FEDERAL TRADE COMMISSION (1993)

P859910

B175251

FEDERAL TRADE COMMISSION

SIXTEENTH ANNUAL REPORT TO CONGRESS

PURSUANT TO SECTION 201 OF THE

HART-SCOTT-RODINO ANTITRUST

IMPROVEMENTS ACT OF 1976

(FISCAL YEAR 1993)

ANTRODUCTION

Section 201 of the Hart-Scott-Rodino Antitrust Improvements

Act of 1976, Pub. 4. 94-435, amended the Clayton Act by adding a

new Section 7A, 15 U.S.C. Section 18a ("the Act"), Subsection

(j) Of Section 7A Provides as rollows:

Beginning not later than January 1, 1978,

the Federal Trade Commission, with the

concurrence of the Assistant Attorney

General, shall annually report to the

Congress on the Operation of this

Section. Such report shall include an

assessment of the effects of this

section, of the effects, purpose, and the

need for any rules promulgated pursuant

thereto, and any recommendations for

revisions of this section.

This is the sixteenth annual report to Congress pursuant to

this provision. It covers fiscal year 1993.

upon the value of the acquisition and the Size of the parties, as

acquisitions involving small Parties and other Classes of

acquisitions that are less likely to raise antitrust concerns are

The primary Purpose of the Statutory scheme, as the

legislative history makes Clear, is to Provide the antitrust

Program, with its filing and waiting period requirements,

Provides the agencies with both the time and the information

necessary to conduct this antitrust review. Much of the

On or after October 22, 1994. Bankruptcy Reform Act, Pub. L. No.

103-394 [H.R. 5116], § 109, 108 Stat. 4106 (1994).

parties to proposed transactions and thus is. immediately

available for review during the waiting period.

If either agency determines during the waiting period that

further inquiry is necessary, it is authorized by Section 7A(e)

of. the Act to request additional information or documentary

materials from either or both of the parties to a reported

transaction. Such a request extends the waiting period for a

specified period, usually twenty days (ten Gays in the case of a

cash tender offer), after the parties have complied with the

request (or in the case of a tender offer, after the acquiring

person complies). This additional time provides the reviewing

agency with the opportunity to analyze the information and to

take appropriate action before the transaction is consummated.

If the reviewing agency believes that a proposed transaction may

violate the antitrust laws, it may seek an injunction in federal

Gistrict court to prohibit consummation of the transaction.

Final rules implementing the premerger notification program

were promulgated by the Commission, with the concurrence of the

Assistant Attorney General, on July 31, 1978.7 At that time, a

comprehensive Statement of Basis and Purpose was also published

containing a section-by-section analysis of the rules and an

item-by-item analysis of the Premerger Notification and Report

Form. The program became effective on September 5, 1978. In

1983, the Commission, with the concurrence of the Assistant

Attorney General, made several changes in the premerger

notification rules. Those amendments became effective on

August 29, 1983.° Additional amendments were published in the

Federal Register on March 6, 1987,‘ and May 29, 1987.5

? 43 Fed. Reg. 33,450 (1978). The rules also appear in

16 C.F.R. Parts 801 through 803. For more information concerning

the development of the rules and operating procedures of the

premerger notification program, see the second, third and seventh

annual reports covering the years 1978, 1979 and 1983,

respectively.

3 48 Fed. Reg. 34,427 (1983) (codified at 16 C.F.R. Parts

801 through 803).

‘ 52 Fed. Reg. 7,066 (1987) (codified at 16 C.F.R. Parts

801 through 803).

s 52 Fed. Reg. 20,058 (1987). (codified at 16 C.F.R. Part

801 through 803).

The appendices to this report provide a statistical summa

of the operation of the premerger notification program. Appendix

A shows, for a ten-year period, the number of transactions

reported,* the number of filings received, the number of merger

investigations in which requests for additional information or

documentary material (hereinafter referred to as "second

requests") were issued, and the number of transactions in which

requests for early termination of the waiting period were

received, granted, and not granted. Appendix A also shows for

Calendar year 1984 and fiscal years 1985 through 1993 the number

of transactions in which second requests could have been issued.

(This information appears in Appendix C and is explained in

footnote 1 of that appendix.) Appendix B provides a month-bymonth comparison of the number of transactions reported (Table 1)

and the number of filings received (Table 2) for fiscal years

1984 through 1993. Appendix C shows, for calendar year 1984 and

fiscal years 1985 through 1993, the number of transactions in

which the agencies could have issued second requests, the number

of merger investigations in which second requests were issued,

and the percentage of transactions in which second requests were

issued. As we explained in the Eighth Annual Report, we believe

that Appendix C provides a more meaningful measure of the second

request rate than Appendix A because Appendix C eliminates from

the total number of transactions certain transactions in which

the agencies could not, or as a practical matter would not, issue

second requests.’

‘ The term "transactions", as used in Appendices A, B,

and C, and Exhibit A to this report, does not refer to separate

mergers or deals; rather, it refers to types of structures such

as cash tender offers, options to acquire voting securities from

the issuer, options to acquire voting securities from someone

other than the issuer, and multiple acquiring or acquired persons

that necessitate separate HSR identification numbers to track the

filing parties and waiting periods. A particular merger or deal

may involve more than one transaction. Indeed, some have

involved as many as four or five transactions.

