s) to be
acquired. Deletes requirement for identification of expected dates of
major events and deletes paragraph discussing acquisitions ``from a
holder other than the issuer or unincorporated entity'' to reduce
confusion.
``Item 3(b)''
Clarifies that agreement schedules are not required unless they
represent some agreement between the parties (e.g., a non-compete).
Specifies that parties filing on a letter of intent may also submit a
draft of the definitive agreement, if one exists.
``Item 4(b)''
Reorganized and amended to clarify the types of reports that are
acceptable (e.g., unaudited reports that are relied upon by the board
are permitted), and from which entities reports are required.
``Items 4(c) and 4(d)''
Clarifies that document title, date, and author information is
required for both 4(c) and 4(d) documents. Additionally amended to
clarify the proper labeling convention for these documents, as well as
the privilege log requirements outlined in Sec. 803.3(d).
``Item 5(a)''
Simplifies the instructions.
``Item 6(b)''
Amended to clarify that only shareholders with 5% or more, but less
than 50% must be identified.
``Item 6(c)''
Clarifies the instructions.
``Item 7''
Amended to clarify that all six-digit NAICS industry code overlaps
must be reported, regardless of whether there is a ten-digit NAICS
overlap.
``Item 7(b)''
Amended to clarify which entities should be listed.
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``Item 7(c)''
Amended to change the order and organization of the NAICS codes for
clarity, and renumbered the sub-sections. Amended to clarify that
geographic information should be provided by state postal code
abbreviations, including identifying the number of states reported, and
that a response of ``national'' is acceptable in certain cases in lieu
of listing every state.
``Item 7(c)(iv)''
Amended to more clearly state that county and city/town information
is required for the specific NAICS codes outlined in this section.
Reformatted for readability.
``Item 8''
Amended to clarify that Item 8 is related to codes reported in Item
5.
Administrative Procedure Act
The Commission finds good cause to adopt these changes without
prior public comment. Under the Administrative Procedure Act (``APA''),
notice and comment are not required ``when the agency for good cause
finds (and incorporates the finding and a brief statement of reasons
therefore in the rules issued) that notice and public procedure thereon
are impracticable, unnecessary, or contrary to the public interest.'' 5
U.S.C. 553(b)(3)(B).
The Commission is updating the Rules, Form and Instructions to
provide the option of submitting HSR Filings on DVD, and to clarify the
Form Instructions. Paper copy submission will remain available. 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 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).
For these reasons, the Commission finds that there is good cause
for adopting this final rule as effective on September 1, 2016 without
prior public comment.
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 an HSR 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 (as adjusted annually).
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
These changes do not contain any record maintenance, reporting or
disclosure requirements that would constitute agency ``collections of
information'' that would have to be submitted for clearance and
approval by the Office of Management and Budget under the Paperwork
Reduction Act of 1995, 44 U.S.C. 3501-3521.
List of Subjects in 16 CFR Part 803
Antitrust.
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, 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.
* * * * *
0
3. Amend Sec. 803.2 by revising paragraphs (e) and (f) to read as
follows:
Sec. 803.2 Instructions applicable to Notification and Report Form.
* * * * *
(e) For documents required by item 4(b) of the Notification and
Report Form, a person filing the notification may, instead of
submitting a document, provide a cite to an operative Internet address
directly linking to the document, if the linked document is complete
and payment is not required to access the document. If an Internet
address becomes inoperative during the waiting period, or the document
is otherwise rendered inaccessible or incomplete, upon notification by
the Commission or Assistant Attorney General, the parties must make the
document available to the agencies by either referencing an operative
Internet address where the complete document may be accessed or by
providing paper copies to the agencies as provided in Sec.
803.10(c)(1) by 5 p.m. on the next regular business day. Failure to
make the document available, by the Internet or by providing paper
copies, by 5 p.m. on the next regular business day, will result in
notice of a deficient filing pursuant to Sec. 803.10(c)(2).
(f) Filings made via DVD must comply with all format requirements
set forth at the Premerger Notification Office pages at http://www.ftc.gov. The use of any format 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. 803.3 by revising paragraph (d) to read as follows:
Sec. 803.3 Statement of reasons for noncompliance.
* * * * *
(d) Where noncompliance is based on a claim of privilege, a
statement of the claim of privilege and all facts relied on in support
thereof, including the identity of each document, its author, the
author's title/position, addressee, the addressee's title/position,
date, subject matter, all recipients of the original and of any copies,
the recipients' titles/positions, the document's present location, and
who has control of it.
0
5. Amend Sec. 803.5 by revising paragraphs (a)(1) introductory text,
(a)(3), and (b) to read as follows:
[[Page 60260]]
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 with the DVD 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 DVD filings, the
written notice (in a form specified in the instructions) must be
included on the DVD.
(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
with the DVD 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
6. Amend Sec. 803.10 by revising paragraph (c)(1)(i), removing
paragraphs (c)(1)(ii) and (iii), and redesignating paragraph (c)(1)(iv)
as paragraph (c)(1)(ii) to read as follows:
Sec. 803.10 Running of time.
* * * * *
(c)(1) * * *
(i) For paper copy filings and DVD filings, the date of receipt
shall be the date on which delivery is effected to the designated
offices (Premerger Notification Office, Federal Trade Commission, Room
5301, 400 7th Street SW., Washington, DC 20024, and Director of Civil
Enforcement, Office 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 (including FedEx and UPS). 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 Web site.
* * * * *
0
7. Amend the appendix to part 803 by revising the Instructions to the
Form to read as follows:
Appendix to Part 803--Notification and Report Form for Certain Mergers
and Acquisitions
* * * * *
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Donald S. Clark,
Secretary.
[FR Doc. 2016-20950 Filed 8-31-16; 8:45 am]
BILLING CODE 6750-01-C