[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.


[[Page 60259]]


``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

* * * * *
BILLING CODE 6750-01-P

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Donald S. Clark,
Secretary.
[FR Doc. 2016-20950 Filed 8-31-16; 8:45 am]
 BILLING CODE 6750-01-C