FEDERAL TRADE COMMISSION (1985)

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FEDERAL TRADE COMMISSION

WASHINGTON. O.C. 20580

OFFICE OF

THE CMAUIMAN

Nova~be~

12, 1986

~he Honorable George Bush

President of the Senate

United States Senate

Washington, D.C. 20510

The Honorable Thomas P. O'Neill, Jr.

Speaker of the Bouse of Representatives

Washington, D.C. 20515

Subject:

N. th Annual Re ort to Congress Pursuant to

Section

of the Hart-Scott-Rocino Antit=ust

Imorovements Act of 1976

Gentlemen:

Section 201 of the Hart-Scott-Rodino Antitrust Improvements

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

new Section 7A, 15 O.S.C. § 18a. Subsection (j) of this section

provides as follows:

Beginning not later than January 1, 1978, the

Federal T=ade Commission, with the concur=ence of

the Assistant Attorney General, shall annually

report to the Congress on the operation Df 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 ninth annual report to Congress pursuant to

this provision.

In general, ~ection 7A establishes a mechanism under which

certain proposed acquisitions of stock or assets must be

reportec to the Federal Trade Commission and the Department of

Justice orior to consummation. The oarties must then wait a

S?ecifie~ period, usually thirty days (fifteen days in the case

of a cash tender of fer) , before they may complete the

transaction. wnether a oarticular acquisition is subject to

these requirements depen~s upon the v~lue of the acquisition and

the size of the parties, as measured by their sales and

assets. Small accruisitions, .acquisitions involving small

parties and other classes of acquisitions whic~ are unlikely to

raise antitrust concerns are excluded from the Act's coverage.

The primary purpose of the stitutory scheme, as the

legislative history makes clear, is to provide the antitrust

e~forcement agencies with a meaningful opportunity to review

mergers and acquisitions before they occur. The premerger

notification program, with its filing and wafting period

requirements, provides the agencies with both the time and the

information to conduct this review. Much of the information

needed for a preliminary antitrust evaluation is included in the

notification filed with the agencies and thus is immediately

available for review during the initial thirty-day waiting

period.

If either aqency determines during that initial waiting

that further inquiry is necessary, it is authorized by

Section 7A(e) to request additional information or documentary

materials from either or both of the parties to a reported

transaction. Such a reauest extends the waiting period for a

S?ecifiec period, usualiy twenty days, after all of the

reauested information and documents are received. ~his

additional time orovides the ·agencies with the opportunity to

review the informaticn and t'o take appro9riate action before the

transaction is consummated. If either agency belie.•1es that a

pro~osed transaction may violate the antitrust laws, Section

7A(f) allows the agency to seek an injunction in federal

district court to prohibit consummation of the transaction.

~eriod

Final rules implementing the premerger notification program

were promulgaten by the Commission, with the 1oncurrence of the

Assistant Attornev Gene=al, on July 31, 1978.

At that time, a

comprehensive Statement of Basis and Purpose was also published

containing a section-by-section analysis of th~ rules and an

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

~orm.·

The program became effective on September 5, 1978. In

1983, the Commission, wit~ the concurrence of the Assistant

Attorney General, made several changes in the premerger

notification rul1s. Those amendments became effective on

August 2~ ,. 1983.

43 Fed. Reg. 33,450 (1978). The rules also appear in 16

C.!.R. Parts 801 throuch 803. For more information

concerning the development of the rules and operating

procecures of the premerger notification program, see the

second, third and seve~th annual reports covering the years

1978, 1979 and 1?83, respectively.

48 Fed. Reg. 34,427 (1983l ·(codified at 16 C.F.R. Parts 801

through 803).

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Statistical Profile of the Premeraer Notification Procram

The a?pendices to this report provide a statistical summary

of the operation of the premerger notification program.

Appendix A shows for each year (or part of a year) in which the

orogram has been in operation the number of t;ansactions

reported, the number of filings received, the number of

transactions 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 were received, granted, and

aenie~.

Apoendix B provides a month-by-month comparison of the

·number of filings received and the number of transactions

reported for 1983 through 1985. Appendix C shows, for calendar

years 1981-1985, the number of transactions in which the

agencies could have issued second requests, the number of seconc

requests issuec, 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 Aooendix C elimina~~s from the total number of

transactions certain transactions ln which the agencies could

not, or as a oractical matter would not, issue second requests. 3

~he statistics set out in these appendices show that the

number of transactions reported in 1985 increased 25% over the

number reoorted in 1984 (1400 transactions were reoorted in

1984, 1749 in 1985). The statistics also report an increase in

the number of second requests issued. Appendix A shows that the

number of second requests issued increased from 77 in 1984 to 84

in 1985 while Ap~encix C shows an increase from 71 in 1984 to 84

in 1985. ~hese numbers reoresent, however, a slight decrease i~

the number of second requests issued as a percentage of reporte~

transactions (from 5.5% in 1984 to 4.8% in 1985, based on

Ap~enoix A, and from 6.3% in 1984 to 5.8% in 1985, based on

A??end ix C::) •

~he statistics also show that the number of transactions

involving ~equests for early termination has again increased

Appendix C, notes 1 and 2. The second request statistics

in Aopendices A and C also differ in two other respects.

Apoendix C incluces only the number ·of seconc requests iss~e=

for transactions reported in each specified year, while

Ap~endix A includes all second requests issued curins eac~

calennar year irrespective of when th~ filing.was actually

received. I~ andition, Aooendix A includes secondary

acquisitions while Ap~endl~ C does not.

~ee

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dramatically. 4 In 1985, early termination was requested in 1415

transactfons, while in 19.84 it was requested {n only 1064 and in

only 643 in 1983! This represents, as a percentage of reported

transactions, a request rate of 80.9%, as compared with 65.0% in

1984 and 57.0% in 1983. ~he number of requests granted has

increased (from 847 in 1984 to 1077 in 1985), although the

o~rcentage ~f reauests granted has decreased (from 79.6% in 1984

to 76.1% in 1985).

We have also included in the reoort, as Exhibit A, eleven

tables containing other information about transactions reported

in calendar year 1984. Some tables break down the number of

transactions reported by the dollar value of transactions or by

the reoorting threshold and indicate the number and percentage

of clearances granted and second requests issued for each

cateoorv of transaction. Other tables orovide a breakdown of

transactions based on the sales or the ~ssets of the acquiring

~ersnn or the acquired entity or on the industry group (2-digit

SIC co~e) in which the acquiring person or the acquired entity

derive most of tbeir revenues. These statistics have been

!nclud•~ in prior annual reports for the calendar years 1981

1983.;,

~ecent

Develoo~ents

Relatino to Premeroer Notification Rules

an~

~rocer<u~es

Rule Chances

On SP.otember 24, 1985, the Commission oublished in the

Fe~eral Peaister a Notice of Proposed Rulemaking proposing

thirteen changes to t~e 9reme;cer notification rules and the

and Re9o=t For~.

With two exceptions, the

orooosed rules were designe~ orimarily to reduce the burden of

the oremerger notification ?rograrn.

(The exceptions are a new

recuirement that certain transactions be reported when made

through "acquisition vehicles" and the deletion of a little use~

exemption for accuisitions subject to a prior approval order.)

N~tification

As notec in the Seventh Annual Report, the increases in the

number o~ requests for early termination and the high

prooortion of those requests which have been granted are

probably attributable to the change in the agencies' standar=

for granting early termination, ado9ted in the formal

interpretation issued by the Commission on August 20, 1982.

See the Eighth Annual Re?ort, Exhibit A, for 1983

transactions, the Seventh Annual Reoort, Exhibit B for 1982

transactions, ·and the Sixth Annual keoort, Exhibit A for 1981

transactions.

50 Fee. Re9. 38,742 (1985). Attached as Exhibit B is a co9y

of the Notice pub~ishe~ in the Federal Register.

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The rules proposea in the Notice seek to reduce the burden of

t~e oremer9er notification program in three ways:

by narrowing

the ty~es of acquisitions that are subject to the notification

p~ocess; by reducinq the documents and information that must

accompany notifications; and by clarifying the meaning of

s:veral of the premerger notification rules.

The followin9 list of the proposed amendments to the

notification rules briefly characterizes each

prooosal.

~remerger

801.l(nl ~nd S 801.5: Accuisition Vehicles. This

would require the owners of an entity formed or availed

of principally to ma~e acquisitions (an "acquisition vehicle")

to file notifications for acquisitions made by the acquisition

vehicle as if the owners had made the acouisition themselves

without the vehicle. It was designed to-ensure that similar

transactions be reportable notwithstanding certain differences

in the form in which they are undertaken.

~roposal

b. ~ 801.ll(el: Total Assets of a Newlv-Formed Person. This

prooosal codifies an informal interpretation by the Commission

staff. ~he rule woulrl state that for determining if a person

has the minimum amount of assets to be subject to the reporting

re~uirements of the act, a newly-formed entity need not include

cash that will be use·~ to make an acqu is i ti on of assets or

voting securities, or securities of the person the entity is

acquirinc. Thus, the informal interpretation would not require

notifications where the acquisition merely transfers ownership

of one business and does not combine two previously separate

businesses.

c. ~ 80l.12<b)

Calculatino Percentaoe of Votino Securities to

be F.el~ or Acouired. This proposal also codifies an informal

sta:f interPretation. ~he rule would state how to calculate the

percentage of a person's voting securities held by each

shareholder where the person has issued classes of securities

that have different vo~ing rights. The codification of this

interpretation will make clearer when a person has a

notification obligation.

801.13: Aocreoation of Assets and Votino Sec~rities.

oroposal limits an e~isting rule. It would no longer be

necessarv to reoort small acouisitions of assets solelv because

the acquiring ?erson has made a previous reportable acquisition

from the same seller. The effect of this proposal is to reduce

the coveraq~ of the rules by removing reporting requirements for

small accuisitions that are unlikely to pose.competitive

~his

t:)roble~s.

e. '~ SO?.~, 802.2 and 802.3: Acauisition of Assets. This

nrooosal replaces the existing rule that exe~pts acquisitions

the ord5ha~v course of business. That rule has functioned

primarily through informal staff interpretations of the

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statutory exemption of "ordinary course" acquisjtions. The

orooosed rules would clarify what transactions are in the

ordinarv course of busin~ss-and therefore exempt, and would

·exempt from filing certain other asset acquisitions that are not

likely to violate the antitrust laws.

802.20(b): Increase in the "Controlled Issuer"

This proposal expands the exemption for acquisitions

of votinq securities valued at $15 million or less. The

exonnsion would exempt almost all of the roughly 100

t=ansactions valued at $15 million or less that are reported

each year.

~hreshold.

g. ~ 802.35: Accuisitions bv Emolovee Trusts. This proposal

creates a new exemption for acquisitions of an employer's voting

securities hv certain employee trusts. Since the adoption of

the tax incentives for certain acquisitions pursuant to E~ployee

Stock Option Plans, such trusts have become common. The

proposal would reduce the coverage of the notification rules but

continue the review of other acquisitions by employee trusts

that coulc pose com?etj.tive problems.

h. i:: 80/.iOfb): Acr.:ruisiticns Subiect to P!:'ior A-ooroval. This

?rooosal deletes an exemption for acquisitions subject to prior

apt::iroval orders.. A~. though the exemption affects few

transactions, it can create oroblems in obtaining consent

agreements or orders from businesses subject to prior approval

or1'ers.

803.~:

Affidavit Reauirements of the Accruirinc Person.

orooosal codifies the Com.~ission's formal interpretation

concern:ns the notice which must be sent to an acquired person

~v an acquirinq person and describes lang~age for t~at notice

that will be considered acceptable. It also proposes a new

notice reauirernent for owners of "accuisition vehicles" to

i~~orm ac~uired persons of their filfng obligations.

~~is

' 803.~:

Incornoration bv Reference. This proposal

replaces the existing rule with a more detailed description of

the circ~m~tances when information and documents that have been

filed can be incorporated by reference in subsequent

notification forms. This rule would reduce the burden by

clarifying the circumstances in which the rule applies and by

expanding some as~ects of the rule.

Runnino of 't'ime in ( 801.40'Transactions.

orooosal codifies an informal staff interpretation by

stating t~at the statutory waiting period for the formation of a

ioint vent~re does not begin until all persons that are requi~ed

to repor: the formation have filed notifications.

!<.

( 803.lO(a):

~his

l. The ?remercer Notification and Reoort Form. T~ese seven

proposec c~anges would simplify the notification form, and

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thereby reduce the time required to prepare th~ form without

·im?airing the ability to review transactions.

m. C~anoes in Examcles td Conform With Prior Amendments tb the

Rules. ~his proposal would change certain examples that have

n~t been altered to reflect earlier amendments td the rules.

This will eliminate some unnecessary confusion by making these

examoles consistent with the current rules.

The comment period on these proposed ru.les, which was to

have exoired on October 24, 1985, was extended to November 29,

1985. ~he Commission is now considerino final action on these

rules in light of the 26 comments it ha; received.

2 . . Revision of the Premeroer Notification and

R~oort

Form

On March 26, 1986, the Commission amended the Notification

and Report Form to require the submission of 1982 revenue data

inste~~ of 1977 revenue data in response to certain items on the

form.

The form requires data for two time periods: the most

recent vear for which the reauesteo information is available,

and the "hase year" that coi~cides with the Bureau of the

Census' most recentlv available quinquennial economic census and

t~e Annual Su~vev o~ ~anufact~res.

T!"lese publications provide

the most reacilv availahle and reliable statistical information

on industry comoonents and market universes. The agencies

compare this statistical data. to the reporting persons' revenue

data to determine whether a proposed transaction may raise

serious a~titrust problems.

~ecause the Bureau of the Census has now published its 1982

Census of ~anu:actur~s, the Premerger Notification and Report

For~ has ~ee~ revised to reauire 1982 data instead of 1977 data

in response to ~uestions regarding revenues. This revision

aJ.lows the ace~cies to conduct an antitrust analysis based upon

mor~ recent, an~ thus more relevant, statistical data.

addition, the use of more recent data re~uces the burden to

· reportin9 persons of complying with the Act.

Cbanoe to Fiscal Year Basis

Effective October 1, 1985, the Commission converted to a

fiscal year reocrting basis from a calendar year basis.

Be9innin9 with next year's annual report, information will be

furnished for perioas covering October 1st through

5eotember 30th. ~he information in this annual report was

comoilea for calennar vear 1985.

c:.1 Fe~.Re~ 10,368 (1986) (to be cocified at 16 C.F.R. Part

803 ,.·h~

Aooend x). Attached as Exhibit C is a copy

of t~e Notice

-pub_1s e.. n the Federal Register.

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Comoliance

As in previous years, compliance with the premerger

notification program's filing requirements continues to be

good. Since the program's inception,- only two actions have been

brought under s~ction 7A(g) (1) to recover civil penalties for

non-compliance.

One of those actions was brouqht this year.10

In that case, the complaint charged Weeks Petroleum Ltd. (a

Bermuda Corporation with offices in New York City), Bell

Resources Ltd. (a diversified company based in Australia which

owns over 90 percent of Weeks Petroleum stock) and its chair~an

with violating the notification pr0visions of the Act in

connection with Weeks Petroleum's purchases of stock of Asarco

Incorporated (a copper producer headquartered in New York

City). The complaint allege~ that Weeks Petroleum, acting .under

the authorization and direction of Bell Resources and its

chairman, acquired in excess of $15 million of Asarco stock by

November 21, 1984, and continued acquiring Asarco stock

thereafter, but did not file a Notification and Report Form

until March 8, 1985. While the transaction by which Weeks'

holding of Asarco crossed the ~tatutory $15 million threshold

and Weeks' su~s~quent acquisitions of Asarco shares would have

been exempt f:om the requirements of the Act if mace "solely for

the purpose of investment" under section 7A(c) (9) of the Act,

the Commission's investigation indicated that these acquisitions

were not made solely for the purpose of investment.

Accordingly, the complaint alleged that the defendants violate~

the Act and were in violation of the Act throuch Aoril 7, 1985,

when the waiting period triggered by the March-8 filing

expired. Under a consent dec:ee, Weeks was required to pay a

civil penalty of $450,000.

The agencies examined a number of other transactions for

possible violations of the Hart-Scott-Rodino Act in 1985. These

i~vestigations focused primarily on two issues:

the validitv·of

clai~s that the transactions were exempt and the possibilitytha~ transactions were unlawfully structured to evade the

reporting requirements of the Act. These investigations grew

out of the agencies' program of monitoring current transactions.

The agencies review newspapers and industry publications

One actio~ was brought in 1984. United States v. Coastal

Corporation, Cv. No. 84-2675 (D.D.C. filed August 30,

1984). Coas:al paid the maximum civil penalty authorized and

divested the stock that it was alleged to have acquired

illegally.

United States v. Bell Resources Ltd., Weeks Petroleum Ltc.,

anc M.R.H. Holmes a Court, 85 Civ. 6202 (S.D.N.Y. file~

August 9, 1985).

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~or

anno~ncements of t:ansactions that mav not ha~e been ·

reported in accordance with the requireme~ts of the Act. In

addition, industry sources, such as competitors, customers and

suppliers, and interested members of the public often provide

the agencies with further information about transactions. If a

propo~ed transaction is announced that appears to b~ covered by

the statute and rules, but no filing is received within a

reasonable time, Commission staff sends l~tters to the parties

requesting an explanation for their failure to file. The same

procedure is followed when the staff learns of a consummated

transaction for ·which no prior filing was received.

In almost all cases, these investigations establish that

the transactions were not covered by the Act or were exempt from

it. In a few cases, most often involving individuals or

relatively small corporations, paities have failed to file when

required to do so, but their failure was inadvertent. rather than

deliberate. In all of the latter cases in which such violations

have been identified, the parties have belatedly filed

Notification and Report Forms when they were made aware of their

filing obligation. None of these investigations has involved a

transaction that presented the.serious possibility of a

violation of the antitrust laws.