? See Appendix C, note 1. As we explained in previous

annual reports, the information regarding second requests in

Appendices A and C differs from that reported in those appendices

in the annual reports for fiscal years 1979-1987. Appendix A and

C in prior reports identified the number of | in which

a second request was issued, while Appendices A and C in the

Present report show the number of merger anvestigations in which

second requests were issued. A merger investigation may include

several transactions. We believe that reporting the number of

merger investigations in which second requests were issued better

(continued...)

The statistics set out in these appendices show that the

number of transactions reported in 1993 increased approximately

16.2 percent from the number of transactions reported in 1992

(1,846 transactions were reported in 1993 while 1,589 were

reported in 1992). The statistics in Appendix A also show that

the number of merger investigations in which second requests were

issued in 1993 increased approximately 61.4 percent from the

number of merger investigations in which second requests were

issued in 1992 (second requests were issued in 71 merger

investigations in 1993 while second requests were issued in 44

merger investigations in 1992). These numbers indicate an

increase in the number of second requests issued as a percentage

of reported transactions from 1992 to 1993 (from 2.8 percent in

1992 to 3.8 percent in 1993 based on Appendix A, and from 3.0

percent in 1992 to 4.1 percent in 1993, based on Appendix C).

The statistics also show that in recent years, early

termination was requested for most transactions. In 1993, early

termination was requested in 91.5 percent (1,689) of the

transactions reported while in 1992 it was requested in 88.3

percent (1,403) of the transactions reported. The number of

requests granted increased in 1993 compared to 1992 (from 1,020

in 1992 to 1,201 in 1993). However, the percentage of requests

granted decreased slightly (from 72.7 percent in 1992 to 71.1

percent in 1993).

We have also included in the report, as Exhibit A,

Statistical tables (Tables I - XI) containing information about

the agencies’ enforcement interest in transactions reported in

fiscal year 1993. The tables provide, for various statistical

breakdowns, the number and percentage of transactions in which

clearances to investigate were granted by one antitrust agency to

the other and the number of merger investigations in which second

requests were issued; the number of transactions based on the

dollar value of transactions reported and the reporting threshold

indicated in the notification; the number of transactions based

on the sales or assets of the acquiring person or the sales or

assets of the acquired entity; and the number of transactions

based on the industry group (2-digit SIC code) in which the

acquiring person or the acquired entity derived revenue. These

Statistics have been included in prior annual reports for the

7(... continued) |

reflects the agencies’ enforcement activities because it

represents the number of mergers or acquisitions that were

investigated to this extent under the Act by the agencies.

calendar years 1981-1984, and for fiscal years 1985-1992

(excluding 1986) .*

In fiscal year 1993, legislation was signed into law that

increased the premerger notification filing fee to $25,000,

effective October 7,-1992.° The new bill amends legislation

mandated by Congress in 1989 which provided for the collection of

a $20,000 fee from each acquiring person required to file a

premerger notification and report form under the Act. The

Statute specifies that the waiting period required under the Act

will not begin until receipt of the filing fee. The Commission

issued a statement advising the public about the filing fee

increase, and procedures for payment .*°

2. Compliance

The Commission and the Department of Justice continue to

monitor compliance with the premerger notification program’s

filing requirements and initiated a number of investigations to

assure compliance in fiscal year 1993. The agencies monitor

compliance through a variety of methods, including the review of

newspapers and industry publications for announcements of

transactions that may not have been reported in accordance with

the requirements of the Act. Industry sources, such as

competitors, customers and suppliers, and interested members of

the public often provide the agencies with information about

transactions and possible violations of the filing requirements.

AS a result of the agencies’ efforts to assure compliance,

the Commission staff, under authorization of the Department of

Justice, filed two complaints in fiscal year 1993. The

. Due to resource constraints, statistics for fiscal 1986

transactions were not prepared.

° H.R. 5678, Pub. L. No. 102-395, amends Departments of

Commerce, Justice, and State, the Judiciary, and Related Agencies

Appropriations Act, 1990, Pub. L. No. 101-162, § 605, 103 Stat.

1031 (1989). See Thirteenth Annual Report to Congress.

x0 57 Fed. Reg. 47,466 (1992). See Exhibit B.

5

complaints alleged violations of the Act and sought civil

penalties under Section 7A(g) (1) of the Act.”

In United States v. Harold A. Honickman,” the complaint

alleged that Honickman had violated the Act when he acquired

assets of Seven-Up Brooklyn Bottling Co., Inc. ("Seven-Up"), a

company engaged in the production, distribution and sale of

carbonated soft drinks in the New York metropolitan area.

According to the complaint, Honickman employed several entities

as devices for avoiding the notification and waiting period

requirements of the Act, although the substance of the

acquisition enabled Honickman to gain control of the Seven-Up

assets. Prior to the transaction, Honickman owned two of the

four major bottlers in the relevant market. Under the terms of

the final judgment, Honickman agreed to pay a civil penalty of

$1,976,000 to settle the charges.

