[Federal Register Volume 84, Number 124 (Thursday, June 27, 2019)]
[Rules and Regulations]
[Pages 30595-30620]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-13225]


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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 Federal Trade Commission (``Commission'' or ``FTC'') is 
amending the Hart-Scott-Rodino (``HSR'') Premerger Notification Rules 
(``Rules'') that require the parties to certain mergers and 
acquisitions to file reports with the 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. The Commission is 
amending the Antitrust Improvements Act Notification and Report Form 
(``HSR

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Form'') and Instructions to require use of 10-digit codes based upon 
the North American Product Classification System in place of the 10-
digit codes based upon the North American Industry Classification 
System.

DATES: The amendments are effective September 25, 2019.

FOR FURTHER INFORMATION CONTACT: Robert 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 and 
wait a specified period before consummating the proposed transaction to 
allow the Agencies to conduct their initial review of a proposed 
transaction's competitive impact. 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.
    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 of the Act.
    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 HSR Form and its associated 
Instructions, codified in the appendices to part 803, to govern the 
form of premerger notification to be provided by merging parties.
    The Commission is amending the HSR Form and Instructions to require 
use of 10-digit codes based upon the North American Product 
Classification System (``NAPCS'') in place of the 10-digit codes based 
upon the North American Industry Classification System (``NAICS'').

Background

    Item 5 of the HSR Form requires filing persons to submit 
information regarding dollar revenues and lines of commerce with 
respect to operations conducted within the United States during a 
company's most recently completed year using NAICS and NAICS-based 
codes. All filing persons submit non-manufacturing revenue at the 6-
digit NAICS industry code level. While the official NAICS 
classification system only provided for six-digit codes, the United 
States Census Bureau (``Census'') developed a 10-digit NAICS-based 
product classification code for manufactured and mineral products. 
Filing persons must also report manufacturing revenues (NAICS sectors 
31-33) by these 10-digit codes in Item 5 of the HSR Form. These 10-
digit codes were updated in conjunction with the data collection for 
the 2002, 2007, and 2012 Economic Censuses.
    In 2017, Census updated the 6-digit NAICS codes, but discontinued 
its use and update of the 10-digit NAICS-based codes. Census, instead, 
adopted 10-digit codes based upon the North American Product 
Classification System to report products, including manufactured 
products. The NAPCS is a comprehensive, market- or demand-based, 
hierarchical classification system for products (goods and 
services).\1\ Census used these 10-digit NAPCS codes, along with the 6-
digit NAICS codes in the 2017 Economic Census, which it commenced in 
May 2018. In addition, Census has published concordance tables that 
link 2012 NAICS product codes to 2017 NAPCS collection codes.\2\ Now 
that the deadline for response to the 2017 Economic Census has passed 
and Census has published its concordance tables, the Commission has 
determined that it is appropriate to adopt the use of 10-digit NAPCS 
codes for reporting manufacturing revenues in the HSR Form.
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    \1\ See United States Census Bureau, Economic Census, 
Concordance of 2012 Product Codes to 2017 NAPCS-Based Codes, https://www.census.gov/programs-surveys/economic-census/guidance/understanding-napcs.html; United States Census Bureau, North 
American Product Classification System, https://www.census.gov/eos/www/napcs/index.html.
    \2\ United States Census Bureau, 2017 NAPCS-Based Collection 
Code to 2012 Product Code: https://www2.census.gov/programs-surveys/economic-census/technical-documentation/napcs/2017_napcs-based_collection_code_to_2012_product_code.xlsx; United States 
Census Bureau, 2012 Product Code to 2017 NAPCS-Based Collection 
Code: https://www2.census.gov/programs-surveys/economic-census/technical-documentation/napcs/2012_product_code_to_2017_napcs_based_collection_code.xlsx.
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    Incorporating the 10-digit NAPCS codes into the HSR Form and the 
Instructions will ensure that filing persons provide revenues in a 
format that can be compared to the most recent and complete economic 
data published by Census. The amended HSR Form and Instructions will 
continue to require the use of 6-digit NAICS industry codes for non-
manufacturing revenues. For manufacturing revenues, filing persons will 
be required to report revenue in both the 6-digit NAICS industry code, 
as well as the 10-digit NAPCS product code. The reporting of overlaps 
in Item 6 and Item 7 has been based upon 6-digit NAICS codes and will 
not change.

Revisions to the HSR Form and Instructions

    The Commission is amending the HSR Form and Instructions to require 
the reporting of manufacturing revenue by both the applicable 6-digit 
NAICS code and 10-digit NAPCS code. The changes are as follows:

A. HSR Form Item 5

    The Commission has deleted the following language: ``5(a) DOLLAR 
REVENUES BY NON-MANUFACTURING INDUSTRY CODE AND BY MANUFACTURED PRODUCT 
CODE'' and replaced it with ``5(a) DOLLAR REVENUES BY NAICS INDUSTRY 
CODE AND BY NAPCS-BASED PRODUCT CODE.'' The Commission has also deleted 
the following language: ``6-DIGIT INDUSTRY CODE AND/OR 10-DIGIT PRODUCT 
CODE'' and replaced it with ``6-DIGIT NAICS INDUSTRY CODE AND/OR 10-
DIGIT NAPCS-BASED PRODUCT CODE.''
    Previously, manufactured product revenue (NAICS Sectors 31-33) only 
needed to be reported at the 10-digit NAICS-based code level, since the 
relevant 6-digit NAICS code constituted the first 6 digits of the 10-
digit code. However, because the 10-digit NAPCS-based codes do not 
include the 6-digit NAICS code, manufactured product revenue must now 
be reported by both NAICS and NAPCS codes. For example, assume that a 
filing person determined that its Item 5 revenues should be reported as 
follows using NAICS codes:

3111111131 Canned dog food--$50 million
3111111411 Dry and semi-moist dog food--$45 million

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3111114411 Canned cat food--$35 million
3111114511 Dry and semi-moist cat food--$25 million

    That filing person would now report the following in Item 5 using 
NAICS and NAPCS codes:

311111 Dog and Cat Food Manufacturing--$155 million
2009750000 Canned dog food $50--million
2009775000 Dry and semi-moist dog food--$45 million
2009800000 Canned cat food--$35 million
2009825000 Dry and semi-moist cat food--$25 million

    The reporting requirements for revenue derived from non-
manufacturing operations remain the same.

B. HSR Form Revised Date

    The HSR Form's ``Revised Date'' on the bottom of each page has been 
updated from ``(rev. 01/02/17)'' to ``(rev. 06/07/19)'' to reflect the 
ministerial revisions described in this document.

C. Revisions to the Instructions to the Form

    The Commission is amending the Instructions to the Form as follows.
    [ssquf] Page II of the Instructions adds references to the use of 
the North American Product Classification System and updates references 
to the North American Industry Classification System to reflect the 
release of 2017 codes.
    [ssquf] Page II of the Instructions also deletes the paragraph that 
instructed filing parties to continue to use 2012 NAICS codes while 
Census completed its transition to NAPCS.
    [ssquf] The section for Item 5 on Page VII instructs filers that 
derive revenue from manufacturing operations to use 10-digit NAPCS 
codes, rather than 10-digit NAICS codes, to report this revenue.
    [ssquf] The section for Item 5 on Page VII also instructs filing 
parties that derive revenue from manufacturing operations to report the 
sum of those revenues in the appropriate 6-digit NAICS code.
    [ssquf] The section for Item 5 on Page VII requires filing parties 
to check the overlap box for NAICS and NAPCS code overlaps. Filers 
deriving revenue from manufacturing operations that will report an 
overlap in Item 7 should check the overlap box for the corresponding 6-
digit NAICS code in Item 5, even if there are no 10-digit NAPCS code 
overlaps.
    [ssquf] The section for Item 5 on Page VII is further changed to 
emphasize that acquired persons are to only include total dollar 
revenues for all entities included within the acquired entity.

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).
    In this case, the Commission finds that public comment on these 
changes is unnecessary. The Commission is amending the HSR Rules to 
adopt updates developed by the Census for the reporting of manufactured 
product revenue. These updates do not involve any substantive changes 
in the HSR Rules' requirements for entities subject to the Rules. 
Rather, they merely change the numerical codes used to report 
manufactured product revenue.
    In addition, these amendments 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)(3)(A). These 
changes merely alter the manner in which entities report manufactured 
product revenue to the Agencies.
    For these reasons, the Commission finds that there is good cause 
for adopting this final rule as effective on September 25, 2019 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. 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 further by exempting all transactions 
valued at less than $50 million (as adjusted annually).\3\ Likewise, 
none of the rule amendments expand the coverage of the premerger 
notification rules in a way that would affect small business. In 
addition, the Regulatory Flexibility Act requirements apply 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, to the extent, if any, that the Regulatory Flexibility 
Act applies, the Commission certifies that these 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.
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    \3\ By comparison, the dollar thresholds established for total 
annual receipts of a small business under the applicable small 
business size standards fall well under $50 million. See 13 CFR 
121.201.
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Paperwork Reduction Act

    The Commission has existing Paperwork Reduction Act clearance for 
the HSR Rules (OMB Control Number 3084-0005). The Commission has 
concluded that these technical amendments do not change the substance 
or frequency of the pre-existing information collection requirements 
and, therefore, do not require further OMB clearance.

List of Subjects in 16 CFR Part 803

    Antitrust.

    By direction of the Commission.
April Tabor,
Acting Secretary.

    For the reasons stated above, the Federal Trade Commission amends 
16 CFR part 803 as set forth below:

PART 803--TRANSMITTAL RULES

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1. The authority citation for part 803 continues to read as follows:

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


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2. Revise appendix A to part 803 to read as follows:

Appendix A to Part 803--Notification and Report Form for Certain 
Mergers and Acquisitions

BILLING CODE 6750-01-P

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3. Revise appendix B to part 803 to read as follows:

Appendix B to Part 803--Instructions to the Notification and Report 
Form for Certain Mergers and Acquisitions

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BILLING CODE 6750-01-C
[FR Doc. 2019-13225 Filed 6-26-19; 8:45 am]
BILLING CODE 6750-01-P