~er:er Enforcement Activitv Durino 198sll

The Antitrust Division filec four complaints in merger

cases during calendar year 1985.12 Three of these cases, United

States v. Coocer Indust=ies, Inc., United States v. Allied

Cor~oration, and United States v. Bax~er Travenol Laboratories,

Inc. and American Eoscital Succlv Corooration, have been settled

by the entry of consent decrees.

The other case, United States

v. Industrial Asohalt, et al., is pending.

The cases mentioned in this report were not necessarily

reportable under the premerger notification program. Because

of the Act's provisions regarding the confidentiality of the

information obtained pursuant to this program, it would. be ·

inappropriate to identify which cases were initiated under

the premerger notification program.

United States v. Coocer Industries, Inc., Cv. No. 85-0765

(D.D.C. filed March 6, 1985); United States v. Industrial

Asphalt, et al., Cv. No .. 85-463l(RG) (C.O. Cal. filed July

15, 1985); United States :v. Allied Corporation, Cv. No. 852475 (D.D.C. filed August 2, 1985); and United States v.

Baxter Travenol Laboratories, Inc~ and American Hospital

Supply Corporation, Cv. No. 85C09856 (N.o. Ill. filed

November 22, 1985).

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tn United States v. Coocer rnaustries, Inc., the Division

challenged Cooper tndustries' October 1982 acquisition of

Westinghouse Electric Corporation's aviation lighting equipment

business, alleqing that competition may be lessened in the

manufacture anc sale of aviation lighting equipment. ~he

consent decree requires Cooper, over the next ten years, to

notify the government before consummating any future acquisition

of a plant which had been producing aviation ~ighting equipment

in the two-year ?eriod prior to the acquisition.

In Uniten States v. Allied Cornoration, the Division

challenged Allied's proposed merger with The Signal Companies

Inc., alleging that the merger of the air turbine starter

businesses of the two firms would violate Section 7 of the

Clayton Act. An air turbine starter is a pneumatic motor used

to start the large gas turbine engines on most commercial

aircraft as well as many military airplanes and helicopters.

~he consent decree required Allied to sell its air turbine

starter business by the end of 1985.

In United States v. Baxter Travenol Laboratories, Inc. and

American F.os~ital Sunolv Cor~oration, the Division challenged

Bax~er ~ravenol's Proposed acquisition of American Hospital

Su~ply Corpor~tion.

The suit alleged that Baxter Travenol's

acqui5ition of American Eos?ital Supply would lessen competition

in five health-care product markets: parenteral solutions

(sterile intravenous (IVl fluids): fluid administration sets

(disnosable devices attached to Parenteral solutions or blood

containers through which parente~al solutions .or blood flows to

patients) : electronic flow control devices (electro-mechanical

devices that infuse fluids at predetermined rates into patients

during ir.travenous theraoyl: therapeutic hemapheresis equipment

(seoarates ~7-ood into components for therapeutic uses)~ and

suraeons' gloves and Procedure gloves (used inside and outside

the ooerating room for surgical ?rocedures). The defenda~ts

entere~ into a series of divestiture and ·contractual agreements

to resolve the competitive problems that would arise from t~e

accuisition. ~he consent decree ensures that the defendants

will perform each of these agreements, and, if they do not, that

the asset~ involved will be divested by a trustee in a manner

t~at will preserve effective competition in each of the five

affecte~

~a=kets.

!n Unite~ StatP.s v. Inaustrial As~halt, et al., the

Division ~iled suit challenging the formation of a joint venture

formed on December 20, 1983. The joint ve·nture resulted in the

merQer of two competing sellers of asphalt ·c.oncrete, Industrial

As?halt and Euntmix, Inc., both of Van Nuys,·california.

As!Jhal t concrete is commonly usP.d in the pav..ing of roads,

oar~ing lots and airoort runways.

The complaint seeks

~ivestiture and alle~es that the merger ca~i~a a lesse~ing of

co~netition in the manufacture and sale of asphalt concrete in

two a:eas of Southern California: the greater Los Angeles area

anf. w~stern San Diego County.

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On one occasion the Antitrust Division informed the parties

to a proposed transaction that it would file suit challenging

the transaction unless tha parties restructured the proposal to

avoid competitive problems or abandoned the proposal

altogether.13 The parties abandoned the proposed t~ansaction.

Finally, the Division entered into consent decrees in five

merger cases in y~ich complaints had been filed ~rior to

.January 1, 1985.

The Commission authorized its staff to seek preliminary

injunctions in four merger cases in calendar year 1985 .. In

three cases the parties abandoned the transactions before the

papers were filed in court. In the fourth case, the preliminary

injunction action was filed on .January 6, 1986, seeking to

enjoin a proposed merger between PPG Industries Inc. and

Swedlow, Inc., two leading manufacturers of aircraft

windshields, canopies, and cockpit and cabin windows. The

Commission also issued an administrative comolaint in this

case.15 In Federal Trade Commission v. PPG Industries, Inc. and

Swedlow, Inc.,lo the Commission charged that the proposed merger

would create a single firm possessing a near monopoly on the

technology for the fabrication of glass and acrylic aircraft

transparencies. The court granted the preliminary injunction

pending the submission of an acceptable hold separate order.

Subsequently, the court modified its decree by entering a hold

separate order. The Commission appealed that decision and, on

Department of .Justice Press Release issued .January 8, 1985,

involving the proposed acquisition by Borden, Inc. ~f

Reichhold Chemicals' resin plant in White City, Oregon.

United States v. Alcan Aluminium Limited, Cv. No. C-84-1028L-A (W.D. Ky. filed October 5, 1984 and consent decree

entered January 15, 1985); United States v. ISM Corp., 1985-1

Trade Ca;;. (CCH) 1166,439 (D.D.C. filed November 19, 1984 and

consent decree entered February 22, 1985); United States v.

Waste Management, Inc., Cv. No. 84-2832 .(D.D.C. filed

September 12, 1984 and consent decree entered June 6, 1985);

United States v. Newell Company, Cv. No. CIV-~-82-305 (D.

Conn. filed June 14, 1982 •nd consent decree entered July 16,

1985); and United States v. Calmar Inc., Cv. No. 84-5271

(D.N.J. filed December 20, 1984 and consent decree entered

Septemb~r 16, 1985).

PPG Industries, Inc. and Swedlow, Inc., Docket 9204 (issued

January 29, 1986).

Federal Trade Commission v. PPG Industries, Inc. and Swedlow,

!nc., 628 F.SUpp. 881 (D.D.C. 1986).

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August 22, 1986, the appellate court reversed the· lower courti7

ruling and directed the issuance of a preliminary inj unc.tion.

The Commission accepted final consent agreements in three

merger cases in 1985.18 In Allied Cor~oration, Allied agreed to

divest certain assets used in the avionics business to offset

the alleged anticompetitive effects of its acquisition of King

Radio Company's competing business. In addition, for a period

of ten years, Allied must obtain Commission approval prior to

acquiring any interest in a company that manuf~ctures or sells

weather radar.

In InterNorth, Inc., the Commission charged that the

acquisition by InterNorth of the Houston Natural Gas Corporation

would lessen competition among pipeline companies that purchase

and transport gas out of the southwestern U.S. InterNorth and

Houston Natural were direct competitors, each engaged in the

expl~ration for and production of oil and gas.

InterNorth

agreed to divest four natural gas pipelines to lessen the

alleged anticompetitive effects of its proposed acquisition ..

The company is also· prohibited from acquiring assets or stock of

any company engaged in the production or transportation of

natural gas in certain parts of the Southwest.

In Columbian Enterprises, Inc., Columbian, the third

largest a.s. producer of carbon black, s~ught to acquire the

Continental Carbon Company, the nation's sixth largest

producer. In 1984 the Commission sought and was granted a

preliminary injunction against 'Columbian, based upon the

anticompetitive effects of the proposed acquisition. In 1985,

t~e Com.~ission accepted a consent order under which Columbian

agreed not to acquire, for a period of five years, any par~ of

t~e U.S. rubber carbon black business of any other person if, as

a result of the accuisition, Columbian would increase its C.~.

rubber carbon black production capacity by more than 130 million

pou~ds.

Columbian further agreed, for a period of five years,

to obtain the prior approval of the Commission before completing

any acquisition not prohibited by the consent agreement.

Federal Trade Commission v. PPG Industries, Inc. et al.,

No. 86-5206 (D.C. Cir. Aug. 22, 1986) (order granting

preliminary injunction).

Alliec Corporation (accepted June 17, 1985); InterNort~, I~c.

(accepted September 30, 1985); and Columbian Enterprises,.

I:lc. (accepted November 13, 1985).

-12-

. In a related case, the Commission provisionally accepted a

consent order.19 In Bass Brothers Enternrises, Inc. et al.,

Bass sought to acquire the Ca~bon Black Division of the Ashland

·Chemical Company, the second largest domestic producer of carbon

black. In 1984, the Commission sought and was grant~d a

preliminary injunction against Bass. In 1985, the Commission

provisionally accepted a consent order in which Ashland agreed

to terminate any agreement that provided for the ~cquisition by

Bass of Ashland's carbon black business. Ashland also agreed to

expand its reporting obligation beyond the requirements of

Section 7A of the Clayton Act by agreeing to notify the

Commission, for a period of four year5,· of certain proposed

sal~s of O.S. carbon black manufacturing plants that are not

sub]ect to Section 7A. Ashland further agreed to observe the

waiting period and second request requirements of Section 7A

when it notified the Commission of any such proposed sale. A

final consent ag~eement was accepted in 1986.

The Commission issued two administrative complaints in

merger cases in 1985.20 In MicCon Cor-o., the Commission charged

that the acquisition by MidCon of the stock of Onited Energy

Resources, Inc. could lessen campetition iri the transportation

of natural gas in various parts of the o.s. The· commission

provisionally accepted a consent order in part of that case; the

remainder of the case is still in litigation before an

Administrative Law Judge.

In Olin Cor-ooration, the Commission challenged Olin's

proposed acquisition from FMC Corporation of certain assets

involved in the manufacture and sale of swimming pool

sanitizers. The Commission charged that the acquisition would

violate the antitrust laws by increasing concentration in the

rele7ant market, and eliminating direct competition between Olin

and FMC. The case is presently in adjudication.

Four final orders were issued by the Commission in merger

cases in which administrative complaints were issued before

January 1, 1985.21 The Commission upheld dismissal of a

complaint against tchlin Inc., challenging Echlin's acquisition

Bass Brothers Enterprises, Inc. et al (p~ovisionally accepted

as to Ashland Oil September 26, 1985; final acceptance Marc~

12, 1986) ..

Olin Cor-ooration, Docket 9196 (issued July 18, 1985); ar.d

MidCon Corp., Docket 9198 {issued September 19, 1985).

Echlin Inc., Docket 9157 (issued June 28, 1985); Kaiser

Aluminum & Chemical Corporation, Docket· 9080 (issued August

27, ·1985); Hospital Corporation of America, et al, Docket

9161 (issued October 25, 1985); and Weyerhauser Company,

Docket 9150 (issued December 26, 1985).

-13-

of Borg-Warner Corporation's automotive aftermar~et

operations. Hospital Corporation of America ("HCA") was ordered

to divest four hospitals it had acouire~ from Forum Grouo, Inc.,

to remedy the threat to competition in the provision of general

acute. care hospital services and psychiatric hospital services

posed by HCA's acouisition. The Commission also issued a final

order di~missing

complaint against Kaiser Aluminum & Chemical

Corporation ("Kaiser"), which arose out of Kaiser's acquisition

of certain basic refractory assets of the Lavine Division of

International Minerals & Chemicals Corporation; r.astlv, the

Commission upheld an Administrative Law =udge's decision

dismissing charges that Weverhauser Comoanv's acouisition of a

cor~ugating medium mill fr~m Menasha Corporation-violated the

antitrust laws.

Assessment of the Effects of the Premercer Notification Prooram

Although a complete assessment of t~e impact of the

premerger notification program on the business community and on

antitrust enforcement is not oossible in this limited reoort,

the following observations ca~ be made.

First, as indicated in past annua~ 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 bv the antitrust agencies orior to

consummation. ·The agencies 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 aoencies to determine

promptly .whether a transaction raises any antitrust problems.

The agencies and the parties_ have sometimes been able to use

this information to isolate one element of a larger transaction

that would create an antitrust violation. The parties then have

an opportunity to cure that problem without sa~rificing the

benefits of ah entire transaction. 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

possible.

Third, 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

forestalls certain questionable transactions from occurring.

Prior to the pre~erger notification program, businesses could,

and frecuently did, consummate transactions which raisen

sicnif icant antitrust concerns, before the antitrust agencies

had the opportunity to adequately consider their competitive

-14-

effects. The enforcement agencies were forced to pursue lengthy

post-acquisition 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.

Finally, the past year's statistics show that the agencies

have granted far more requests for early termiAation of the

waiting period than in the early days of the program. By

shortening the waiting period for transactions that clearly do

not raise antitrust problems, the agencies continue the effort

to recuce the burden of the premerger notification program.

The Assistant Attorney General of the Antitrust Division

has indicated his concurrence with this annual report.

By direction of .the Commission,

v.,,,~7,~f-i

Daniel Oliver

Chairman

cc:

The Honorable Strom Thurmond

Presidenc Pro Tempore

United States Senate

Was~ington, D.C.

20510

...

-15-

List o~ Aooendices

ADoendix A

Su:n..~ary

Appendix B

Number of Filings Received and Transactions

Reported by Month for the Years 1983-1985.

Al?pendix C

Transactions in Which Additional Information

Was Requested for Calendar Years 1981 - 1985.

of Transactions, 1978-1985.

List of Attachments

J::xhibit A

Exhi!:Jit B

5tatistical tables for 1984, presenting data

profiling Hart-Scott-Rodino prernerger

notification filings and enforcement

interest.

Notice of Prooosed Rulernaking, 50 Fed.

Reg • 3 8 ,'7 4 2 ( 19 8 5 ) •

Ex!':ibit C

Notice of Final Rulemaking, 51 Fed. Reg.

10,368 (1986).

-16-

A;::?e:-::lix A

Summary of T:ar.sac:ions, 1978

Se!lt.-Dec.

Jar.uarv

- 1985

- Dece!':l!:le!'

lill. 1984

l.2.2!

1979

11.ll.

11..§.l

l2.E

Transactions

Repor:ed

355

868

824

l. 083

l,144

l,128

Filings

Receivedl

627

l,818

l,462

2,000

l,95;

T:ansactions

Where Additional

Infor:nation was

Reques1!ed2

:.c2

OOJ2

109

Nur.l!:ie: of

T:ansac:.ions

Involvi:"lg a

Request for tar.:.y

Te:::iination8

GrantedB

Oenied8

llli

l,400

l , 749

8,551

2,001

2,533

3,2H

15,639

s:1

463

333

264

24 4

20 5

285

3'76

406

2-::2 Q"

l.!5

104

174

3417

6437 1,064

l,415

3,887

2557

867

599

!. , 07i

3,088

799

847

2i- I

338

Csua::y, two fi.:.ings are receive:. one !:om the ac;~i:inc; pe:sc:"I ar.~ :"le

f:o~ t~e acquired pe~son, when a t:ansac:ion is :~por:eC.

o~:y o~~ ~ -i~;

is :eceived when an ac~ui:inc; ?ar:y !iles for ar. exemption under se~: ~r.s

i;.\c: 6 or (cl (8J of the c.:.ayton Ac:.

~~ese statistics a:e tiasec or. the date the request was issued ~n~ n:t :~e

date of t~e H-S-R fi!i:"lg. Some of t~ese nu~oers ~ave tieen ame:"lce: :~

re!:ect ~ore ac:urate data ar.c a:e, therefore. di!!ere:"lt f:~m :~ose w~ic~

~ave appeared in previous annua: re?orts.

T~ese ame:"lded statistics

i~dica1!e that the Com.~ission recuested ad:litior.a! infor~ation i:"I 46

t:ansactions in 1981, rat.he: :~a:"I i:'I 48, as previous.:.y repor:e~. ar.c :~a:

the A~tit:ust Division requestec ac:litiona! in!or~ation in 24, r!t~er :~ar.

23, t:ansactior.s in 1982.

tac!': nurnbe: inc!udes one t:ansa:ti~r. in w!':ic~ t!ie relevant ac;e:"IC'' w:.:-.o:"!"'

a request for adcitional in!or~ati:n .

E~c~ n~~=e: inc!~des one ::a~sac:::~ w~ic~ was wi:~::aw~ a!!~~ t~~ ~ss~a~=~

o: a second request. Also, one t:a:"lsaction was •i:hc:awn a!te: the

Co::::::issior. obtained a tempera:: :es::ai:"linc; order from :!'le court.

One t:ansa~:ion was withd:awn a!:e: the issuance of a secon= ~eq~es: ~~ :~~

Commission and two transactions we:e wit!idrawn a!ter t:he issuance o: sec::r-.""

requests by the Antitrust Division.

Eac~ numtie: includes five transactions t:hat: we:e withdrawn after the

.issuance of a second request. In adcition, one t=ansaction was

rest=uct~red and refiled af:e: the Comr:iission issued a second request.