In United States v. Anova Holding AG, Stephan Schmidheiny

and Unotec Holding AG, the complaint alleged that Schmidheiny

had violated the Act twice by failing to file required premerger

notifications in connection with acquisitions giving him control

of Landis & Gyr AG in January 1988, and of Wild Leitz Holding AG

in June 1989. According to the complaint, Schmidheiny notified

the Premerger Notification Office regarding discovery of the

violations in August 1989, but did not submit corrective report

forms for the transactions to the antitrust agencies until

February 4, 1991. The United States contended that, although

Schmidheiny’s failures to file were inadvertent, he delayed

complying with the Act for eighteen months. Under the terms of

the final judgment, Schmidheiny agreed to pay a civil penalty of

$414,650 to settle the charges.

32 Under Section 7A(g) (1) of the Act, any person or

company that fails to comply with the Act’s notification and

waiting period requirements is liable for a civil penalty of up

to $10,000 for each day the violation continues.

United States v. Harold A. Honickman, Cv. No. 92-2436

(D.D.C. complaint filed October 30, 1992).

» United States v. Anova Holding AG, Stephan Schmidheiny

and Unotec Holding AG, Cv. No. 93-1852 (D.D.C. complaint filed

- September 7, 1993).

mplaints in merger cases

during fiscal yéar 1993 35 Four of these cases have been

settled by the entry of consent decrees.

The Antitrust Division filed five co

On five occasions during fiscal year 1993,

Division informed the parties to a Proposed tran

x4 The cases mentioned in this report were not necessarily

i mM. Because of

the

Bancshares, Inc. and Texas Commerce Bank-Beaumont N.A., Cv. No.

3-93CV0368-D (N.D. Tex. filed February 23, 1993); United States

Holdings, Ltd., Cv. No. 930573 (D.D.c. filed March 22, 1993); and

United States v. Primestar Partners, L.P., ATC Satellite, Inc.,

Comcast Corporation, Comcast DBS, Inc., Continental Cablevision,

Inc., Continental Satellite Company, Inc., Cox Enterprises, Inc.,

Cox Satellite, Inc., GE American Communications, Inc., GE

Americom Services, Inc., Newhouse Broadcasting Corporation, New

Vision Satellite, Tele-Communications, Inc., TCI K-1, Inc., Time

Warner Inc., United Artists K-1 Investments, Inc., Viacom Inc.,

Viacom K-Band, Inc., Warner Cable SSD, Inc., Cv. No. 93-CIV-3919

(S.D.N.Y. filed June 9, 1993).

36 On October 16, 1992, the Department informed the

Federal Reserve Board that the merger between First Bank System

Pipe, which is used in offshore oi] and gas Products; Department

of Justice press release issued February 23, 1993, involving

(continued...)

7

parties restructured the proposed transactions. In two

instances, the parties abandoned the proposed transactions.

In United States v. Texas Commerce Bancshares, Inc., and

Texas Commerce Bank-Midland, N.A., the Division challenged the

proposed acquisition of New First City Bank-Midland N.A. by Texas

Commerce Bank-Midland N.A. (TCBM), a subsidiary of Texas Commerce

Bancshares Inc. of Houston, Texas, a subsidiary of Chemical

Banking Corp., New York City. Simultaneously, a consent decree

was filed. The complaint alleged that the proposed acquisition

violated Section 7 of the Clayton Act by substantially lessening

competition in business banking services, including business |

transaction accounts and commercial operating loans to small and

medium-sized business customers in Midland. The consent decree

provided for TCBM to divest New First City Bank-Midland and ali

assets and deposits of that bank, except for the trust business

and, unless necessary to assure the divestiture purchaser is a

viable competitor, its indirect consumer loans. TCBM and New

First City-Midland were the third and second largest commercial

banks in Midland, respectively. Between them, they held more

than 35 percent of commercial bank deposits in Midland.?’

In United States v. Texas Commerce Bancshares, Inc., and

Texas Commerce Bank-Beaumont, N.A., the Division challenged the

proposed acquisition of New First City Bank-Beaumont N.A. by

Texas Commerce Bank-Beaumont N.A., a subsidiary of Texas Commerce

Bancshares Inc. (TCBB) of Houston, Texas, which is a subsidiary

of Chemical Banking Corp., New York City. Simultaneously, a

consent decree was filed. The complaint alleged that the

proposed acquisition violated Section 7 of the Clayton Act by

substantially lessening competition in business banking services,

including business transaction accounts and commercial operating

loans, particularly for medium-sized businesses with annual sales

of more than $5 million. The consent decree provided for TCBB to

divest at least two branches of the New First City Bank in

Beaumont and all assets and deposits of those branches, except

for First City’s trust business and its indirect consumer loans.