T:"iese numbers are. dif!e:ent f:om, and more ac:urate than, t!iose -~:.c-.

a;pea:eo in t~e Sixth Annual Repo::. Oc:asional!y pa:ties reques: ea::y

te:mi:"lation but the waiting pe:ioc ex?i:es before the agencies car. ta<e a~v

!crmal action to grant or deny t:~e re~uest. In previous annual :ecorts

sucn requests were er:oneous!y omitted from t:he number of reques:s for

early t:e:mination but an improv.ed t:ack:.nc; systel':l !'las per~i::~'."l us to

include them here·. Because t~e waiting period expired ..,ithout t!ie a;en::H

g=an:ing ea:ly ter~ina:ion the requests we:e effectively deniec ar.d t~e~

a:e counted in the •denied" ca:egc:y. Furthe:mo:e, the la:ge inc:eases i:-:

!96Z and subsecuen: vears in t~e r.umber of t:ansac:ions in w~ic~ a :ec~es:

was made for earlv terminatior. re!:ects a liberalization of :!'le s:anca::

~o: ;:an:in~ earlY t@:~ina:ion fol~owing t~~ dec:sion in He~bl~i~, :~=. ~.

Fede:a: Trade Commission, 539 F. S~??· 123 (D. Conn. 19821 anc :!'le

Cor::.~iss on's Forma! Interpre:a:ior. of Au;us: 20, 1982.

7~ese s a~istics are ~ased or. :~e ~a:e of t~e H-S-~ filing and not c~ :~~

cate ac ion was taken on t!ie reques:.

-17-·

Appendix B

Number of Filings Receivedl and Transactions

Reported by Month for the Years 1983

1985.

1983

1985

1984

Filincs

Transactions

Fitinos

vember

=ember

149

116

148

129

139

191

169

199

184

155

2l0

212

104

116

107

124

131

180

255

212

199

193

211

260

·200

229

269

194

136

118

107

112

120

144

109

132

145

103

211

210

295

267

286

232

302

239

241

350

348

263

!'Al.

2001

1128

2533.

1400

3.2 4·4

1Uary

nuary

:ch

:il

;ust

?tember

tobe.r

Transactions

Filinos

Transact L.:ir:s

osually, t~o filings are received, one from the accuirinc

person and one from the acquired person, whe.n a transacd.on

is reported. Only one filing is received when an acquiring

perso~ files for a transaction that is exempt under Sections

7A(c) (6) and (c) (8) of the Clayton Act.

-·18-

llJ

110

i -149

156

125

160

·136

__ _,

....

, ., "'l

19~

"°I~

J. 0

J. 4 ~-

174 t.

Aooendix c

·ansactions in Which Acditional Information Was Reoueste-::1

1981

1985 1

tOt'

CaJ.en;Jar

~ars

1981

1982

1983

1984

1985

· ansactions2

762

713

903

lU.9

1450

~quests for Acditional

:nfor:natior.

. Number

. Pe:cent 3

10.2

5.9

5.6

6.3

5. 8

The statistics are based on the date of the s~s-R filin9, not

the date on which the request was issue~.

These figu:es omit from the total number of transact;ons

reported all transactions for which the aaP.ncies we~e not

authorized to reouest additional in:ormation. ~hes~ in~,u~e

(1) incomplete tiansactions (only one cartv f i1e;J a corncl~ant

notification); (2) transactions reoorted cursuant to the

exemption provisions of sections 7A(c) (5) an~ 7Afc) f8) of t~~

Act; and (3) transactions which were found to be nonreportabl~.

In addition, where a partv file~ more than on~

notification in the same vear to ac~uire votinq secur.it.jes of

the same corporation, e.g., filino for the 15~ thresho1~ an~

later filing for the 25% threshold, onJ.y a stnc!e

consoJidated transaction ~as been counte~ because, as a

practical matter, the agencies ao not issue more t~an on~

second request in such a case. SimiJar~v, where a oartv has

filed for a cash tender offer to acauire 50' of a taraet's

voting securities and has also filed for the exer.cise of an

option to acquire shares from the target issuer an~ fnr a

subsequent merger, the transaction is assianed three numbers

by the Premerger Office but treated in this table as one

transaction. In contrast, the same transaction would be

counted as three transactions on Table A ana, if secon~

requ~sts were issued, as three second requests.

These statistics also omit from the total number of

transactions reported secondary acquisitions file~ oursuant

to§ 801.30(a) (4) of the Premeroer notification rui.es.

Secondary acquisition have been.deducted in order to be

consistent with the statistics for 1984 transactions inclu~e~

in Exhibit A, Tables I throuoh XI, and similar statistics for

1981-1983 transactions inclu~ec in orior annual re?orts.

Last vear, when this aooendix was ~evfse~, the fioures ~j~

not ex cl uoe secondarv acau is it ions. Accor iii no 1.v, the num::ie r of

transactions for 198i-19~4 aooearinq herein ~if~er from t~ose t~a~

ap9e3.:ec. in A?penc1ix C to las~ vear' s annua 1 reoort.

Secord requests as a oercentage of the total number of

transactions listed in this table.

-11)-

·r11

EXllID- . A

1\1'011I:n1' I ON:• llV :nu: or TllllN:; /\CT I ON,

:~ i ZI'

Illy

'.!'!.!1.~~'!~lJ·!·~ ~~~~!!.

I S~I i 1.1 ions)

11-S-R Tr an:Jacl loln!i

~!.!..~~!_-·1;--··i~~~~·'.i1(-~7

l '10'1

Cranl•••I t11 t"l't: or 00.1

- <'lt•at.lnt:t!

t,;,·,;r,i;;,·,- -. --·-.

. . . ·- -_-_·_-_-_ !··1~·-:!;iif _-~-y

f-·i·i; .. . . '110}

F'l'C

flll. J TO'l'/\f.

•

W•

l.t!li!I l holn I',

112

ll. n

l S up to 2•,

214

20.9

•

11.111•1•·)

2''> pp to '>O

291

26.0

SO up lo 100

180

16.1

100 up to lSO

1.1

•

•••

~£Qfld R~~~!H.~~~·! __

_!!!!ll'h.!:__r_

__f!;.~~!:~'-- _y

[T£

00.1

!1'~

~~ T~·r ~ !!

2. l

4. '>

". 8

)

2.6

u. s

". l

'> . II

.... s

11. 1

10.6

1.0

10.1

9.U

•>. 8

1 l. r,

2. 1

2.1

l. 1

l. 8

5.6

l. 4

). 4

4. 8

4.4

l. 1

5.6

l9. s

2. 4

e.5

l l.O

4. 2

16.l

4.2

2. l

6.2

o• .,

18."

21. l

l. 1

1. 4

5. l

150 up to 200

4.1

:mo up to 100

5.)

•JOO up to SOO

4."

I'>. 1

I ). 1

29. 4

5.9

1.6

l 1.1

SOii up to 101}0

2.0

I II. l

9. I

21. 1

4. s

4.5

g. l

1000 and up

I. B

'o'l.0

111. 0

65.0

10.0

s.o

15.0

l ll 9

100.0

1111

7.0

1. 9

s ."

2. 0

). 6

".)

All Transactions

117

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~--~-~~-

.!/

The size of transaction Is based on the aqqre•Jale tot,ll .unount n{ votln•J sec11rltleR .ind assetR to, be held by the

acquiring person as a result of thfl lran!laction .tn•I i11 t.1k•!n If'"" lhn r1,spon,;r. to 1te1n l(c) of the'premecqer

notification and repo~t form.

Outlnq calendar year 1984, 1400 trans11ctlons •wre reportl!d un1lec the llarl-Scolt-Ro1tlno premett)er notlflcatlon pcoqram.

The smaller number, lll9, reflects a1lj11:Hm1!nts to elimin.1le lhc followin•J types of transaclions1 (II

9 transactions

reportl!ll uniter Section (c) (6) an1l 15'1 tcansilc:t Ions reporlt!cl .11111ler Sc1;llnn (<:1181 (transactions Involving certain

're•Jitlated ln1lustrles and financial buslncirnesl;

(2)

72 lra1111actlu11i1 which were followe•I hy separate notifications for

one Of more addltlona\ transactionS"hetWl!Cll lht• S,lme parties 1l11fln•J 1904 (Such transactlonn ace listed here as a slnqle

consolidated transaction) 1 26 transactions fn11111l 10 tie 11on-fepoftahle1

141

6 lncomp)ete transactions (only one party

in each transaction filed a compliant no1.lflc.1llo11)1 .in•I,

('l)

9 secon<lary acquisitions ((iled pursuant to Section

001..10 (a) (4)) rcporte1I as a result of 1epnrl<1hh· primary tra11sactiorn1.

The tahle docs not however, e•clude 11

competln•J offers or 02 multiple-party t1.11.,;;u:tions (tfans.tt:lion!.i i11vulvln•1 two of more acqulfln•J or acquired perAonsl.

l1 1•1ce11t.1•J•? of total tr.tnn.lctlons.

t•e1 •:•!Ill .••JC ••( I r.111!1acl ion 1 .111•1" •Jrnup.

Nntt!I

ll•!lolll m.1y nol a1ld to lot,11

ti.II?

to ro;11\tl1w1.

l'I.

'1'111\t~:;l\l ..I'

1:r.~•in.1cl Inn_ ll.111•J!~

. .... ___ CI •:a1 '"".'" 1;1 ;"'I •:•I .1;1 .1 J't?r.•;r_n~"·~'.l.";_(_?(:

.,.,,I ,, I u.........

1$ Ml I I ioll';I

T1 .1u·;,11 ·I i •tu•:

HO.I

11 I

I I IN:; IN\Jlll.VI 111; '1'111; 1;111\N'l'll~: llF ("l.l'./\ll/\1•11"1: llV

"':i:ttt. v • I 'Ill 4

CI r.u .111c•· 1:1 ''"'•·•I

___ 11y _1'·Jr1u-y __ ...

rn:

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'l't ,111';,,,•I iotll'I

1II

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1:...... T1 illl!l.lt .• I 011

. 11 · 111 ·1·· _(.:• ""L'

!I ___

'llll'/\I,

•··n:

1111.1

'111T/\I,

F"TC

110.1

'l'OTf\l.

Tnt.n l N11mu•r of

-~~~'-~l_l!~•:n_~.! il_f!~ .".~'--·

'111T/\I,

I ··n-

1111.I

11 . I

0 •

o.n

2. I

4. 'i

6.n

I. 1

J. 4

5.1

•

l,('!l1 lh;1n Ir,

IS up lo 2';

II,•,

I. n

2. ,

2. ,,

II. 'i

I l. l

, •4

II. 4

14. 9

25 •Ip lo 50

I. 'i

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2.9

'i. n

"·

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9.7

'. l

18.9

50 op tn 1110

I. 1

I. I

7.'J

10."

1.n

18. J

10.9

n.o

19. 9

too up lo 1-;u

II • 1

0. ,

l. 4

CJ.II

<J. n

l9.5

4.6

9. l

l'>O up to 2110

0. r,

II. l

0.7

11. r,

". 2

l6.7

}. 4

1. l

4.6

200 up tu JOO

II. "

I . II

I. 4

n. .,

In. 6

21. I

2.9

6. )

9.1

JOO up to 500

l'i

II • 1

II . Ii

l.)

Vi. 1

I I. 1

29.4

4. fi

4.0

8.6

500 up lo 1000

II . 1

II . I

o.s

'". 2

'LI

27.)

2.J

l. I

J.4

lOOl.I nn1J up

I . II

II. J

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f\11 Clrnr;1•1ces

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50. l

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-------------------------,---------- -------y

Nolet

Ourlriq calendar year 1904, 1400 lran!lactlonn werP repurtPd 11n1lrr thP. tl<lrt-Scott:-nodlno premerqer notification proqram.

The !lmaller nnnber, 1119, rellect!l acljnstmrnt!l to ellmln.1tr. lhe (otlowln<J· typt'S or trannactlonst (lJ

9 transactions

rl'portpcl undP.r Section (c)(61 .1n•I l59 l1a1H1'1ctlon!l rrporll'•I 1111111'.'r St!ct.lon h:llOI (trannactlons lnvolvlnq certain

1c.••111lalert lndll!ltrlP.!1 and flnanc:l'11 h11nlnr11!le!l)J

111

·12 tran'lactlonn which Wf!re followed hy !lt'parate notlflcatlon!I (or

0111~ nr more i!ddltlonal transacllon!I bP.twrr.n the !litme tMrtlr.!J clurlnq 1984 (nuch lrnnsactlon!l are listed here aB a !llnqle

connol l<liltrcl transactlonl I 26 lr3n9actlo11n fouml to hr 11on-reportahle1

l°'l

6 lncomtJlete tran!lactlon!I (only one p11rty

In each lr11nsactlon flled a cnmpll.1nt notlrlc'1tlont1 ;11111,

l'il

9 sr.con1lilry ar.<Jlll!lltlons (rllr.11 pursuant to Section

00 I . .10 l 1tl 1411 r e1mr tr.fl 118 r f'!lll 11 of r cpu1 t ah I e pr I m.11 y l r 1tn!lac l lon!l,

Thr t 111.> Ir. do en not howr.ver, r.xc lude lJ comp et I nq

ollern or 81. multlple-party t1.1nsacllnn!l 1tr.'ln!l.1cllm1ri lnvulvlnq l'!"o or more acc111lrlnq or acquired persone).

l't~rr.cnl1t<Je!I

itl!lo 1tppear

In Tl\111.t: I.

llet.11\ m1ty not ilcl<I to lol.'11 tine lo roumllnq.

'l'/\111.1: IV

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T!.!' f!~ ·!~ t ! !! "·-"~!!!'..I!!.

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1 IU! I :i ~•u.1nc~ • t I

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•

110.1

1.ess thdn IS

ltlVllt.VI HI; 'I'll!-: I :i:ill/\Hl'I: tll' :t1:c:11rm 111:0111::;1·:1,

___ ··----·---·:it!•:•!~~·!. l!~''l!"'.;1_'::_1.. r:!'.''!e•I !!'.! ... 1_~·~~ !.:!!!!!.!9e of I

·r1 ... ,,,,.,: l I 1111:• I"

'I'll t .11 N111nl1l'r nf

1-:.1.:h ..... 111:;.11·1 i 1111

Tota I H11111b<! r of

_,l.111•J•!_. ~;,~"!I'

'!'! ·'!''~~-.··:~.!~··!'.!

_J!c;p~~-- ·~!!-'l!'~!i..! '..!__

.,,~:·:~h

)

I 't 11 i

t'1'C

110.1

TOT/\I.

FT('

110.1

'1'01'AI.

•·1-c

OOJ

TOTAi,

-0. l

0.1

2. l

2 •.•

4.2

IS up to 2S

0.4

o.n

I. 2

I. 1

l. R

s. 6

'i. 6

12.7

18.1

1S up to SO

0. 4

o.•1

I. 1

I. 4

l. 4

4.0

'>. 6

14. I

I IJ. 1

Sii up to 100

II. 1

II • 2

0. IJ

4. 4

l. I

S.6

11. l

2.8

14. I

100 up to 1'•0

0.2

II • fl

O.R

2.4

R. 'l

11.0

2. 8

9. 9

12. l

ISO up lo 200

'J.

0. l

II. I

0. l

4. l

2. I

6.2

2.8

I. 4

4.2

:ZOO up to JOO

)

II . I

O.l

o. l

I. 1

t.4

S. I

I. 4

2. 8

4.2

)00.up to SOO

II • I

O', 4

0.6

'I. 'l

7.0

11. 1

4. 2

'i. 6

9.9

SOO up to 1000

II. I

0. I

0.2

4 • ,.I

4. ..

CJ. I

I. 4

l. 4

2.8

1000 a111I up

0. '•

II . I

0.6

10.0

't.O

lS.O

0. ')

I. 4

9.9

All Transactions

l. u

I .fl

6. l

2. fl

l. 6

6. 1

41. 1

')6.]

100.0

ourlng calendar year 1984, 1400 transactions w<!rf! reported 11n1ler thP. llart-Scott-lto•tlno premerqer notification program.

The s111alier number, llllJ, reflects ;11lj11:1lm•!nt:; lo eliminate the followln<J type!i of tranu.-.ctlons1 (lt

9 transactions

reported uniter Section (c)(61 an•I l'l<J tra11r..1ctio11n rllpo1lc1I 1111iler ~i•!t:tlon (cl(O) (transactions Involving certain

rll•111latc.t ln•lustrles anii financial Lluslne:i:il!S); · I l l

·u tr.:i11!l.1cllo11:-1 whld1 were followe1I hy separate notifications for

0111: or more .i1l11itlonal trans.a.:tlons lwlwl!l!n lhe n.lm<! p.111 lf!!l 1l11rin•J 19114 lsuch lransactluns are listed here as a slngle

eun!:oli1lalecl lraniiactlonl1 H1 lr.insaclion!i fm1111I lo ht! 11on·r(•pflft.iltle1

(4)

6 Incomplete lrannactlons (only one party

in 1?."1.:!1 lr.Hw.aclion flleil a r.oonpli.111t n11tili1:,1lion)1 .1nol,

('>I

'J :ilJCIHlllJry acqulsition!l (flt.eel pursuant to Section

ffOI. 10 (") 1411 r4!porteil as reuult of repnrt.-.hle pri1nary trannactions.

The t"hle clues not however, e•clude ll competing

offeru or 112 m11lllple-p1"11ly l1.111si1cllo11:; (l1.111:;.-.ctl1111!; i11volvi11•1 lw11 or more ,u;1111lrin•1 or ac'lulred persons).

1•erc1:11l.1•11:n

tl••l••:

.1IH0

111:t.iil 1n.1y 11111

••PP•!"r

In T/\111.1·: I.

•••hi 111 lot.al 1lo1c lo 1111111.1111•1.

T/\111.1: V

l\t'UIJl:llTlllll:: llV lll:l'llllTINi: Tlllll:::11n1.11,

1·h

-- 1P.5hnI11

_, ---· ... -

l•111:;

-11-S-ll

- - - ·Tr-<1n!:,11:l.

... ···- --·.H.~_".'!•_e ~ _ I/

,.,., 1:1•11l

c· 1, ..... tu•~·~ r;r.111lP•I

••> f1'C 111

1'111-t

1111.1

-· ..... ,· rri1i' ;,·;,;. ti i.

N•in•tt•r

Ffr

11ii.1

- _........ ~!l!•·•!" ,;, ...... _, ·FTC

l>O.I

TllTl\I,

'j • ')

'i. 'I

11. 0

2. l

4 • r,

'·· n

Se co ml R_!!l.ue11t'.!_l:!_'.!!'."~~-

l'er r:Pnl ,,11e O(

Nuooer

_!~~r ep]~!!J'.!.. G1~1~e_

fTC. - --i10J

rn:

llOJ

1'0T" L

----

6.8

20. l

14.J

----

2.1

2.)

). 4

J.4

2.CJ

J.O

5.9

Sl 5 HI l I Ion

I.")

15'

J.9

25\

5 •.l

-t

l I.,,

50t

665

59. 4

".,

"'·

1. 4

,.. '

l\ssets Only

127

29. 2

1·.

n. Ii

10. 1

l 'J. )

). l

'). 8

8.9

0.6

lll9

100.0

I. 0

1'. 9

2.8

). 6

6.)

Unclr.tf!C 111 I ne;1?1

l\ll Transactions

011

.... ,

--------!J

Oorlnq calendar year 1984, 1400 tritn!lilr:tlorrn w('rr: rrp<Hlr•I un•IP.r the llilrt-Scott.-Ro1llno premerqer notlflcatlbn proqram.

The smaller nunber, lll9, rellP.cts 111lj11!1tm••nt.s to eliminate the followlnq types o( transactlonst (It

9 tranaactlons

reportPd under Section tcJ 16J nml t';9 tra1rn•1r:tlons rt>porte•I 11mler Sr.ctlon lcl CAI (transar.tlons lnvolvlnq certain

requlated Industries and flnanr:lill b11slnt>!H1esl1

121

72 tr;rn!lactlons which were followed by separate notlflcatlons for

one or more addltlon11I tr1111sar:t.lo1rn hrl"IP.P.n thr samr pilrtle!l cl111lnq 1994 (such tram1actlons 1ue listed here aa a aln9le

consollclaled t1ansactlonl1 2.fi tramrnctlons lnumJ lo be non-11"portahle1

(41

6 Incomplete tran11actlons (only one p11rty

In.each transaction rlle1I a compllilnt notlrlcatlonl 1 an1I,

('ii

9 secondary acquisitions (filed pursuant to Section

001.JO (a)(411rt>portecl11s result ol rl'port11hlr prlm,,.ry tran!lactlon!I. The table does not howevf!r, eitclude lJ cornpetln9

oflers or 92 multiple-party ltansactlon!'l (tran.r.ar.ll<ms lnvolvlnq two or more 11cqulrln9 or acquired persons).

Seven f 11 ln•J!l wrtr wlth<lrawn hrfore the th1t•;.hol1I co11l1I hr .-.ccuralrly determine•!.

Hot e:

Ueto1l I m.-.y not a1ld to total •hrr to ro111111ln•1.

'l'/\111.t: VI

'l'lt.l\N!;/\t"l'IOll:; llY Mi:i1:-r:; IW 1\1\)llflltNr. 1•1·:11:;0N:i,

!\.:~~ii: L !• ·! "'.J •: .

s H i I I i "II:; l

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ff( ·-- ~o.l.

I'•·• ·~··nt '''I•? ol

~·.!~.!!'.!."~

~H:'.•'!_!IJll'.J!'.. !•~~'!!l!

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110.1

'l'OT I\ I,

N11111her

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PP.rr:o•nl ·"I~ o>f

~:! :!r!_!~~!~'J!'.....f ~~~r.

t'Tr

llO.I

.'.!'~T~!..!

• 2.6

l. 4

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I. 1

10 .'l

10.S

) 0. '>

JO.S

2S up to SO

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l. ,,

1. I

10.l

l. 6

l.6

so up lo too

6. I

l. ')

4. 4

1.4

I.'>

I. s

11111 up lo J~O

6.9

1. ')

6. '>

14. l

2.6

1.9

4. ')

(,. II

2.6

ISO up to 200

2. l

2.1

200 up lo JOO

6.0

'•

I. '1

1. '•

14.9

4. '>

1.0

1.5

JOO up to SOO

102

9. I

'i.'f

9.8

l.O

). 9

4.9

SOO up to 1000

Ill

10.S

.•

I..,

'•.I

4. I

'l. 4

l. 1

2. 6

4.l

1000 an.J up

46. II

'• ')

'•I

I I. I

•). 1

21. 0

2'•

4. R

). 6

8.4

I. 4

2S.O

2'l .O

2S.O

100.0

011

7.8

1.9

I'•. 6

2. II

l. 6

Ii. l

th,\n I'•

t.e~tl

IS up lo 2S

Anscts not

av;il I -'h I c

Alt Transactions

16 11

II I 9

Ourlng calendar year 1984, 1400 transactions were reported uwler the llart-Scott-Rodlno premerger notification program.

The smaller n11nber, ))\'),reflects a1lj11:1lnwntn lo P.llmi11.ile lhe followln•t typP.S O( tranSdctlonsa ()l

9 transactions

reported under Section (c) (61 an1l l'>') tra11s.u:·t ions reportr•I umltH Seel Ion (•:) 18) (lrd11s.1ctlons Involving certain

rt!•111latert lndustrle9 and financial h11ni111!!itlC!•)1

121

·12 tranH.lctlons which wf!re followed hy separate notifications for

001! or more atldltlonal trans.ictions ltctw•!•!ll the s.1me pa1tle11 1lurln•1 l'lll4 (such transa..:tlons are listed here as a slnqle

..:unsollolated traneaction)1 26 transao:tion:i fo111HI to he 11on-reportahle1

141

6 Incomplete transactions (only one party

i11 e<lch transaction flle•I a compliant 11otlfic.itionl1 an•I,

l'•I

'l secon1tary acquisitions (tiled pursuant to Section

001.lO (a)i4)) reporte1t as result of reporlahlc pri111a1y lran:1actlo11s.

The tahlP. •loes not however, e•clude 11 competing

ollt!l!I 01 U/ 11111ltipl1•-pa1ty tr.HlSiH.:llo1l!I (t1.111s.1clin11:; lnv1_>1vin•1 two or more acquirin') or acquired persons).

'Mtin c.1l~•J•HY ii> co111pose1I of 6 newly for111,.•I ac'111lrin•1 P•!rsons whoso! .1s:;ets co11tcl not he accurately deter,.lned based on

.!i11hml11 ... r 1lot:11m••nln1 2 priv.111! invcnl•11H who''" 11111. 1111!p.11c p•!r:io11,il 1•• ,1.111C•! :;h1!1!l!i; dll•I, 0 filinqR which were wltholrawn

h•!l111" lhci1 .i:i!it'I Sile co11lil he ,10:1:11r.1lcly 1l1·l1n111in1•ol.

Nol,!:

llt•t.lil m.ty nnl

Ml•I lo lot.11 1l11e to (01111.lin•1.

T/\111.1~

VI I

Tll/\N!:/\CT ION:: llY !l/\l,f':fi 01' /\C()tll Ill NI: l'f':ll!lON!:,

Salr.n n .... n~r

H -HI ii Ic1nii)

!_l..::_S-R_!_!~nn.!c_~ I~''-"--

!'~~~~-«:.!. !/

Cl.-;u .... nr.e (:ranlr.cl lo f'TC or 1>0.f

· ·-- · - - ---- --- -

Prr cr.nl

H11111l1.-r

--~---·--

f'TC

. _r.'!_ I_ l!_f! __I~"!"~~!;~-<!~£_

l)().J

FTC

1)().1

TOT/\I,

FTC

()()J

FTC

[)OJ

TOT/\L

0.2

6.6

4.)

.. -

2.4

2. 4

4. l

2.0

•

I. 6

,_,

2. '

8.l

0. 1

2.4

4.~

1. l

)

4.'

S.4

4.6

2.0

4. 4

'i 9

... 1

JOO up to 500

lO 1

IJ. 6

500 up to 1000

12A

It. 4

1000 and up

499

44. ,,

15 up to 25

. 25 up to 50

SO up lo 100

100 up to l r,o

150 up to 200

200 up to JOO

Salen not available

21 11

Beco~1._~~q~~~!.'.!._!~~~~!!_-~~

l'<'rcr.nl .....,(' or

tfuaber

Sa!!~'l!'.<Jr Group

- 1>;;;;:;;,-,i a·i•·-.,; -

'i. 4

1.en11 than I 'i

l'JR4

r, • 'J

6. I

A.2

14. 1

2.0

4.1

6. l

fl. A '

fl. R

IL6

).4

J.4

o;. 6

A.4

14 .o

)

2.8

J.1

6. o;

r•• 1

l. 6

1.6

)

2.)

I. 6

).9

'j 1

5'i

11. 4

11.0

7.2. 4

4.8

4.0

8.8

1. 4

11. l

11. I

100.11

llA

l.A

1 . .,

1r._i;

2.8

). 6

6. )

1.1 ·

" · f,

...

)

I\ 11

Tr a no act l onn

011rln'} calendar year 1904, 1400 tran!1 .... ctlon!1 wer.- r1•portr1I 11111lr.r lhr 11 •...rt-Scott-nodlno premr.rqer notlflcatlon proqram.

Thr. nm<tller nunber, 1119, rell.-r.l!J aclj11!ltmr.nl!l to i!llmin .... te the follmdnq lYl'f'!l of tr<1n!1actlonn1 (l)

9 transactions

'"ported under Section (cl (61 anil l'l'I lran!l•tct lon!l rt~porlr•I 111ulr.r firr.tlon (1:1 (Al (lr<tn!1;ictlo1u1 lnvolvlnq certain

rr•1.ut .... t,.1t lmht!ltrle!I and flnancl11l ht1!llnrnr1t•!>l1

(21

·12 lr11nsactlu11!1 which Wt!r<' fnllowetl l.Jy eeparate notlllcatlone for

mu• or more alhlltlonnl transnctlon!I hehte•!n thr s<tm•• 1•.ntlf!!l tlurlnq 1904 (such transactions are llstetl here as a single

connoll1lat~•I tran!lactlonlr 26 t.r11n!111ctlon!I 10111111 lo he non-rl'portahlr.r

C41

6 lncompletf' transactions (only one party

In f',1ch .trnnsactlor1 llled a compliant nntlflc .... tlnnl1 .... nil,

('ll

9 srcon1lary acqul!lltlons ((lied pursuant to Section

801.JO (<ti 1411 reported as rl'r.ttlt of rrport11hl1! prlm<try lran!lactlon!I.

The t.Jhl.- does not however, exclude ll competlnq

uf(r.r!l or A2 multiple-party ·tr<ln!lacllon!l (tr.1m1.1ctlnn!O ln':'olvinq two or more acquiring or ac•1ulred persone).

Tran!l11ctlon!l In thl!I cate•1ory l111:l111lr pr lv11le lnv,.!ltor!l wl111!le s.1les co11ld not hf' accurately determined, newly formed

.... c•111l1 lnij •:om1Mnle!l, anti wlll11lr11wn fllln•1n.

Hute1

l ll 9

llt?tn I I 1nily n••t a1lcl to t.ot<t l 1l11e to round I "'1 •

TJ\111.1~

'rtlf\H:lM'.1'IOH:i 11'1

!°'J! !!~ L!'!! ~~~

1$ Hi l I ionut

_!t:§.=.!l_ !~~!"!:!~~~!'!!.-

~':!'!':!~~- .U

l•ercenl

- ·-- ....

f\!if.1~1·:;

VI I I

01' M·ou1111m •:H·rr·rv

!/. I 9114

Cl e.u a net• Gr ,lnt t!cl Io l'TC or 00-f

---- - -·-- ---- ·- - -·· ·-r.:;:;:(;;,i:;-;1;-;-"r---~'!'!lu~~ -

.. !':~'.!~! .!~·'!''J~-~;!!~11~

Second· Req!!~~!!~!~L

rercrnl .1•1e of

_!!~'!~~-r~'!!!~L!!.·!!'!.!Ll-!~~I!.

1'1't'.

no.1

Y'l'C

00.. 1

TOTAi.

f)().J

I. 2

5. 9

1. I

)

1. 5

l. 5,

00.1

1'01'f\I.

l.ess than 15

7.6

15 up to 2S

186

16. 6

~•• 4

10.8

16. I

2.1

1.8

6.S

25 up to 50

2 ll

111.B

c.. 4

4. l

10. 1

I. l

l.4

4. 1

50 up lo 100

17'}

I 'l. ft

9. I

4. 6

I I. 1

5. l

I. 1

6.9

IOO up to 150

114

1. '•

1. I

1.6

111 . 1

2.4

4.8

4. .,

12.5

I 1. l

I. 6

). l

4. 1

12. l

19. 1

)

4.5

9. l

10. 4

2.2

l l.O

'5. 2

5.9

2.0

7.8

ISO up lo 200

.... 1

200 up to JOO

'). 9

1.'

JOO up to 500

4. I

l0.9

500 up to 1000

4. 6

21. 6

'). 9

21. 5

1000 and up

'>. ,,

1•1.0

9. ~.

211. 6

6.).

1.2

9.5

IUlaets not

av"llahle

66 ]/

5.9

4. 5

12.'

16. 1

)

4. 5

4.5

lOO.O

1. 8

l.9

I'•. 6

') l

2.8

6.l

All Traneactlone

l ll 9

' 9. '

)

The asset a of the acqul red ent lty were· taken f ro111 responnes to Item 2 Mt lit tAssets to be Acqul redt or rro·rrt Items 4 tat

or 41bl ISEC documents and annual reportsl of lh1i premcrqer not If icaticrn and report form.

011rln9 calendar year 1904, 1400 transactlnnn were rep~rtccl un•for the llart-Scott-Rolilno premerqer notlflcatlon proqram.

1'he smaller nuntler, 1119, reflects 1ulj11:>1me11ln lo ellmindte lhe followln•J types of lransactions1 II)

9 transactlons

repo1letl under Section tel 16) a11cl l')') lrd1111.1clions reporlecl under Sec:llon (cl 181 (transactions lnvolvlnq certain

rl!•Julated ln1h1strles and flnanclal l"'slne:l!lt!!l)J

121 72 tran!lactluns which were followed Ly separate notlflcatlons for

one or more acl<lltlonal transactions hetwe1:n the same parties cl11rln•J 1984 tsuch transactions are listed here as a slnqle

consol l1l.1lecl l1ansar.tlont 1 26 transiu:t Ion:• (0111111 lo he non-rc:porlahlc.1

(41

6 Incomplete tr4n!lactlons (only one party

to 1h1: t1,111:;.u:1io11 fill!el a c:c11npll"11I 11•1t1rlc.lli11nl1 .11111,

l"al

9 H•:1;c11ulary 4C•Juiulllontt (fllecl pursuant to Section

11111.10 1·111411 11·111nll!•I ,15 re,;ull ol 11•puC1.1hlc: p1im.11y lrJil'l•ICtlo1w.

Tiu: ldhlc: 1lo1:u 11ol however, exclu1lc ll competlnq

0110:1:; '" Ill 1111111 ipl1:-p.11ly 11.11w.1cl in11:; 111.111n.1i:Liui\:i lnvolvin•J lwo or mort: "':cptir inq or "c•111iretl pcrsonsl.

Th•: v.l111r. nl

H<1l1•:

lhc: .1:;:;r1s nf lhu 1:11111.y t11!i1111 .u:•l'ii11:•I in nol ,1v.1ll.1lall! for

ll1:t.11I 1n.1y not ;11lol lo lol.1i cl1w tc- 10-.11ulill't.

the sl11ly-:i111 tr<111n.ictlons In this cateqory.

Tl\llt.1·. 111

Tlll\H!:l\c 'TI ON~l llY

1!-5- '!..._!_!_ ~!'~i1_C t_l•~·~~.

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::1\1.1~~:

01' l\COlll 111m

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--- Cl1•i11;111ce

· .. ·· ---Granlrcl

- -- to fTC or OOJ--·'-''!'__ 1~-, !'~·· _c_:_r ~''!l'

F-1,:H1tl9l11•. .r,( ;._f . ~·.,

t'rt:

11t-.1

·1url\I,

r.;1cr-i.i·a;,-,~·"r

Second '!.~'!£!!.!!_! '.1'!~~-d_ _·

rrrcenla<Jr o(

Humber

6a_~en !'!!'~!.....2.!~~e_

F'TC--IJOJ

11(),1

f'"l'C

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16. 1

5.4

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2J. .1

17. 2

4.l

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l 11. 6

200 up lo JOO

r.. n

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JOO up lo 500

Ii. I

10.)

to.1

20. fi

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4. 1

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12. 5

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1.11

).6

t•• )

I J. I

l I4

10. 2

25 up lo 50-

212

in. IJ

50 up lo 100

105

"' . ..,

IQO up to 150

150 up lo 200

l.er.n than l ';

147

JS up lo 2';

r,., I l'B nol

11vallahlr.

/\ll Tranrlacllonn

62 .Y

l ll 9

•

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

--~---~

The Rlll)r.9 or the acquired entity WP.re t<1kP.n from rr~pon!lr.!1 to 'ltrm s (dollar reven11est and Items 4(a) and 4(b)

doc11111ents and annual repor tnt o( the prt>mer9P.r not I I lc:at 1011 1 epor t Corm.

Ourln9 calendar year 1984, 14011 tr.ansactlons wr.rP. rr.port,.rl onrlr.r the lll'lrt-Scott-nodlno premt>rqer notification proqran1.