The decree also required TCBB to divest all New First City

#*( . .continued)

Texas Commerce Bank’s acquisition of New First City Bank-El Paso,

N.A.; Department of Justice press release issued June 30, 1993,

involving the acquisition by ChipSoft Inc. of MECA Software Inc.,

leaders in consumer tax preparation software. On July 9, 1993,

the Department informed the Federal Reserve Board that the

Division had no problem with the bank merger regarding Banco

Popular and CoreStates’ U.S.V.I. bank branches because the

transaction had been modified to exclude the branches in the

problem (St. Croix) market.

a7 The divestitures have occurred.

8

commercial loans of $500,000 or more, and the deposits of those

loan customers. New First City Bank-Beaumont and TCBB were the

largest and second largest commercial banks in Beaumont,

respectively. Between them, they held approximately 30 percent

of commercial bank deposits in Beaumont .**

‘In United States v. USAir Group, Inc., the Division

challenged the proposed transaction between USAir Group, Inc., of

Arlington, Virginia, and British Airways Ple of London, England.

Simultaneously, a consent decree was filed. The consent decree

required USAir to divest its authority to provide scheduled

airline passenger service to London from Philadelphia,

Baltimore/Washington and Charlotte, North Carolina, and for USAir

to transfer its authority to operate from each of those cities

(known as "gateways") to an approved purchaser within 45 days of

its initiation of code-sharing services with British Airways from

that gateway. If USAir had been unable to complete a sale, it

would have been required to surrender the authority to the U.S.

Department of Transportation for authorization of another

airline. On January 21, 1993, British Airways purchased roughly

20 percent of USAir’s stock for $300 million, and the two

airlines agreed to initiate joint operations on U.S.-London

services. Under the joint program, the two airlines provided

connections from London to numerous U.S. cities through USAir’s

hubs at Philadelphia, Pittsburgh, Baltimore/Washington and

Charlotte using shared airline designator codes, which are used

by airlines and travel agents to identify carriers. British

Airways accounted for about 38 percent of the seats available for

all U.S.-London travel, with nonstop flights from 14 U.S.

gateways, including Philadelphia and Baltimore/Washington.

USAir, with nonstop service from the Philadelphia,

Baltimore/Washington and Charlotte gateways, competed with

British Airways for passengers travelling to London from cities

located in the Northeast and Mid-Atlantic regions of the United

States, as well as for nonstop passengers from Philadelphia and

Baltimore/Washington. The complaint alleged that the effect of

the deal would substantially lessen competition in the provision

of scheduled airline passenger service between interior U.S.

points and London and in the provision of nonstop scheduled

airline passenger service in the Philadelphia-London and

Baltimore/Washington-London markets.”

In United States v. The Gillette Company and Parker Pen

Holdings, Ltd., the Division challenged the $561,000,000

acquisition by The Gillette Company, a Delaware corporation,

as The divestitures have occurred.

a9 The Philadelphia-London route and the Charlotte-London

route were divested to American Airlines on July 2 and November

12, 1993, respectively.

headquartered in Boston, Massachusetts, of Parker Pen Holdings

Ltd., a British corporation, headquartered in Newhaven, England.

The complaint alleged that the acquisition violated Section 7 of

the Clayton Act by substantially lessening competition in the

premium fountain pen market. Premium fountain pens are high

quality refillable fountain pens that have an established premium

image among consumers. Retail sales of premium fountain pens in

the United States totaled approximately $46 million in 1991.

Gillette’s Waterman premium brand fountain pen and Parker each

accounted for approximately 20 percent of those sales. Gillette

and Parker, together with one other company, controlled about 80

percent of the premium fountain pen market in the United States.

On March 23, 1993, the government’s request for a temporary

restraining order was denied by the district court and on May 5,

1993, the government’s motion for preliminary injunction was

denied. An order dismissing the case was entered June 28, 1993.

In United States v. Primestar Partners, L.P., ATC Satellite,

Inc., Comcast Corporation, Comcast DBS, Inc., Continental

Cablevision, Inc., Continental Satellite Company, Inc., Cox

Enterprises, Inc., Cox Satellite, Inc., GE American

Communications, Inc., GE Americom Services, Inc., Newhouse

Broadcasting Corporation, New Vision Satellite, Tele-

Communications, Inc., TCI K-1, Inc., Time Warner Inc., United

Artists K-1 Investments, Inc., Viacom Inc., Viacom K-Band, Inc.,

and Warner Cable SSD, Inc., the complaint named Primestar

Partners L.P., its 10 member companies, and the parent companies

of its multiple system operator (MSO) members as defendants.

Primestar Partners, L.P., based in Bala Cynwyd, Pennsylvania, is

a joint venture partnership formed by some of the nation’s

largest cable television companies, some of which are also

leading suppliers of video programming. Simultaneously, a

consent decree was filed. Primestar was formed in order to offer

a multichannel subscription television service, called

"Primestar," which is transmitted directly to consumers via a

medium-power satellite owned by GE American Communications Inc.

This type of service, commonly referred to as direct broadcast

satellite (DBS), uses a relatively small home satellite dish that

is less expensive to install than large home satellite dishes and

is a potential substitute for cable television service. The

complaint alleged that the defendants engaged in a continuing

agreement, combination and conspiracy to restrain competition in

multichannel subscription television service by forming Primestar

Partners, L.P., to block other firms from entering the DBS

business in violation of Section 1 of the Sherman Act. The

complaint also alleged that the effect of the Primestar venture

had been to delay, if not prevent, entry into the DBS business

through an agreement to restrict access to programming owned or

controlled by the venture’s partners to other companies that want

to start a competing DBS service. Primestar’s formation made

programming much more difficult to obtain and deterred entry by

others. The consent decree forbids the defendants from enforcing

10

Primestar partnership agreement that affects

Or conditions of programming to

scription television. The decree

any provision of the

the availability, price, terms,

each other that would affect the availability, price,

agreements with specified programming services that

exclusive distributi

Additionally, the litigation in United States Vv. Pacific

Telesis Group and Communications Industries, Inc.,?° as

described in the Annual Report for Fiscal Year 1986, was

concluded when an order of dismissal was entered on July 27,

1953, by the court.

During fiscal year 1993, the Division investigated seven

bank merger transactions for which divestiture was required prior

to or concurrently with the acquisition. A "not Significantly

adverse" letter conditioned on divestiture prior to or

concurrently with consummation of the transaction was sent to the

appropriate bank regulatory agency in all instances .??

20 United States v. Pacific Telesis Group and

Communications Industries, Inc., Cv. No. 86-1298-RMT (C.D. Cal.

filed February 28, 1986; complaint dismissed without prejudice

July 27, 1993).

Grenada Mississippi acquisition of Eastover Bank for Savings of

Jackson, Mississippi; on February 5, 1993, a "not Significantly

i ices of the HomeFed Bank, F.A., San

Diego, California; on April 12, 1993, a "not Significantly

letter was sent to the Federal Reserve Board and on

April 14, 1994, a "not Significantly adverse" letter was sent to

the Office of Comptroller of the Currency regarding Colonial

(continued...)

11

2. Federal Trade Commission

The Commission authorized its staff to seek preliminary

injunctions in three merger cases in fiscal year 1993. In one of

those cases, the parties abandoned the transaction before the

motion for preliminary injunction was filed in court.”

In Federal Trade Commission v. Alliant Techsystems Inc.,”

the Commission filed for a preliminary injunction alleging that

Alliant’s proposed acquisition of Olin Corporation’s Ordnance

Division and Physics International subsidiary would lessen

competition substantially in systems contracting for certain

types of lightweight and tank ammunition. According to the

complaint, Alliant and Olin are the only two systems contractors

supplying 120mm kinetic and chemical energy training and tactical

ammunition, 120mm tank ammunition and 30mm lightweight training

ammunition in the United States. On November 18, 1992, the

district court granted the Commission’s motion for a preliminary

injunction. Subsequently, the parties abandoned the transaction.

On December 17, 1992, the Commission accepted a consent agreement

for public comment and issued a decision and order on March 16,

1993.** The order requires Alliant to obtain Commission

approval, for a period of ten years, before acquiring any systems

71(.. . continued)

Savings Bank merger into American Community Bank National

Association, Lima, Ohio; on May 4, 1993, a "not significantly

adverse" letter was sent to the Federal Reserve Board regarding

the Huntington Bancshares Inc. of Columbus, Ohio, acquisition of

CB&T Financial Corporation, Fairmont, West Virginia; on May 11,

1993, a "not significantly adverse" letter was sent to the

Federal Reserve Board regarding the First Union Corporation of

Charlotte, North Carolina, acquisition of First American Bank of

Virginia; and on September 17, 1993, a "not significantly

adverse" letter was sent to the Federal Reserve Board regarding

Norwest Corporation’s acquisition of Winner Bancshares, Inc.

22 FTC news release issued September 29, 1993, concerning

the proposed acquisition by General Electric Company ("GE") of

Chrysler Corporation’s railcar fleet. The press release reported

that the Commission had reason to believe the acquisition would

lessen competition substantially in the United States leased

boxcar market. GE is the largest lessor of railcars in the

United States.

29 Federal Trade Commission v. Alliant Techsystems Inc.,

Civ. No. 92-2499 (D.D.C. filed November 6, 1992; preliminary

injunction order entered November 18, 1992).

a4 Alliant Techsystems Inc., Docket No. 9254 (issued Marc.

16, 1993).

12

contractor for 30mm lightweight ammunition or 120mm tank

ammunition. a

In Federal Trade Commission v. Columbia Hospital

Corporation,** the Commission filed for a preliminary injunction

alleging that Columbia’s Proposed acquisition of Medical Center

Hospital in Punta Gorda from Adventist Health System/Sunbelt

Health Care Corporation would lessen competition substantially

for acute care inpatient hospital services in eastern Charlotte

County, Florida, and certain adjacent areas. The parties operate

two of only three hospitals in the Charlotte County area. The

district court granted the Commission’s request for an injunction

on May 5, 1993. Subsequently, the matter was withdrawn from

adjudication. On February 8, 1994, the Commission accepted a

Proposed consent agreement for public comment and issued a

decision and order on May 5, 1994.7* Under the order, Columbia

is prohibited, for a period of ten years, from acquiring any

acute care hospital in the Charlotte County area without prior

approval of the Commission.