1'he smaller nunber, 1~19, reflects adjuslm•~nt!l lo r.ll1nl11,1le tht> (ollowlnq lypr.s of trans11ctlons1 (l)

9 transactions

rt?portt><I under Section (c) 16l ;iml 1')9 tr.1nnar.tlons rr.porlr•I 11n1ler St>ctlon le) (01 (transactions lnvolvlnq certain

rr1111lilt1>d lncluntrles and flni\nr.lal h11iil111!S!ll'Sl1

121

72 tra1rn.-,ctlons which wP.rl' followt><I hy sepuate notlflcatlon11 for

011r. nr more a<tdltlonal tran!'lactlons hr.lwr1!11 lh'! s.'"lm<> parllr.n 1lurlm1 190'9 (such trann;1ctlons are listed here as a sln9le

eoll!mll<l<1tP1I traniiactlont1 26 lra11~11c.tlon!l founrl to 111• nun-rt•port11hlf'1

(ill

fi lncomplr.ll' lr1tnsactlone (only one party

lo UtP. tra11s .... ctlon fllr.d ,, cnmpll1111l notlflc .... t1011J1 ., .....

er,, 9 s1•co11d.uy iJC'IUlnltlons (flied pursuant to Section

llOL.111 Cal (411 rr.portrcl an rf'nult o( rrport.-,hlr prlm-"•Y lt.111!l.-,ct.lo11'J,

Thr. lahlr <lorn not hnwr.vr.r, e11clurle ll·competln9

nll•~rn or 02 multlpl<>-p<1rty tr.-,nii.-,r.tl•m!J (tr,-,11n.-,ctlonn l11vnlvlnq two or morr. ac•111lrlnq or acquired personal.

Tr;t11n;u:tlo11n In this catp•J•lfY .'trf' rr•prenrntrcl t.y lhr. .-,r•111l~ltlon of newly formrd corporations or corpor1ttl' joint

vr.111011•!1 l111m which 110 s,·ole!I h.1vr. hl'r.n qr.11r1alr.1I ""'' 1111• ·'"IC:•l'tl!llllnnr. of ;iiiiiet!I which ha•I procluct>cl no nales or revenues.

""t••t

IWt.-,11 m.1y 1111t a1l1I l'o tot.-,1 1l11r. to rou1ullmJ.

(SEC

1'1\111.t: IC

t Hllll!i'l'llY lillCllll' Of l\CQlll 11 I tfi 1•1m:;11H. I '.llli

2-nlqlt

~_!~~....!':~·!~ .!/

!!"!dllS!.!.l' OeS.£! !e~!.!!!l

---~-----·---~!;'J'!!~J~~ J'!:!-E~L

~~!!~.£!..

clt,a1.1111:c Gr•111l.tHI

..... FTC or llll.I

'f~~--- !~~j--!fi~-!~~I

Aqriculture Productlon-Crhps

Aqr I culture Proc.luctlon-Ll vestock

Hetal Hlnlnq

Rltumlnous Coal and Llqnlte Minlnq

Oil and Gas Extraction

Hlnlnq and Ouarrylnq of Hnnmetall le

Minerals, Except Fuels

llulldlnq Constructiun-Guneral Cuntract.u1s

and Operative Uuildcrs

:ti

Construct lon other than lhtl l1lln1J

Construcllon-General Cnt1lract~rs

}

Construct lon-Specl al Gr,1dc Con tr actor :1

•·0011 and l<lndred l'roducts

To~acco

Manufacturers

·l

•re Kt l le H 11 l Pr od11c ts

Apparc l an1l other Pin l nhml Prntlucts m.11le

from t'dhrlc!l .tn•I tii111ilar Hdte1 i.tl:;

1'6

l.umher and Wood Products,

Except furnituru

f'.!£

I 11 Sllt!d

To~T

Secontl Ret111ests

• 111tt I

•I I I

ltlllll!i'l'llY :;11.1111• 111·

2 -11 I •J I t

!llC Cntll' ~/

""I ... ,

• 1111 Mi l'l:lt!;!IN,

!!HJus l r y__uc: !i~ ! i l'l i 011

I '1114

/\1·1111 Ir ln1J l'e1.!~o.n ···------·-·f.rcuwi llt><lllf'fll !l

T• 1 1···11. 111 HO.I

In !lllCtl

,... ,,. · ,,... , ;·.,1.ei

Vi~ -~c-· .'.i:!~L !

. .

t' 11•,11 ,,,,,.,. 1;1 .11tl '"'

""'"'"''

rurnl lure and rl 11t111 ••!:

Paper and l\l l led rr0<lucts

1.1

rr Int I n<J, ruh I I sh I n•1 ,;,.,,

l\llled lndustrlr!•

l'f

1•10.h11:I~:

•••

Chemlcal!l and l\lllr1I

2'1

Petroleum lie( lnln•J .11ul 111'1.tlr•I 1111111•;11 1 ... ,,

nuhhr.r and HI sc. I' l.1!1 I it:~1 111111hw 1 s

Slone, Cl~y, <;la!l!l, ;uul c.'oncrelt! r101lui:t•;

l'r lmilry Hetal

lnrtu:itr l1~!l

l./

ralJr lcalt!d HPtdl l1P.1Chwl n, t·:111:1·11t H.11:h 1111•1 v

olnrl Transport ii t I un •:'111 I pmt•nt

l">

Hachlnery, E11cept Electrlc.tl

1r1

f:lectr lc.1l ""'' 1-:1 .. rt ronlr H.1chl1wrv1

r.11u I pme~lt .1nd H11pp 111•!1

l r,

1'r annpor tat Ion F:<111lpm1•11t

If,

Hra!lur lnc1, l\11.1ly1.lm1 .t1ul C'.11nlr11l I l11•1

ln!ll111menlri; rhuln•Jr.111hl1·, H1••li··.1I

l\nrl Opt I cal Goocls 1 Hatche!'I ''"'' l' l11i:k!l

....

If--

)

•,

Hl11cellaneous H.111uf.1ct11r ln•J ln1h1?1l1 j, • .,

)

·1·11111.1: )(

ltlllll!i'l'llY Cilllllll'

l-lli•J i l

!i!L•··_1~!!!

J! 1 ~~~UY_~·~:.!c;~ !~~ !.1! 1!

11:1 i Ir 0,111 Tr ansp11r t. al I 111\

l.ocal anti Suburhan Tran:clt .1n.I

lnlerurhan lll•1hway ra:l!H!n•1nr 'l'fannpt1r tat Inn

Motor FrelcJht Transporlallnn

l\ntl Wal chous I n•J

Water Transportation

4 ')

Transpnrlallon hy Air

Tr anspor tat Inn llnrv icmi

Communication

4')

l::lectr le, Gat1, and S.inl\.uy S•:rvl<:t!:l

Wholesale Tratle-OurJhle Gootl!I

Wholes.i\e Tratl1!-Non.l11tahll! C.0111ln

Ou ll1lln<J Hater la le, 11.ircholiHt:, lia1 tlt•u

Supply an1I Huhile llomt! lli:Jl1:1:;

lic:nur .1 I Herchan1I i :ie filor e:i

root! !il ores

~')

Automnt Ive Oea I ere an1I G.11101 i1w

Service Slalions

/\l'UUllC 1 u; 1•1:11:;0N,

1'1114

-···-- ····--- .. __ l\•:•1•~lr !•~'J !'~!ii~·~-----~----~c'l•·.u ·'"'"' Gr .1111 '"'

!il'conct Requests

Tu F'I': nr 110.1

Is sued

N111nht!r

.. :0111 i ""'"''

,:.;,, ·

· 1\. iT · · -r" i .ff

trr-Q')T- -.T·.~~l

'1'11111.I·: l<

11·11111 I 11111•.tl

1111111::n1v .:1111111· Ill' /\l"VllllllNii l'EW:llN,

1-tllqll

Coolc

~ill'

!!l_d_uf! ~-- r y__ Uc !lC ! . 11 •l I:~'-'

,.,., ..

_ ... --· ... ___ /\c•tnl r__l_n•J_ !'!!!_~,,.~

1· 1, .. 11 ...... ,. c:r .11111•11

..... FTC 111

tl111nl ". ,

'i6

/\pp1irP.l 11nd /\ccennnty ::lnrw;

•;1

fur 11 I t 11 r r ,

llom<> for 11 I nh I n•1 ,

iaorr!;

t'Tt'

11ii.i . ·- .T•1i.il

f.r.r.•Jnd RrflllP.!11 n

In sued

t:T~--[~).J_-· Tot~!

,..I

.1 ntl

l~quipmP.111

r I nr:•!!i

'iO

t:a t I nq nncl Ur Ink i n<J

'i'J

Hlscellnneous Rrtnll

nank ln•J

Cretllt l\•JP.nclr.n oth1·r

SP.cur I ty an<I CnmmtHI l t y llroko>r !J,

1lP.11lr.r!1, F:llcht111•11~!1, .1ncl Hervlcr>n

ln!111rance

J 'i

6..,

Hr.al F:st11te

If,

llolrtlnq and

llot1> I !1, R•mm It~ llmt!l••n, Cilmpn, 111111

othr.r l.oll•Jlnq rlace!'I

IJuslne!HJ Services

/\utomotlve Repair, Sr.rvlcr.!1, ancl 1:.11.1•1•"1

olltt~r

110.'

l11.111 llank!I

lnv1?nt1nf't1I. Ol I l1:r:1

7.1

'l'/\111.I: X 1•:0111i11111!11)

IN11ll:>TICY 1;1e11111• OF /\•"UllllllNI; t1 t:tl!illN,

l-lli•1 it

~! ! ~ ~~"'!.: !/

.. ·-··-"·' :!1'! 1_r -~ ~1J _f'e! .!!! 1!! _ _ _ -~-----

t~·!~!! ~L~! :!~: ~_! l'~ ! !:!"

c I 1?:11 .11w1: <:r .int"''

.....

N11ml11•r

Hot Ion Pict 11ri::1

/\muA•:m1:11t an•I 1lucr1!al inn f.t!I v ii:1!!i,

1-:XCt!pl Hot 11111 l'i cl111 •?!i

110

llealth f.ervlces

119

Hiscel laneo11:1 Survlc:e:1

'.10

None lass If i ah I e 1:11 tah I I sh1111:11t 1;

O Ivers If I e1l

Not l\v.i i I ah lo

Cnmp.111 i I'll

I\ I I ·rr an sac t i on:1

1'1114

.lO

, .. ,,'.

Ill

110.I

..-·n: -· ,·!0 1· :i·. i:. T

f.econit Rl'q11es ts

lttllllllll

f'f.~.

~i}J'"-·· .T~~~!.

]

I '1

6'1

117

1111

17 '•

11'•

I II 9

2-0l•Jlt SIC codes are part of the system of st.1011.ud ln1l11strlal Classlrlcatlon estahllshe•I by the U.S. Government,

!it.rndard Industrial Classification Manual, l<j/l, EKecutive llflice of Lhe President - Office of Hanaqement and 8udqet.

Thc.SlC-<JCOupln9illae<lfilt1\Ts table-were deter.ml1w1I from resjm11ses s11l11nlltc1I hy flllnq partlea to lte11 5 or the

prcmerqer notification and report form.

011rlnq calendar year 1984, 1400 trans.lctlons wf!re rcporte•I 11n•ler the ll.Ht-Scott-Ro11ino premerqer notification program.

Thu :;maller number, 1119, re{lt!cltt .ulj11:;trn1!11l1; tu 1:li1ni11.1tt! the rot111wi11•1 lypt!S ul lrdn!idclions1 II)

9 transactions

reported ·under Section lcl (61 dntl l~'J tran:i.11:ll1111:1 rcporlt!1I 11111lcr f.cclio11 (cl 181 I transactions lnvolvln9 certain

r1!•Jt1lated l1ul11atrles and flnani:ial b11sl111::;:;c::•I;

121

ll trdn:1action!1 which were followetl by separate notifications for

<UH! or more a1ltlltlonal lransacllons hulwt:e11 lh1: s.1me partle!l •l111ln11 19114 (such transactions are listed here as a slnqle

cons1lli1l.llcd transactlo11I; 26 transactions (0111111 to l11i non-1epo1ldldt!1

141

6 111.:omplete transactions lonly one party

In 1•.ic:h lr.i11:1,lclln11 file1I a crnnplidnl 11uti(i1:,11iunl1 .irul,

l':il

9 !it!<:orulary acq11lsltio11s ((lle1I pursuant to Section

11111.111 (1l)(411

11~portc1I .i:1 a ri•null o{ 11•1>t11to1hl1! prl1n.11y tr.1n:;M:ti1111s.

The lahl1: .101:!.I not howevt!r, e•clu.te 11

1-.1111111·lin•1 ol 1t•r:; or Ill 1n11ltipl•:-p.11ly lr.111:;,11:111111:1 (l111n:;,11:li1111!i i11v11lvl1111lwo11r rnore .lC•1'iirl1111 or acqulre•I persons!.

1'r.111:;.11·ti1111!l i11cl11<lt•1I in thl:1 1:1\tf!•J•llY reprc.'if!nl rwwly ro1m1•1I comp.111les, cornpanle:; with 110 11.S. operations,

•11•1111.-.11 j.,111; I tl•·•I hy 111olivi•l11.1I,;, .11111I1li1111:0 wilh•l1.1w11 111·1•111: 1111: i111l11s11y cl.1:;:;ilit.:11I ion .:11111•1 ht! detcrmlne<t.

'1'11111,1: Kt

tt11111:;nn 1:1111111' Ill° /\l'Ulllllnt 1:NTl'l'Y1

2· lil•t I I

:; IC C"cult~

ln•lust_i:Y. ...!J.e!H.:! l['l 1011

.. ·-· .

1•111-t

. ......... ~·:•111~_r,!'.•l_1-:n~ l_~y

1·1 ... 11 .11w" 1:1.1111 •••I

'l'n F'I,.

N111fthr1

/\•tr icul tur.11

/\•Jr lcul tor al rrocluct Ion-I.I v1>r.tock

Hr.la l

n It um l nous Coa I .11111 I. I •I'll t f! HI n I 11'1

Oil itn•I f;as r.11lracl Ion

Hlnlnq nnct Qu11rryln•1 or Numnr.1.all Ir.

rt rniucl l·m·-<:tttp!l

H I n l nq

· Hl11rr,1ln,

1'111•lr.

nul l<llnq Con!llr11ct lon-<:rnr.rill Conlr.11:lu1:1

ancl Op er all v,. nu 11 •lf'r n

CfJnstructlon olhr.r than lltil 1•11119

Construct I on-Ge1wr .1 I Cont. r .tc t.•Jr !l

•>1

V'"'. - 1111.i

110.1

...... ,j

-·~,'(~

·--0_r·-. !~·!~I

Humh•?r 11r 2-ll 'JI t

l11lr.1- lnch1!;\

__ Tl ~_1_rn~1c: ~Io~~-

r.11crpt

_2/

l-:-r.-

!i•·1·on1l ne•111r.st.n

l!rnue1l

I';

1110

)

. 2

Conr.tructlon-~prcl.11

roocl and Klnclred rrmluctn

Tohacco H.1nur itclt1! t'r r.

Te11tlle Hill rro1l11cln

/\pparr.l amt other Fin I r.hed Pr•ulucl.n m,1011•

from Fahrlcn .11111 Himll.H H,1tr.rl.1f:;

l r,

C:ra.Sr Contr.1c:tur!l

""' '"""'''

1'1'111.1·: II.

INllll:;TllY lilllllll' Ill' t.l\Jtllltt:n t:NTl'l'Y 1

1'1111

2-lll•tll

1H!: _1:~"'!! JI

! !~!!~•.! !.!:Y_!?~!!£~_ ! l!~L~~

-----~···1'..!l~_t;!•.!·:~!.!~y ____

.. ___ .

N11nilo1!r

1: 1... u .1111:1· t~r .111t 1-.I

!of't:11n1I ncquc9t s

..... l·"I\'. 01 'llll.I

IH!lllCll

!-;i·( ·-- ,-1~1.(· -~i·n~~l

~.. 1;<;--~o]--~f~-~a\

HumlHH or 2-olC)IT

Intra- ln•hl!ilry

__ T!.~-~~~c:_!:..! ~'~-

l.umher and Wood rrotlucts,

t:11cept Furn I tu re

furniture and Flaturcs

10.

raper and l\l I led rroolucts

'l1

Pr l nt I nq, ruhllshlnq ancl

l\l I lcd ln•hwtrlcr.

)

Chemicals c1nd 1\11 !eel rrnclucts

'•I

)

retroleum netinlnq and nelatecl I n1l11~a r I cs

l .

nul>hcr and Hise. Pl asl lcs rroclucts

I.eat her and l.eathcr l'roducts

Stone, Clay, Glas9, and ConcrctP. rr o.lw: ts

rr imarv Hctal

Fahrlcated Hctal rr 01l11c ts, f.xcept H.1o:h I OtH v

a ntl 1'r ans purl al I on t:q11 I pmc11 t

'.I

Haqhlnery, Except t:lectrlcal

4 '>

••

Electrical ancl Electron le H.1ch I ncry,

Equipment a nil Suppl I e 9

., ,,

ln1l11st1 les

'l'/\111.I: ll I

l•:n11I I 11111••11

lt111t1:t'l'llV 1;i111111• Ill' f\C'VlllUl:ll l:NTITV,

l'tll-1

7.-111•1 I I

!ii(" Coclc

1. n·~~t_!l ~r_y_ l_)_c_!l_c:! _I l' I I""

... I·-·----··.