The Commission accepted consent agreements for public

comment in nine other merger cases in fiscal year 1993. aA

complaint and decision and order was issued in four of those

Cases during the fiscal year, and consent agreements became final

in the five additional cases after September 30, 1993.

In Dentsply International, Inc.,?” the complaint alleged

that Dentsply International’s acquisition of certain assets of

manufacture, marketing and sale of silver amalgam alloy products

in the United States. Premium silver alloy Products are used by

dentists in the treatment of dental caries. Under the order,

Dentsply was required to divest its "Valiant" products business

to a Commission-approved purchaser within nine months.

35 Federal Trade Commission v. Columbia Hospital

Corporation, Civ. No. 93-30-CIV-FIM-23D (M.D. Fla. filed February

1, 1993; preliminary injunction order entered May 5, 1993).

26 Columbia Hospital Corporation, Docket No. 9256 (issued

May 5, 1994).

27 Dentsply International Inc., Docket No. C-3407 (issued

January 6, 1993). In December 1993, the Commission approved the

divestiture by Dentsply of assets related to the manufacturing

and marketing of its "Valiant" line of silver alloy products to

Ivoclar North America, Inc.

13

In S.C. Johnson & Son, Inc.,** the complaint alleged that

S.C. Johnson & Son’s ("Johnson") proposed acquisition of The

Drackett Company from Bristol-Myers Squibb Company would lessen

competition substantially in the manufacture and sale of

continuous action and instant action air-freshener products and

furniture care products in the United States. Under the order,

Johnson was allowed to complete the transaction, but was ordered

to sell the Drackett assets used in the production, distribution

and sale of "Renuzit" air freshener products, and "Endust" and

"Behold" furniture polishes.

In The Monsanto-Company,?? the complaint alleged that

Monsanto’s proposed acquisition of the Ortho Consumer Products

Division ("Ortho") of Chevron Corporation would lessen

competition substantially in the United States market for

residential non-selective herbicides. According to the

complaint, Monsanto and Ortho are direct competitors in the

market for herbicides used to control brush, plants, weeds and

grasses. Under the order, Monsanto was permitted to acquire

Ortho provided that it divest Ortho’s "Kleenup" product line and

glyphosate inventory.

In Consol, Inc.,?° the complaint alleged that Consol’s*®

proposed acquisition of Island Creek Coal, Inc. ("Island Creek"),

from Occidental Petroleum Corporation would lessen competition

substantially in the market for coal-export terminal services in

Baltimore, Maryland. According to the complaint, Consol and

Island Creek are the two leading providers of terminal services

which include unloading coal from railroad cars, storing coal,

blending coals and loading coal onto transoceanic ships at the

#8 ~—~S.C. Johnson & Son, Inc., Docket No. C-3418 (issued

March 16, 1993). In May 1993, the Commission approved Johnson’s

request to divest its "Renuzit" air freshener business to The

Dial Corp., and its "Endust" and "Behold" furniture care

businesses to Sara Lee Corporation.

29 Monsanto Company, Docket No. C-3458 (issued September

1, 1993). In September 1994, the Commission approved Monsanto’s

divestiture of certain assets related to the manufacture and sale

of non-select herbicides to Platte Chemical Co., a subsidiary of

ConAgra, Inc.

30 Consol, Inc., Docket No. C-3460 (issued September 27,

1993). In April 1995, the Commission approved Consol’s

divestiture of Curtis Bay Company to CBC Acquisition Corporation,

a subsidiary of American Commercial Marine Service Company and an

indirect subsidiary of CSX Corporation.

32 Consol is a joint venture between E.I. du Pont de

Nemours and Company and RWE Aktiengesellschaft.

14

port of Baltimore. Under the order, Consol was permitted to

acquire Island Creek, but was required to divest the Curtis Bay

Company, which owns and operates the Bayside Coal Pier in

Baltimore.

- In Cooper Industries, Inc.,? the complaint alleged that

Cooper Industries’ proposed acquisition of the Fusegear Group

from BTR plc would lessen competition substantially in the

manufacture and sale of low-voltage industrial fuses. Lowvoltage industrial fuses are expendable devices designed to open

an electric circuit when the current becomes excessive. Cooper

and Fusegear, through Brush Fuses Inc. ("Brush"), constitute two

of the three full-line low voltage industrial fuse suppliers in

the United States. Under the order, Cooper was permitted to

acquire the Fusegear Group, but was required to divest certain

machinery and equipment used to manufacture low voltage

industrial fuses, and license the technology and know-how to make

Brush industrial fuses to a Commission-approved licensee within

twelve months.

In Imperial Chemical Industries, PLC/ICI Americas Inc./ICI

Acrylics Inc.,** the complaint alleged that Imperial Chemical

Industries’ ("ICI") proposed acquisition of certain assets of

E.I. du Pont de Nemours and Company ("Dupont") would lessen

competition substantially in the United States market for the

manufacture and sale of acrylic plastics. The transaction was

Structured as an exchange of ICI’s nylon assets and business for

DuPont’s acrylic plastics operations. Under the order, the

parties were permitted to proceed with the transaction, but ICI

was required to sell one of the three manufacturing facilities it

owns in Memphis, Tennessee; Olive Branch, Mississippi; and

Compton, California.