.. ---~c:~'!.!_r:_~c1_.r.1!~l~y-

c '"1r.uw .. 1:1.1t1lt>cl

To l"n· m

U111nl,.•r

!Ill.I

F:1~ .. iti1.i

. ;'"'' .1T

!>1•co111I ll1·11111!Sl!l

lirn11r.d

'f:r~--.~>O:C- .T~·~i[

r--r.-

N11mhr.r or 2-llirpt

lntr<t- ln1h1ntry

__ .]'_~!'.':'~~~~

Trilnsportatlon Equlpmrnt

Hear.or 1 nq, 1\11,1 l y 7. i "'-I ,11111 Cont111l I l11•1

Instrument !1: l'holo•11 ;1phlr:, H1•1l I 1:.1 I

l\11d Up t le it l Goo1ln 1 WitlChC!I illl<I C l11ck!I

I l

HI see 11 ilneous Hilllll r .1c I en I nq ln1h1i;t.r iP!I

l.nc,1 l itntl S11h11rh.1n Tr .111!1 It. iHlfl

lnlf'r111lrnn lll•1hw,1y l't1?tn••n4t~r Tr ,·u1r.po1 t.11 I 1111

Ho tor f'r1• lqht Tr" 11r.po1 tilt I on

l\nd Hit.r chmm I 11•1

Water Transport<ttlon

'•

Trilnr.portatlon hy I\ i r

. ,.,

rlpf'l Ines, f:llCf'(lt N.1t11r.1l G<t!l

••

Tra11sporl<ttlon Srrvlcr!l

Commun I ca.t I on

r.lectrlc, Gas, anti S<tnltary Sr.rvlcf'!l

,,"

Wholesale Trade-Durable Goocl!I

211

.. 8

1'11111.I: ll,

!IF

INllll!i'l'llY 1:.111111•

2-ll i•J I l

! !'~~!! ~ !.L.!Je :!~ !.! ('~ ! '?!~

~ !!; -~·~·•!!. !/

Wholesale TraJe-Nonrlurahle Gornls

011ll1tlnq Materials, 11.u1lwarr., 1;,u1len

!iupply an1l HolJlle llnmu lh.!.111!1 H

111•1•····

M·v111111:11 1:tn-1·1·v,

1'1114

_--·----- ____ ..... _. ---- ____ --~•:•J•.! ! ~ !!•!. !:!i~ !!Y---....,-----,..,....__,------~

l'I 10,11 .lll•:C C.r.11111•.I

N1111~1r.r

;11111

...... r··~: _·!~. 011:! --

F'I\'.

llll;I

·General Merchandise Sto1us

t'ood Stores

Automot Ive Dea I ers and Ga sol lnu

Service Stallons

Apparel and Accussory Stores

Fu r n I tu re , Home Fu r n I sh l nq , a ntl

l::l)11ipment Storus

~rnl:l~

:;.,1·111111

-----

n·s

nequests

J:;~!!~!!___

!~':!

.'!'~~~!.

N111nh1?r of 2-0(ijTt

l11lra-1111l11stry

__'r.!f'~!'.'...~!:U~!"!~--

IC)

•

Eat lnq an1l Or Ink ln•J l'lacc!I

HlscP.llaneous Rutall

llank I n•J

Crerllt A•1encles other than nanks

Security and Commorllty nrokern,

ll•?alers, Exchd11•1es, anil H1!rvlce!l

ln11urance

. '>')

'•

T/\111.1:

t1·1111I I 1111t•1ll

tt11111:a11v 1;1111111• 111· l\•·0111111:11 1:nr1Tv,

1•111i1

2-11 i•t It

511' t:•1•lt'

_l/

! !~lJ~.!! ~ !.L ~>.•~i;•:.!__ Ip~ J_• ~.

..... _____ .. _ ..... . . .. _____ ----"-''.'l~ J_i:_e_i!~nt_l_t_y_ _ _ _ __

c 1...... ,llll'f' 1:r.11••····

ltf'CllOU llf'•Jllcsts

N11mhrr or

N111nlu~r

I 11 !'lltr a nc P. 'l\•J en t !1 ,

nr ok •' r !1 , ,., m I 1:.. r v I r. •? H

'1'11 l"'l'l' •11

1111,J

- i10.i

- •f·11\,:.. (

fi'<~

lnsucJ

f!~--!~i1r-- .'01~

2-01~

l11tr;1-lnol11nl1y

_ _'f.l.!'_l~!l.~<:_~~!1_s__

6';

lleal •:statt?

lloldln9 and other. Investment Oft lcr!J

llolel!l, Rnomlnq lhnl!lf•!1, Camp!l, .in•I

other l.0tl•1 I nq I' l ;u:••n

l'er so11<1 I r,,. r v I cen

h11!1l11Pns Servlcen

7.4

7r;

1\11 tomot Ive Rep;, Ir, !1e r v I CP!I, ,.,nil Gar .1•11":

'J.

Hollon rlctures

l\monf'lnent ;tnd Recrf?ill Ion Serv lc•"l,

E llCP.pt Hot I on I' I c I ur ••!1

llf'alth Servlcf'n

)

'l'l\111.1·: )(I

fc:unl i 11111,.1)

ltlllll!i'l'ICY c;11rn11• Ill' l\t'IJll llll:ll t:NT I 1'Y.

2-lli•Jil

~!·~_<.:c_>·!~

.!/

1~ 1! 11 sU.~:!~~Jr1:. ~·~~

I 'HI 4

- --------fl•'•lr.1nc:c

--·--------------"~!1'!!

~~!L!;~~l ty

C.1.1ntNI

n1?co111I llC'lll•?sts

or 1>0.1

~·~· --· ,);;,r---·f;;~!!t

To F'l1:

~111nh1;~-

I s1111e1I

f,~--f~~r- _!ottl

H11mh~r

of 2-0lqlt

Intra- I n1l11s try

_ _T!_~~!~~!..~~--

E1l11ca t Iona l Services

Miscellaneous Services

Diversified Companieu

)

Not Avallahte

I ti 9

I l'i

4 \2

All Transactions

?-Digit SIC codes are part of the system of Stand.ucl ln1l11strlat Classification estahllshcci hy the,U.S. Government,

.!'!?~. F.•ecut Ive 01 I Ice uf the !'resident - Off ice of Hanaqeme(lt and Bu<lqet.

The SIC qrn11pin•JS USl!d In this t.1hle were clc!lcrminccl from rci:;111111!i<!S t111l11nlttci1I hy fllln•J p.utles to lte .. S of the

prcmcr•1er _notification and report form.

Durln9 calendar year 1904, 14.00 transactions wc!re reported un•ler the llart-Scott-nodlno premerqer notification pco9ra111.

'the smaller number, 1119, reflects a•l\11i1tme11t!1 lo eliml11.1te lh•! fnllowln<J types of trdnsactions1 llt

9 traneactlons

reported under Section (cltlil ancl lS'J tr .. 11!l,1i:tlo11!l rcportc•I 11111ler Section (r.1181 (transactlnns lnvolvlnq certain

re1111ldlcd ltulustrles ancl flnanci.11 h11sl11e:1scBl1

121

·12 trans.ictlolls which were followe1I hy separate notlflcatlons for

one! or more Ail•lltlonal trans<1ctlnns hctwcwn 1111! s.1mc p.utlcs 1l11rin•J 19114 (such transactions are listed here as a single

cn1woli1t.1te<l transacllon)1 26 lr.i11s.u:1io11u l1H11ut lo he 11on-rcl'ort<1hle1

(41

6 Incomplete lr.snsactlons (only one party

111 1:.11:h l1.s11sacllon flle•I a complla11t n11tific:.t1io1111 <ln•I,

('>I

9 Hc•:o111lary ac'ltilsitions f(ilctl pursuant to Section

1101.}0 (d) 1411 rt·p•Hlc•I 11R a rcmtlt of rt•p11rl.1hl11 p1 l1n<11y trdn!laclions.

The lahle 1lo1:R not however, exclude 11

t:11111111:t in•1 ollt:rs or Ill m11lllpl1!-parly t1.111:i.11:I inn!i

ll1..c11:;a1:I ion:; i11v11lvln•J two or m111c acq11lri11•J or acCfulred personsl.

T1an:1.1..:l ion:1 in lhi!I c:alt!•J•Hy lnclu1l1! I 11 i11•1:i wilh1lr.1w11 i..,1,,.·1: "'' ir11lo1:il ry •1ro11p co11l1I ht: 1l111nrndnnd and newly formed

.1.:op1i11:cl t:lll ii 11':1,

~la!!~!~!:.~ l!~~!U~l £la!!!.U£~~J~!!! Hd!!~!.•

Exhibit B

---

Tuesday

September· 24. 19~5

...

- =.::~~

~~-=

-----

Part II

- - - ---- - ---- ----- ---~

Federal Trade

Commission

16 CFR Parts 801, 802, and 803

Premerger Notification; Reporting and

Waiting Period Requirements; Proposed

Rule

38i4:?

.-·

Federal Repster I Vol. SO. No. 185 I Tuesdav. September 24. 1985 I Proposed Rules

F'ECERAL TRACE COMMISSION

ter:n ia de~ed iD Exec-.itive On:ler

u::st. ~ proposed ru!es will oot result

• ~Parts 801, 802. and 803

Premer;er Notification; Repor'tinQ and

Waiting P•riod RequJrementa

.AGEHCT: Federal Tr.ide Com.minion.

AC'MOM: Notice.1;1{ proposed ruJemaking.

suwwuv: These proposed Nles would

amend the premerger notifi~tion rules

that require the parties to certain

mergers or acquisitions to file re?.c::s

with the Federal Trade Commission an.d

the Assistant Attomev ~neral in

charge of the Ant1trUs t Di\·is1on of the

De?arunent of !us-.ce and :o wait a

specified pe:iod o!' time ~efo:'!

conswnmatlng sucn transac:Jons. The

te?orting and wa1ung pcnod

requ1re:':'lents are intended to enable

these enforcer:1ent aee:-::1es to det!l'Tntne

whether a pro;:>osed ~!:;!: or

acquisiuon m1gi':: v1oia:e •i':e an:Jt:--.is:

laws if conswn:::ated and. when

. appropnate. to seek a preitr.:inar:;

ir.;:.:nc::on in fecie:al cou:-: to preven:

consu:::mauon. Dur:ng the se\·e:-: years

the :-ules have ~e!n 1:1 effec:. t."ie Fede!'al

Trace Ccc-..::ussior:. with :he

conc:.::-:ence oi t.":e ,;,ss:s:ant .~!torn!\·

Ger.e:al for An:Jt~st. has arnende~ :he

• '":'le~e: no11iica uor: rules se\·e:ai

s in orde: io 1m;:rove t.he prog::a::fs

e~.ec::veness u:crto lessen the :ii.::cen

of :or.:plying w1t!'l the :-ules. These

proposed rev1s1or:s are ir.tendec 10

for:he: rec:.:::e !te C:>Sf !O the ;:ii.:olic o{

compiying wuh the rules and to im?ro\·e

the pr:i@ra::i s ef! ec:i .,.er.ess.

DA ns: Cor::::-:cnts :::u;;: be received or:

or :i!fore O:::uber :~. 19J3.

AOO"'ESSES: ...... :":'.'.!:". .::or.::-::en:s shc..oiC:

be submi:tec !O !:lot!': (~ 1 :he Sec:-e!or-;.

Feceral Trade Cor._-n1ss:.Jn. Room 1~::.

Wesh:ngton. DC :0530. ar:d ;::: the

Ass:s:ar:: Ac:c:":'\e\· Ger:erai. .~::::-.;s:

Divmon. De~a7~:'!'1·'!r:: -:ii lus::ce. Room

3::H. Wasl:::ig~on. DC :?0530.

lfO" l'\:RTHEA IHl'OltMATIOH C:ONT AC:1':

john M. S1p~!e. Jr .. Senior .'\ttorney.

P:eme:;zt: >;ot1!'::;.a:.or: Offi.::e. or

Ker.net~ ~1 Da\·1cso:-•.~ttor.:e·;.

E\'a!i.:at:on C'~::ce. 8:;::'1:.: of ·

Co:npet:t1or:. Room 39:'.. Fede::! T:a::e

Co!':'.~:ss1o:i. \\ as!':::igton. DC ZOSoO.

Tele;:ihone: (ZO:?i .5ZJ-34C4

SUPPU:MEM'T ARY IHl'OlllMA TIOH:

Reiul<1tory nexibilit:- .o\c:

V\' .:h two e'ce;:::or.s. :he ;Jropose'.i

ar.:c::-..::ner:!s co the H"'r:.Sco;,. RoC::no

p:e:-:-:er~~: r:o1::::a:.cr. :-..;!es are iarge~:

ter."::-:::o: or c!es:;z::ec :o roe:fo:e !he

e!": to the ;:i;.;S11c of re;'.)or:::-.• The

'- .:r.::ss:o:: has dt!e::":".::-.ec n·ora of :he

pro;:iose: rules :s a maier r..;le. as :hat

in: an annual effect on the economy of

SlOO million or more: a major inC"!ase in

cosu or prices !or consw:ne%'3.. inclividual

iDd~tnes. Federal State. or local

government agencies. or geographic

regioru: or. aignilie«nt adverse effecu

on competition. employment.

investment. productivity. innovation. or

on I.he ability of United States-~d

enterprises to compete wtth foreign·

based enterpnses in the domestic

mario:et None of the amendment. would

expand I.he coverage of the premerger

nouficauon rules in a way that wouid

affect small business. Therefore.

punuant to 'ecuon 605(b) of the

Adm:nistrauve Procedure Act. 5 U.S.C.

605(b). u added by the Reglllatory

Flexibility Act. P.Jb. L ~

(September 19. 1980). the Feder-al Trade

CommisS1on cero.fies !!:at these rules

will not have a sign:ficant ec.onoauc

im;iact on a substan11al nwnber of amall

entities. Section 603 of t.he

Administrative Procedure Act. S U.S.C.

603. requ1nng a final regulatory

flexibility ana!ysas of these n.iles. i1

therefore inappi1caole.

Paperwork Reduction Act

The Hart-Scott-Rodino ?=-!merger

Nouf:cauon n.ile and :-eport fon:i con:ain

information ccllec:1on requirements as

defined by the Paperworic Reduc:1cn

Act. +4 U.S.C. 3.501 et seq. These

requirements have been rev1ewec ar.d

appm.,.ed by the Office of Management

and Budget (OMB Control ~o. 3()8.;..

0005). Because the proposed

amendments would aife" t.he

infor:nauon collec:ion requirements o~

the preme~er noufica ::on ;:>rogr-am. t.".e

proposed amendments have been

submltled to OMB for review ur.cicr

aect:on 3504(h) of the Paperwork

Reduc:1on Act. Comments on t:Oat

1ubmission may be direc!ec to the

Of~:ce of Information and Regulatory

Affain. Office of Managerr:eni and

Budget. Attention: Desk Officer for the

Fede~al Trade Cor:--T.1ss1on.

Bac.kgrou.ad

Section 7 A of the C:u·:on Ac: r·the

act .. ). 15 t.:.S.C. 18a. u added by aec:1on

201 and :?OZ of the Hart-Sco!!·Rodi::c

Antitrust lmpro.,.eme:as .-'.c! of 1976.

requires persons contemplating ce!"ta1n

1cquisi11ons of asse!s or voting

sec:iritif's to g1\ t advance r:ouce to &.e

Fed'!ral 7rade Com=:::ssion :hereaft~:

refer.ec! to as "the Com!!:1ssion"J anc!

the Assistant A:tor.:e\' Ge:-:eral in

charge of :he Anm:--.:i1 D1v1s1on of the

Depar:;ner:t of Justice (hereafte:- refer.ec!

to as ··:he Assis:ant Attorney General")

and :o wait cer:ain de'1gnated period'

before the consummation of such

acqumtipo.a. The traruac:ions to which

the advance notlce requirement 11

applicable and the length of the w1111ng

penod required are aet out respectlveiy

in 1ub1eeucna (•I and (bl of section ; A.

nu., amendment to the Clayton Act

does not c:.b.ange I.he standan:ls used :n

determining the l~al.ity of mergers and

acquia,itions under the antitrust laws.

The l~slative history sugge5ts

eeveral purposes 1U1de:-ly1ng the act.

Fin!. Can.gm• dearly intended to

eliminate the 1-rge "ll1ld.rught me:-ge~ ··

wh1c., ia negotiated in aec:et and

an.nou.nced 1ust before. or sometlm1!5

only aft:r. the closing takes place.

Second. Congress wanted to asst.::-e :!':.:

large acquisiuons were sub1ected to

meaningful ec::ut1ny under the antit::.;s:

laws pnor to consumr-ation. Th1rc.

Congress provided an opportun:ry for

the Comm1s51on and the Ass1s:ar:t

Attomev ~nerai (who an! some11m1:s

hereaftir referred to collec:1veiy as t~~

-anttln.iat agenoes" or the ··eniorce::it!".1

agencies") to sttk a court ordel'

enjoining the corr.pleuon oft.hose

transcc:ion1 tha: the ager:cies dee~ :o

present s1gn1ficant antlt."'Ust proble:r.s

Finally. Congress sougnt to fac1L:a:e an

effec:ve remedy when i d:aliengoe :y

one of the enfort:ement agencies ;:ir.J\ ~c .

1uccessful. Thus t.he act requires t.!".a: :N

agencies receive pnor nouiicanon oi

a1gruficant acqu1sltlons. provides cer:;,,~

tools to fac:litace a prorr:.;:t. thorougn

tnvesngatton. and assures an

oppornm1ty to seek 1 pre!1mir:ar:;

in1unc:1on before !..':.e pa mes are leb~ :: :·

free to complete t.':.e transac:1on.

eliminaung the p~b!e::i of ur:s::a!'l': ;::;, :-.;

the as~ets aitel' the :ransac::cn i:as

taken pliice.

Subsec:1on 7A(.:}(~) of :.'le ac:. 15

U.S.C. 18a(d)[1). Ci:ec~s u'ie Cor.:::i:ssio:-.

with t~e conc:ir.ence of the ..a..ss1s:ant

Attome\' General. in accordance 1.1.::!': 5

U.S.C. SS3. to require that the

not1f:cauon be in such Cor:n and co:::a::-.