In McCormick & Company, Inc.,** the complaint alleged that

McCormick’s acquisition of Haas Foods, Inc., from John I. Haas,

Inc., would lessen competition substantially in the business of

producing and selling dehydrated onion products in the United

States. Under the order, McCormick was required to divest

sufficient seed to produce 100 million pounds of low moisture

onions to a Commission-approved buyer. The order prohibits

32 Cooper Industries, Inc., Docket No. C-3469 (issued

October 26, 1993).

3 Imperial Chemical Industries PLC/ICI Americas Inc./ICI

Acrylics Inc., Docket No. C-3473 (issued November 29, 1993).

44 McCormick & Company, Inc., Docket No. C-3468 (issued

October 25, 1993). In October 1993, the Commission approved

McCormick’s application to divest 6,000 pounds of seeds to Burns,

Philp & Company Limited.

15

McCormick, for a period of ten years, from acquiring assets or

voting securities of any company that has produced more than 2.5

million pounds of dehydrated onion products during the previous

12 months, without prior approval of the Commission.

> In Columbia Hospital Corporation/Galen Health Care, Inc.,**

the complaint alleged that Columbia’s proposed acquisition of

Galen Health Care, Inc., would lessen competition substantially

for acute care inpatient hospital services in Osceola County,

Florida. The order required Columbia to divest Kissimmee

Memorial Hospital in Osceola County to Adventist Health

System/Sunbelt Health Care Corporation or another Commission-

approved purchaser.’*

In Dominican Santa Cruz Hospital and Catholic Healthcare

West,?? the complaint alleged that the acquisition of AMI-

Community Hospital of Santa Cruz by Dominican Santa Cruz Hospital

("Dominican") and Catholic Healthcare West ("CHW") would lessen

competition substantially in general acute care hospital services

in the Santa Cruz County, California, area. According to the

complaint, AMI and Dominican comprise two of the three hospitals

in Santa Cruz County. The order would permit the transaction,

but prohibit Dominican and CHW, for a period of ten years, from

acquiring all or any part of a general acute care hospital in

Santa Cruz County without prior approval of the Commission.

The Commission issued a decision and order in one merger

case during fiscal year 1993 involving an acquisition in which

the administrative complaint was issued before October 1, 1992.

In Occidental Petroleum Corporation/Occidental Chemical

Corporation/Tenneco, Inc./Tenneco Polymers, Inc.,** the

Commission issued a decision and order concerning the acquisition

by Occidental Petroleum Corporation ("Occidental") of the

polyvinyl chloride ("PVC") business of Tenneco Polymers, Inc.,

35 Columbia Hospital Corporation/Galen Health Care, Inc.,

Docket No. C-3472 (issued November 19, 1993).

36 Columbia sold Kissimmee Memorial Hospital to Adventist

Health System/Sunbelt Health Care Corporation in August 1993.

37 Dominican Santa Cruz Hospital and Catholic Healthcare

West, Docket No. C-3521 (issued August 18, 1994).

3s Occidental Petroleum Corporation/Occidental Chemical

Corporation/Tenneco, Inc./Tenneco Polymers, Inc., Docket No. 9205

(issued April 5, 1993). In January 1994, the U.S. Court of

Appeals for the Second Circuit approved a settlement modifying

the Commission’s order. Under the final order, Occidental must

divest its suspension PVC plant in Addis, Louisiana; and its

suspension and dispersion PVC plants in Burlington, New Jersey.

16

The administrative complaint charged that the

mpetition substantially in the

manufacture and sale of PVC in the United States. PVC is a

thermoplastic resin that is combined with additives, and then

converted by heat and pressure to a variety of finished vinyl

1 PVC markets

products. The Commission found liability in severa

and required Occidental to divest the suspension PVC homopolymer

manufacturing facility located at Pasadena, Texas, as well as the

suspension and dispersion PVC production facilities located at

Burlington, New Jersey, within 12 months to a Commission-approved

buyer.

from Tenneco, Inc.

acquisition would lessen co

Although a complete assessment of the impact of the

premerger notification program on the business community and on

antitrust enforcement is not possible in this limited report, the

following observations can be made.

First, as indicated in past annual reports, one of the

premerger notification program’s primary objectives, eliminating

the so-called "midnight merger," has been achieved. The

requirement that parties file and wait ensures that virtually all

Significant mergers or acquisitions occurring in the United

States will be reviewed by the antitrust agencies prior to

consummation. The agencies generally have the Opportunity to

Challenge unlawful transactions before they occur, thus avoiding

the problem of constructing effective post-acquisition relief.

Second, in most cases the parties provide sufficient

information to allow the enforcement agencies to determine

promptly whether a transaction raises any antitrust problems. In

addition, over the years, parties have increasingly Supplied

information voluntarily to the Commission and the Antitrust

Division. This cooperation has resulted in fewer second requests

than would otherwise have been necesSary.

Finally, the existence of the premerger notification program

alerts businesses to the antitrust concerns raised by proposed

transactions. In addition, the greatly increased probability

that antitrust violations will be detected prior to consummation

May deter some competitively questionable transactions. prior to

the premerger notification program, businesses could, and

frequently did, consummate transactions which raised Significant

Occidental, if Tenneco regained any of the assets that previously

had been sold to Occidental. See Eleventh Annual Report to

Congress.

17

antitrust concerns, before the antitrust agencies had the

opportunity to consider adequately their competitive effects.

The enforcement agencies were forced to pursue lengthy postacquisition litigation during the course of which the consummated

transaction continued in place (and afterwards as well, where

effective post-acquisition relief was not possible or available).

Because the premerger notification program requires reporting

before consummation, this problem has been significantly reduced.

The Assistant Attorney General of the Antitrust Division

concurs with this annual report.

18

Appendix A

Appendix B

Appendix Cc

Exhibit A

Exhibit B

Li t f 2 F

Summary of Transactions, Fiscal Years 1984-

1993

Number of Transactions Reported and Filings

Received by Month for Fiscal Years 1979-1993,

Transactions in Which Additional Information

Was Requested for Calendar Year 1984 and

Fiscal Years 1985-1993.

Li £ Exhib:

Statistical Tables for Fiscal Year 1953,

Presenting Data Profiling Hart-Scott-Rodino

Premerger Notification Filings and

Enforcement Interest.

Federal Register Notice issued

October 16, 1992

19

Appendix A

Summary of Transactions;

Fiscal Years 1984-1993

APPENDIX A

SUMMARY OF TRANSACTIONS

FISCAL YEARS

1984 1985 W 1987 1988 1989 _1990 _1991 _1992 1993

TRANSACTIONS REPORTED 1,340 1,603 1,949 2,533 2,746 2,883 2,262 1,529 1,589 1,046

FILINGS RECEIVED 1/ 2,418 2,975 3,611 4,742 5,172 5,530 4,272 2,916 3,030 «3,559

TRANSACTIONS Im WHICH A 1,119 1,301 1,660 2,170 2,391 2,535 1,955 1,376 1,451 1,765

SECOND REQUEST COULD

WAVE BEEN ISSUED 2/

INVESTIGATIONS IW WHICH 61 67 71 58 68 6 89 &% 4 71

SECOND REQUESTS

MERE ISSUED

ric 25 24 32 18 39 35 55 33 26 40

bo) 3/ % 43 39 40 29 29 % 31 18 3

MUMBER OF TRANSACTIONS 963 1,281 1,639 2,264 2,440 2,582 1,975 1,321 1,403 1,689

INVOLVING A REQUEST FoR

EARLY TERMINATION 4/ 5/

GRANTED 4/ 781 975 1,263 1,752 1,685 1,937 1,299 907 1,020 1,201

MOT GRANTED 4/ 153 288 362 512 555 645 676 ous 383 488

* Pretialinary date,

1 Usually, two tilings are received, one from the acquiring person and

one from the acquired Person when a transaction is reported. Only one

application is received shen an acquiring party files for an exempti

on under sections 7A(c)(6) of (c)(8) of the Clayton Act.

2 These figures are from Appendix C and are explained in footnote 1 of that Appendix. The figures

for 1984 are on a Calender basis; years

1985 - 1993 ere presented on a fiscal year basis.

3 These statistics ere besed on the date the request was issued and not the date the investigation was opened.

& These statistics are based on the date of the u-s-a filling and not the date action was taken on the request.

3 Includes the fottowlng mamber of nhon-reportable transactions: twenty In 1984; elghteen in 1985; fourteen in 1986; sixteen in 1987; twenty-four

in 1988; fifty-four in 1989; fifty-seven in 1990; twenty-six in 1991; thirty-five in 1992; and thirty-eight in 1993,

MOTE: Statistics for earlier years ware last reported in the Fifteenth Annual Report to Congress (April 6, 1994),

Appendix B

Number of Transactions Reported and

Filings Received by Month;

Fiscal Years 1984-1993.

Table 1.

October

November

December

January

February

March

April

May

June

July

August

September

TOTAL

Number of Transactions Reported by Month for the Fiscal Years 1984!

1284

89

107

124

76

98

136

118

107

112

120

144

109

1,340

a

42985

132

145

103

111

110

153

149

156

126

160

136

122

1,603

The.number of transactio

reported in the Fifteenth Annua

APPENDIX B

1986 1987

195 290

187 494

144 199

108 96

120 104

149 163

131 162

211 185

145 197

180 218

187 194

192 231

- 1993

1288 =61989 1990 1991 4992 4993

245

216

243

161

204

224

230

228

241

223

310

221

1,949 2,533 2,746

259

316

267

160

201

236

202

(254

264

223

273

228

267

371

139

160

138

179

168

187

182

156

163

152

2,883 2,262

t]

ns received in the fiscal years 1979 -

148

198

121

96

97

113

120

130

122

130

156

98

1,529

Report to Congress (April 6, 1994).

140

180

155

97

87

135

129

142

116

154

124

130

163

184

160

100

110

149

131

155

151

172

204

167

1,589 1,846

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