1Uc:h infonnation an::! docurr:e:-:!<1:j

material u may be necessa:-; ar:d

appropriate to de!er.:11ne whoe:~.e: :".e

proposed transac!:::n :nay. if

consu.':lma:ed. violate th! an:m:.:s1 •a.,.. s

Sub!ecnon :"A(d](:?) oi :r.e act. 15 C.5 C

18a(dJ(Z). gran!s the Cor.:=:::rno:-:. "'.:"'.

the concurrence oi the Ass1s:a:-.t

Attome\' General. ir: accordancEc w :~. :

U.S.C. ~3. tbe aut."ionty (Al co c:!e'.::-:1·the te=-ms used in the ac:. (B; '.O ~·'!~,~ ·

addwonal pe:-sons or transa::1c:-.~ :~::-:

the act's Sot:!ication and wa:::~g ;:>e .. ;:

requirements. and (CJ to ;:iresc::b! ~~~·

other n.iles as may be necess::: l " :

ap;:irop:'iate to ca~· out the ;:iur;;o~es c:

aec~ion :"A.

Federal Register I Vol. 50. No. 185 I Tuesday. Se?te:::ober :?4. 1985 i ~?osed Rules

On Oece!T.ber 15. 1976. the

Ccmmission iuued proposed rules and a

proposed No!ificauon and Report Form

("the Form") to implement the act. Thts

proposed rulemaking was published in

the Federal Reogister of December 20.

1975. 41 FR SS-988. Because of the volume

of public comment. it became clear to

the Commi!lsion that some substantial

revisions would ha\'e to be made in the

original rules. On Juiy 25. 1977, the

Com:nission determir.ed that additional

public comrr.e!'lt or. the rules would be

desirable ar.d a::ipro,·ed ~vised

;:~posed :-.;le~ and a revised proposed

r:o11ficat:on a::.c Repc:-1 For:n. The

rensec n.:ies ar:c Fo~ were pub!ished

ir. t~e Fede~;; Reiiste: of :\u~cs: 1. 1977.

4: F'R J~,j .-\.:c1t1c-r:ai cha~gcs in the

re\'\sed n.i:es and Fc.!":n we:e made after

:::e c!o~e of :!-;e co!'Tlme!'lt ;miod. The

Coram!u:on fo:-::-:aily prorr.u!~atl'd th!

L::.1i :-.;!es ar::! !='om. and :~scec ar.

<:~c::i~.pany::::~ S:a:ma::::i of Basis ar.d

P:.:~i:-~t c:: l:.:lr io. 19:"8. The As;i::a:::t

At1C1r::e;· Ge:::eral gave his for:r.al

c.or:c:.::-:-er.~c o::. fuly ltS. 197'5. Th~ lin~l

r'.lies ar:d For::: ar:J :he State:7':ent cf

Ba•:s .?~C P..J:-;os~ we:! puc!:5hed t!". :~e

Fec!erai Regi~tP':' of Jc!v '.'~. 197'2. .;J FR

:;;~::::. a:::ci b!'came effo:::·.e ~n

Se;::embc~ :. 19'."e.

Ti:t rules are c,;;, 1c.!~c :r.:-. ::::tt: p~rt.>

v.!:ic!: ap;:ea: al 16 CFR P.w &01 w:.

~::c 3CJ. Par: 501 dc:!1.:ies a :iumuer ci

t!':!' IE~:::.s used in thl! ac: ar.ci :-ules. and

e .... ;::a1ns ""h1::h acqo.:1S1t1ons are suo1cc:

h ti"::! ;e;,>c:::::~ ar:u "<.:t:r.g penod

ro.::;:;::!'~c:::! P.;r: w:: co:: tc.:::$ a

!'l;;::-::;c: cf e ... e~?tions from tiiese

:c:-~:.;:~eme:1ts. Part 803 expi.ur.s the

r·-·c!::;.;:es :o: :::::rr.piyin~ with the ac:.

'fot: '.\otif:cauc:: ar.ci Reper: For:::.

":.. ::: :s cor.i;:ie!ec =~ pe:sc:::s re-.:;:.:::ed

tr. fiie r.ot:f1cat1on. I! an aot1er.d::-. to

J· .. :· 5'13 oi :he :ules.

··

T:-.:ee ::.~anQes ha,·e bee:: rr.ade in the

preme:-Fe: noi1ficatior: rJles s:nce the~·

\'e:e fi:~: r.!or=:i;!gate:!. The firs: was a::

i:::::e!~" ::: :!:e rr.:::1mum dc!:ar \'al:.:e

(•,e::":;:::on dr::iu::ed 1n ~ 80:.20 of :he

::.:ie!. This amendrnen: was prc:posed !n

tr.I' federal Register of A;.igus: 1C. 19':'9.

.;..; FR 17'09S a::C: was pubiished ir: ftnai

fc~ ;r. the fedc:::il Re-gister t.•f

!\c,·c:':".~ t:' ::. !9-ll .;..; F'R &.ra1. The

scr.onc ar.:e!':.::nt!':t re;:!::icP'd ttie

requ!:tme:-:t tl':at ce:ta:r. re,e:iu~ d11ta

fr·~ th!' ~ H:' 1~-: be pro\'ldP'd in tl:e

~.;o::!':.:.a!10:-: a:-:c R£;:>crt fN~ w;:h a

r!'~:;::'c-r..P!'" :h:ll c::ir..~c;rat.<t> d.;:a be

pr~,·;.::t'c fr.: :!ie ~ear 11:1;- This char.~P

w2~ :n2cit t-ec;ii;se tota! r!.'ve:i:ies for

the \ear 197'~ brol..u: dowr: O\ Sta:ic!ard

Ir.d~s:::ai C!2ss:f:::a:10:-: (SiC) codes

beca~e aqiiabie fror.-. the Bureau of :he

.Ce:isi;! The a~er.d~er.'. a;:'pP'ared ::i thP

federal Re-giater of Mardi S. 1980. 45 FR

14205. and was effecnve Mav J. 1980

The third set of changes w"ere

published by the Federal Trade

Ccmmission as proposed rules changes

in the federal R~ter of July ZS. 1981.

46 FR 38710. These revisions were

designed to clarify and improve the

effecuven~s of the rules and of the

Notification and Report Form as well as

to reduce the burden of filing

notification. Several comments on the

proposed changes were recer..·ed dur.:'lg

the comment penod. Final rules which

adopted some of the s1.1gges11ons

received dun.'lg :J:e comr:ie!'lt penod but

which were subs:ar.tiallv the same as

the proposed r.;Jes. wer~ publisned ln

the Fede:-.! Register on fuiy Z9. 198J. 48

FR 344Z:". and oecar::e effecttve on ·

Aug!ls: ::9. 1983.

ln additton. the Notificatton and

R~;:-ort For.:t. !cu:'ld in 16 CFR 803

(Append:.~). has been rev1sed twice. The

new versions were approved by the

Office of Management a::c! Budget on

Der.ember.~. 1981. anc! F'ebnJary :3.

195:t. respecn\'eiy. Sir.ce tl':a: :ir.ie the

;'.;otiiica11on and Report Form. in its

cur.er.: \'ersion w11t some add1~1or... !

mine~ c!ar:f1cat1ons. has been appro,ec

by the Off;ce of :-.1ana~e:ne!'l! and

Buc2Pt. The most rece!'lt approval came

on Sep:ember H. 1954.

The ge!'les1s oi this set of proposed

chan~!s to the premerge: notifica 110::

rules 1s a ccn11nui:::2 efic:: b\· tl'.e

Commission to red~ce the b~den of

fil:r::i p~!!!'!".er~e~ not1f::attons. That efio::

""as the !oc:.i~ of a ~1.111ce of Request fo~

Comments lht> Commission pubhsl":ec m

the Federal R!iister on fi.;Jy z. 198:. (.;;FR :916:). Wan two exceptions the

amendments to the rules proposed in

this :--;ouce are based on that Request

for Cor=:::te!'lts. the comme::ts rece!\'f:d

as a resu!t of that Request. and reiated

burden reduction efforts. The pro;::iosals

seek to accomplish this reductior: by: (1)

t-:arrowir.g the typ" of acquisitions that

mus: be reported through the

nouficatto:: process. (11 red:ic:.n~ the

doc:l!!'lents or information that must

accompany noulicat:ons. ar:ci (Jl

clarifying the meaning of the r:::u!ica:ion

n;Jes. The two proposals that de r:ot fit

this de~c:iptior. are d:sc:.iss!!d sep<ira te 1:,

below.

The 198: Reques! for Corr.rr.ents

outlined fo..:: approaches to red:.;c:r.F the

burden of the no11fica11or: progr:.~. thre~

c! which for.ii the ballis of sor.-.r d these

proposed a:::e!'ld~ents to the r.:!e5 n.e

approaches to burden redi;c::on c:i

which comme::.ts were req!lestcd

included: narrowing the coverage of the

rules by raiS'lng the dollar threshoics

that determine which acquis1ttons must

be reported: setting separate higher

doUar repornng t.b.resholda for

acqu.i1itloa.3 in aome industries:

e!i.millating one or more of th.e

auci::euive reportiD.8 requ.i.remenu for

additional acqui1itions of voting

1ecurities: Uld.. allowing persons filing

11otlficatioaa to reference inionnauon

'nd documents fl.led in previous

11otificationa.. rather than require them to

resubmit tho1e materials.

The Commission is proposing to raise

one of the dollar thresholds that

deterntine the coverage of the nJles but

not the one discussed in the Request for

Comments. The Request disC'Jssec

raismg the statutory S1.S million

mini::iwn size-of-transac:ion c:iter:a oi

secnon 7A(a)(3J(BJ to S:S million. T!':1s

discussion was premised in part on

atausncs from transactions filed m 1981

showtng the enforcement agencies had

demonstrated a lower level of inte~est :r:

transactions of less than S:S million. [: is

clear from statistics cove:ing 198: ar:c!

1983 I.hat the patte!'n of lpwer

enforee::ient ir.terest does not pe!',is: ::-.

the subsequent years. Consequen:!;- :!':e

Com:'!'11ssion has not pursued that

ap;iroach.

The Comnussion has. however.

inc!;.ided'tr.:ee proposals LC this :-;~t:ce

that would narrow the CO\'erage oi :.'le

rules. ln ~:-oposo.l 6. the CcJT.inis!ion

would raise the doilar threshold :r:

§. SOZ.~(bl ar:c thereby reduce the

number of acqu1s1uons valued a: S15

million or less that are reponaoie. !r.

proposal i. the Comm1ss1on wouici ace .;,

new rule. proposed § 80Z.:lS. to ex er:".;:-:

the acqu1S1t:on of an emp!oye( s \·o:;.r.~

aecunues by certain emp!oyee t:".;sts :r.

proposal .i. the Conu::1:ss1on wo;.;!d no

longer require a nouf1ca ttO;i for ce:;a i:l

1mall acqwsi!lons where the J:)a:!:es :iac

previously filed a noufica t1on.

The Corr.mission has not four:d a

basis for establishing separate

thresholds for differe:'lt indusmes The

Request for Comme!'!ts noted doubts

that suc.'1 system could be de\·1sec.

Further studv has confim.ed tte

d1ff:c:.ilty of'deii:ung inc!ust:-:es ar.c

establishing separate threshoids. lr:

;iropoul 5. howe\'et. the Corr.r:::ss;or.

wouid establ:sh a hii;~er th:-esi':olc fo:

acqu1s1t1ons of carbon-based :-r.::ie:ais ~.r.

proposed I 802.J and woi;!d txe!'::;::

e::nreiy acquisi110::.s of cer:a::: k:::c!~ of

real property that are defi::ec :::

prcposed § 801..Z.

The Ccmm1ss1or. has :-:o: ;;:'o;:oseC: '.C

e!im1nate any of the seque:::1.;i

thr:?sholds !or :eport:ng :nc:ease ::!

ho!d1ngs of voting sec:.in:1es. Tl':e

Comm1ssior: cor:t!n:ies to f;:::c ar.

inc:-ease in the percentage of sec:;;Pies

Federal Re-gister I VoL SD. No. 185 I Tue:!eay. September 24. 19SS I Proposed Rules

j by a person to be a matter that can

exemption thresilold) and propo..aJ 7

1u1ve competitive significance.

(conc:&nlUl.8 an exemption f.or

The Comlltission adopted the

acquisition.a by employee trust.)

suggestlon:s in the Req•Jest that persons

becauae each of these det.ermi.nes for a

filing aonfication should be pt!'!"IT'jtted to

aubs tan ti.al aum ber of tran.aa dion.a

incorporate by refe!"ena cen&in

whether an actiuisition mu.et be

previously submitted doc-~-ments and

reported. ln addition proposal.a 1 and 7

information when it promulgated

deserve attention bee.a~ these

t 80Z.3(e} in 1983 (48 F'R 3+438 Uuly 29.

amendments respond to OQiOl.llg

1963)). On the basia of exi)enence wtth

developm~ts in the Con:n and manner of

this rule the Commission would in

ma~ 1cquisitions.

proposal 10 now further reduce the

The thirteen propos.als in this Notice

materials that must be submitted with a

ue arnngec±. to the extent that clear

not1ficatlon. A new af!Ction. proposed

exposition pe:-::1its. in the order they

l 803.9. would replace exming

would appear in the Code of Federal

§ 80:.J(el. ln propo&&l 12. the

Reg1,;lat1on<.

Comm:ss1on would aiso reduce the

L.iat of Subject•

iniol'T:latlon M!quired by die !'-lonfic.ation

and Report Fonn.

16 CFR ?ar.s 801 ar.d BC':

ln adciluon to these approaches. the

Ann trust.

c~mrruasion aeeks to reduce the burden

of the notificauon prog;am by a aeries of 16 CFR ?ar: SOJ

amendme:ua to clarify the meanir.g of

Antitnat. Reporting and

these rulea. largeiy by codiffUlg infcr:nal recon:ikeeping :eqw:e::nent1.

intefi)retationa oi tile Comm1asion staff.

Propoeed St.atemeot of Ba1i1 aod

These amenci:nent1 include; a inethod of

~(QI' the Commiuaoc's RevlM<I

calc~Jaung die aueu of a newiy-for:ned

Pntme~r Nonficatioo Rules

enuty in proposal Z: a method of

caic:'.Jlanr.g t.lie ;:ie:-cen:age of vowig

Aut.iorrty

secum1es a pe:-son hoics ;n propoaal 3; a

The Fef:il'!rai T:adt' Comrnisa1on

desc-:i:nor. of acc;u1S1t1ons tha1 are

propOSell t."iese amenoents 10 the

•1:e!':':;ll because t.liey are 1r. die ord1r.ary

premerger nouf1canon rules ?ur:su.;ir.t to

.::se of business in proposal 5: the

section 7A(dl oi t.he Ciavton Ac:. 15

.• c;u1~::ients for gw~ng notice to an

U.S.C. lSa(dl. as adcied by aecnor. :::n of

acquired enuty Ul proposal 9: the time

the Hart-Sco11-Rod1no Anutrust

wher. the statutor;· waltir.g penod

lmprovemenu .~ct of 1976. P...:b. 1- *beg:r.s for nouf.cat1ons oi the for.:iation

435. 90 Stat. 1390.

of 101nt ventu:-es tn proposal 11: and a

se:-ies of cha~es to exam?les in the

L Section• 80'1.1/n) aod !!01.S

rule5 to M!flt'c: ame:-:cirner.ts to t.lie rules

Acquiaitioo \•eb.jcles

in ;:iroocsa! 13.

The Comm1ss1on proposes to amend

F:nally m propo,al ~ and ?repose! 8

it1 rules to require pe:sons intending to

the Comr:-:11S1on addr!lls!ll matte!"S other

make acquis1uon1 ju-ough cena1n

lhan burder: l"'l?Ciuction. P:'cposa! 1 wouid

ennues to fiie no11fica11on1 as if thev

ac~ a new r..:le to cover a for:n o:'

were making :.hose acqwa111oas dU'~c:ly.

transac!1c:-; :::at has ber:orne

Although die premerger nonficauon

mc:eas:ngf\ prevaie:-:t. The proposed

rules subject many indirec: acc;u1s1t1ons

rule ""ou;c: require pe!':lons to file

to antitrust review. acquiStttons tr.ade

no:1iic.;i.1t1cni. ior acqumuons mace

through entitles whose pnnc1?al pu.-;>ose . by entitiell that are not "eontrelled·· by

other persons f:-!quer.tlr are not

is to make the acql!ist!lons ~ if the

re;>ortable. The Commjesion ha'

ac:;u1smor.~ !'l•d been made direc:lv.

cor.c!uded :.hat such acqu1s1uon1 should

?:'opes;,! e ... ould til!:'l:nate a l:ttle ~sed

be reportable if the enoty s main

e:o.~:::;::tion to er.sure t.."l.i: certain

f..10:::t1on is to make the .icq:.us:uon and if

ilCQuisiuons ore subjl'c: to me.in::-:gf.:i

the ac:qu1S1 ti on would ha \'e been

ar.t;::-..:st rt,·ipw.

reportable hac the ent1:y·s ownen made

The Commission ir.v1tPs tnte~s:e:::

their acql.!isition.s directly instead of

pe!"Scns to s~bm1t cornmer:ts er. the

through that entity (or "acc;uiStti~n

natu:-e and ~co;::e of :ht- ;>robl1::ms

desc:-ibec in ~e P:'opose::i St.; t!men! of

vehicle"). The Commission proposes to

Basis zr.d P...::"?ose a~ .... e!l u t..".e

add a new rule. proposed l 801.5. to

ap;:::opr:a\er.ess of 1..':e ;::rc?o~e<l

~quire owne:-s to fiie notifications !or

ar.:t:i:::":e~!s ~o !~e r~l!~ as soi1..it1or.s ~o

acquisitions made by enuti" cieemec :o

t~OF ;>r-:>:.ie:::s Tli'! Co:-r::::.ssion ir.·:1tes

be acc;umtion vehiclu. The de!:nitior. or

'tii:~G: att!!":!:·cr: ~o r.-rc?osa: 1

the terr.i "acquisition vehicle'' wowci be

.;:i:-::!••rur.; t!':e ··ac~·..:1.>i~'or. \'e~:c!e ..

placed in pro?osed § 801.l(r.).

r..:ie). ;:::::ccsa: 5 {cor.:e~·'.':g 1!-:e

For tax and othe: business rusons.

e~e:::;:it1::n of cer:ai:-: k!~ds of asse!s).

many acquisitions are road'e by a .newly·

propo,a: 6 '.con:e!'":':me ar: r:;c:Pase 1r. an

formed entity. The owner of that entity

typical..\y cont:ributea the capital or

~e.a fill' Joana that are uaed to m.Ue

the ac;quiaitian. Commonly. Uter an

1cqw1itioc i.a completed the ~al

IXlllenc! a{ eitbu the ac:.qwnd entlty or

the newly-latmad entity ia di11olved in i

1t&tutory merger.

In meat tr&Daactiom. thia formation of

an ei;aty to ~li.e an acqw.aiuon has no

effect on the parnu wbo are required to

file premuger aoufications. Tn:11caily

the newly-formef:! entity ia a wnoi;y

oWtied aubaidiary of an existing

corporauoa. Because. pursuant to

§ 801.l(a)(l). the subs1diarv 11 c.onuollec

by its pa~nt c.orporauon. tne n.;!es cee~

the ··w11mate parent entity .. to be :he

aeliwring persor.. Accordingiy the :ire·

existuig pa~nt corporanon is required

to file a premerger not1ficauor. ... ne\nc~

or not it creates a subsidiary to effect

.the acqumtion.

A1 the Statement of Basis and

Purpose to § 801.l(a)(!) notes. 1i :.":.:s

were net the result ··1.."le ultimate paren:

enttty would be able to evade tt:e

re-qu1~ments of the act by rr.anipu;a t:::~

the !subsidiaryj.- 43 FR 33456 ()uiy :il.

1978). Quite apart from the ques:1or. of

evasion. :.hat fili..'lg obligation 1s

appro?nate because the parent

cor;iorauon is the real par:y in in:e~es:.

The subsidiary. wha1ev~r the reasons

for its C'!Stlon. 1s not a tunc:~1o~:=i;:

bulllness. at leaat not unt1i !he

acqu1s1t1on i1 completeci. !111 a sh!!!

incapable of corporate ac:1on ur.::!

capital and corponite purposes are

suppiied by its owner. The ulu:nate

parent enllty 11. the:-efo~. the acq~:;::-:~

person. Mo~ve:. it is the cor.t:oi

obtained by the parent and the pot en na !

for ;nt1compeo11ve effects frorn

comb1n1ng its business Wlt.h tha1 of ~h~

acquired entity ther the act seeY.s to

ha~·e the enfon:ernent 1genc:es ~"i""'

These N!Uons for requiring

not1fic.at1cn.s also apply to aome

acqui11tion1 in whicn owners of

acqu1nng entities do not fit the

premel"!er Nies' defin1hon of ;n

"ult:::nate parent ennry." U. for exa:::;:!e.

four corpora tlon1 each acquire :.S

pe:cent of the voting sec:u::ues or asse:s

of another corporauon. the ac::;u1sittcn

would be re?ortable (asawnmg tbe· ac: !

s1z~·of-penon. 1ize-of-tnnsac:1or. a!lc

other notificaoon cite:ia are sat:s!:ec !.

The four teparate cra.naactiona woui~ :.e

uarr.ined to determine iI owne:-sr..; ;:i!

the acquired penon·a votlni secu.:-.:11!!

or assets by any of the fou~ 1a !tke!) !o

lessen compection. If. for pt:..~usts o:

ac:;uir:n.g the voting aecunoes. tnt fo-..::

we:-e to c.-e1te an enotv tQ maio:e t."te

ac::;w:sition. the anutru;t interest 1n ~i'.e.

transaction would be unchangec. In iac:.

suc."i acqw11uon1 ty;11cally are followed

Federal ~r I Vol. SO. No. 185 / Tuesday. ~J?mber 24. 1935 / Prop:o:aed Rules

1 a $Ututory tnel"'8er th.at is oot mbjec!

lO the rure's notification te.quiremmt.s

and that tran$fers direct ownership to

the four owne~. ln ~ instan~ not

only is the antitrust interest in the

traMection the 'eoe es in a direct

acquisition. the 1"Ulti"' legal ~ts in

the busine~~ ere identical: each would

then directly own ZS pereent of the

shares o{ the •cquired busin~s.

Ne,·crtheless. existing rules do not

cor:sider 1ny o{ these o"-nen to-be 1

p!!~nt o{ the •~iring entity (beeauu

lh<'y do not ccr.trt:>l tt:e cnrity as that

te~ is d~fl::ed int BOU(a)(bl. i.e_ none

h .... eith:! 50 pe!'Cer.t

the '-otir.s

secur.ties of the ent:!'y OT' the contraet'Ual

l"'""·u to des!~ate a maior:ty of its

hc-e!'c! of di~-::tors:. Althout;h tbe

obi~cti,·e crite:-:3 of :h! C:'l.isa!"~ rules.

!i>.. t tht' one defining cor.::-oL have bee~

the key to n:akir.~ the pre~e!i'!! .-e\'ie"'·

progri.rr. wcrxabic in :::est

ci~.imstar:ces. tilt: consequence here is

tb ! cwn!:-s ::u y r:ot be ;eqi;:~ec t'l

r:.;:i::r. t!:c act;u::::ion. Ir: fa::. t!:e

tr!r::;ac:•~nn rr.1t;~! !!nt !>to reF~~;;!:!e by

:iny;Jr.t.

TwC' c:..a:n:;it:s ilk~:.,.at! !:ow t."ia rule5

d~ ;;(I: J!w;,:\:~ !'!':akc s:.ic: tr;;n~'IC!icns

~c;::"r•::~I~ a·::d w::; :h.;~ res:.:!: i~

i.-.app~pri?.'.!'. If th,. er.!1ty ~or,:,ed for

t!':C' ;11.;:?cs:- of ::-:;,k!n~ :hp ac:;.::!'.!ion is

• par::-.arsL;:. i:s ow~ers arc :lot

n-q:.::rcd :o rl'p':lrt acq:.::s1ttuns m1de by

the e::!;;~. tl:e e:::tity is :l coQoratc

ja:-~ n•:::!.!:1!. the :.rar:s•c:iur: a!s.:: may

not be l"'!?O~ab:c.

The p.trtr:ersh1;:i :n:ssc::on is usier

lt: folio~. Assume: l!le fo~: COQOrations

a:-t compc::iors of each o:..'l.e: and of t.b:

fi~ !o b~ acqwr<"d. Assurnr: fi.:.rthe: that

t:.:tc:i fi:-m is "•l:.:n~ ir: excess of Sl

t.ni!.;Jn. Thi: for:::3tion of the ;:iar::lc!'3hip

is not rr:::io:-tabl!' bt:ca:.:se t ao;.40

cove:-s t.hl' form a :icir: o! onl>·

corpo:-allcns. not p:irtners~:ps. The

•c:.iu:si:ior: b; the parmers:U;:> is not

reportable !.>e~use the par:riership does

nc! meet :he size-of-pe::;sor: lest o{

see!ion iA(a)l:: (that is. it does not have

tci:al asi:ets or ar•_-::.:al net sales of SlO

t::il!ion O:' more). anc it is !'lOt Cont.roiled

h' a::y other person. for reasons

dli<c:.:ssed belo~ in t..':.is ?':o:iC! in

eon::ect1or. with the ;:iroposed cha~es

to § 801.11. lhe pre::ll'!"gtr n.:les to. not

cour.: the n\•er Si biilicin in cash that will

bt: cttr.:ri!:::.:tPC tC'I :::•l..! the •cquisitiun.

t.!'::.:~ the part:'lersh1p is con:1icerPd too

S1T1all to be r!::;i;!:i:rj :o re;:o:t iti<

acc;u1sllio:-.s. ~forCc\·e~. a par:nership

·dues :-:o: fi: ! 801.l(bi's definiuein of a

ron:ro!:ed e:-::i:y u:id:~ e"l.i!:.ing irJor::-.al

1:i:r:;:re!o:ior:s t!r.less L':.t ;:am:t:-sr..ip

ha~ ott.e: c.s:.ets. nC; ;il\r! of the

tr11ns.acticn ~ill be :e;:or:<1bi1:. I!\ en

thou;h the size Clf th!' n:-:::s ar.d :heir

mark.et shares in this ~}e ~t

that tAe OM:qWait.ron ahoa.id be dOM:ly

revi.£wed.

The l&.al'e tra.madic:m. if panaed

through 1 ~te jomt ve::lture. would

not be reportable iI the acqu.isit.ion wee

u.nde!i&,ken "'1th loam (l.bat were not

gu.a.rantHd by the per.ans formi.Qs the

CQ:l)Oratior.I or ii the votin8 seclrities in

the new ver.tu.re were valued al S1S

million or less. Section 601.40 cour.t.s

sh and loan1 e~d or guen!nt~

by the owne!'S as usets of the joir.t

vencu..--e. Th~ only i! tin! oewly-forme-d

C::l!"pora:lon had reeei ... etl ca.sh or owner·

g-.;arantttd loans lo m•ke a Sl billion

1c::u1si~:on 'A-Ould ii meet the siu-ofpe!'Se:; c:'iteria of section i A(a )(Z) of the

.A..nd only if the sec-J:ities we~

value:! lt mt're tt:an SlS million would

size-of-tnnsac:ion c:ite..."ia be met and

the transect~r. nnt be e~empt Wldar

I eo~o. If eit.'ier c:iteria is not met. tr.e

formatlo:i of th~ ce:;::ionite joint '\"enture

would not be ~rtable. The failu.-e to

ret;:.:ire th~ rerorting of ecquisitior.s br

nt:w!y-fonne-d entities whose only ess.ets

are c:ish or loans (sH discu,.,ion of lhis

iuue in prtlposal Z below) hzs be-come a

5ig::i!ic•r.t omi$.Sion i.n eertai.n

circumsta.!1::.es bee.a~e of Ll\e growing

po!)\llariry of ~veraged buyot.:ts 1n

wluch locuu a.re eecured by the 13ae!s

being p:.ircha.sed. II the four an:npeUtors

obt.iU'led iinao:::ng in the manner

desc:'ibec! or value-d \"OC:.."\g secunties at

S15 rTUilion or less. ne1lher the formation

o( Qor the acquisition by their corporate

joir:t .... l!lt:ll! wou.ld be reportable.

E~e:: i! the fonnation and 1ubeequen1

aq~is:~on were n!';'Or".&ble. the reswt

under the ex.isU.'lg r.Lle1 would not

provide a fully sausfac.tcry opportuni:y

to review the acGuiaition. Because the

!er.ma ti::::1 and acquisition :rans.acuons

would t-1' rerorted aeparate!y. the

notil'icanon o~ the (or.nation would

show several fi=::is forming I joint

ventU.'"'! corponatton which at th•t time

. had no business. The second transaction

would show that corporation (or

-acGuisirion vehicle~) acquiring ar:

existing busin"s. ln Mith!'!' ~e would

the notification by the newly-forme-d

company be directly helpful for antitrust

anaiys!s because it hu no business and

cannot reflect on ita norific.ation form

the pote:inal anticompetiti,,·e effects of

the acquisitiCJIJ. And ~us.e the timing

of the notification ~uirements for the

two transactions are separate it is

possible the en!orcecent i.$ellcies a>uld

lose the advanta~ given them by the

aet in obtai.c..i.ng in!ormahon from the

owners of the new c.orporallon t!l.."'Ough

reques:i for additional information. U.

for u&mple. the acquisition vehicle

were formed sixty daya prior to filing for

•c+-

:=r,4s

the SOeq'IM!Tll Kq!li'aition. the

911i~t ~nciM ~ hlfTe no

indicition ol what is ttlf: inteonded ta~!

and no basis for prevectma the joint

venture iL by it.el!. it does not violate

~ anritnm lll'W'S. Wlmt ttre itequuition

vehicie files

the rubsequmt

acqm~tion. fta cotfficatioc is li.lcz!y to

provide littie mdicaticm of the

c:i:>mpetiti'\"1! ~ap that could e'Xi1t as a

result of the transition. Moveove.r. lhe

°"'-ners might be bey-ond the reac of the

en!on:ement 1g-enoes· demand.s throush

,reqnests {or additional i.n!orcation.

In ort!er to emure acqui5itions by

newly fomied non-controlled entities a.re

reportable and an op;iortunity for

e:xarr.intQ$ competilrve con:sequences of

1ud1 acqusitions. lhe Com::.i.ssion

p:-oposf!' to treat suc:h transac:ions as if

lhe o"'-ners of the acquisition vehicle

had directly acquired the vo~

aec-.:.~ties or assets of the acquire::!

person. The existing def:.rution of

~person .. in § 601.l(a)(l) is des1g.ceci to

pre,·e::~ avoidance o! reporting

obligations by maiuns the for.::auon of

1ubs1r:lian" if'rele,·ant. Similar!\".

proposed § 801.S would ei.i!:lloaie ail

inquiry into th" rusons owners c."iose

the orunl.Z4tio:'lal fortr; use::! to ma).e an

ac:q~1tl~ The propouj ihoui<l f'Pduce

a.ny bi.as auled by eiU1~ rule~ tu

struen:.re transactioc.a 1t1 l~s ef!:c1en1

fcrnl in order lO a-.;oid filing •.pre.merger.

11oufic.;uon. It would thereoy

suppleme:it i aol.90 wiuch requir" suc."1

traa.aact10 cs tD be !"e'?Of'teod iI :.he

c:rution of the ac:quia1uon vehicle had

-the pu.rpo5e of 1vo1di..o8 the obligauon

to comply Wlt.b the reqwre!'nents of the

ac:::· ill addition to 1hap1ng the report:i:-.;

obligation aceordul.g to t.be 1ub1:ance of

the tranwc:tjon rat.ber than iU for.:-_ the

ptcposal would el.iminate ~e anornaly

under exia~ jcrint venture rules that

makes it pou1ble for 1 pe....,or: acq:..:lr'-~~

voting securrties or 111ets (thrcuf::

newl;··formed entities) to cor::piete 111

waiting period before the waitin~ pence!

for the newly-formed mtity'a acquiait:nn

bqina.

The Commiuion believt?S it hu

1uthoritv. w;th lhe concurrence of the

Attorney ~neral. to treat these

acquisitions as if they wett m1de by the

owoen of the 1cqui1ition vehicle on the

followfa.g gl"'OUDd:s: the ~t:irement in

section 7 A.(a) of the act that pe~sor:s

who acquire voting sec:uriti" or asset~

-cl.irealy or md.irec:tly .. file notific:alions.

lhe authority in aee~on 7A(d)(Zl(AJ to

"define the tl:r:m.I need in !the act}"

including the te:n.s ·directly."

*indi~tly .. and "bold;'' and the

1ulhonty iJl 9ection 1 A(d)(Zl(C) to

*preacibe sue..~ other ru.J" u mey be

necessary and approptiate to carry out

Federal R&gister / Vol. 50. No. 185 / Tuesday. September 24. 1985 I Pro?Osed Rules

t purpoaes of (the act)" including

truti.ng tnnaactiot11 wlllch have aimilar

characterutic.a in the aame manner.

The Propoud &Ju

The propoaed acquisition vehicle rules

have five prUicipal elements. Fint.

I 801.S(a) atates the general rule that

acquisitions of votiJ18 securities or

auets by an acquiaition vehicle are

attributed to its owners on a

proportional basia. Seeond.. an

acquiaition vehicle ia defined in

l 80.l.l(n) as an entity formed or availed

o{ principally for the purpose of ma~

1cqui3itions. Third. I 80'1.S(: I

establiahes the method for calculatin~

the nwnber of voting securities that will

be attributed as a ttsult of an

acqu.isihon by tlie vehicle. Four".h.

I 601.S(c) does the same fer calculating

the value of voting securities and assets

that are attributed. Fift.~ I 801.S(d)

desC::-:bes the ercumstances in whic.h

'·orir.g sc:-.ir.:ies and u1et1 ....;u no

longer be at:ributed to owners of

acqui11uon vehicles.

The ~ne.-::1 Ru1e

P:-opoaed ., 80'1.S( al i1 designed to

treat ownen o{ ac:iumt1on veru::l" .. if

'"'ey wer? the 1cqu1s1tion persona

;lcng the 1cquis1tlons diret;t 1y wtthout

.r.e agency of the 1cquinng vehicle. The

effect of t."lis paragn~!': and these

propos.ec n.tles ia 10 require an owner o{

ai: acqui:iit1on veh1cie to fiie 1 premerger

notifc.a11on in orc:.i."n1111nces whe~ the

proportion of the ac:iuisition artr.buted

to it and any other voti:ig iittllrities or

asset• 1t holds combine to meet or

exceed one of :.he reporuns th.-eshold,.,

o( I 8Cr..1(h]. ?:-oposed § 801..5 does not

alter the re;ior:'.ng obligation ari:iing

f:-om the !onnauon of a roini venture

under l 801.40 or the reporting

obligari,,n of the acqu.is1!1on vehicle.

wnic."i may be requ1rec! to file

ffparo11e~_.

TM Definition of Aqui,itio-.• \'<!hide

The-de!in1tion i.-i propo.ed ! 801.l(n)

ia formulated to include u an

1cqui11tion vehicle any entity that

'IX:akes an ecquisiuon but conduct• little

or no bu11nes1 activity apart !rem

acti ..;ties involved in maicing the

acquisition Thua. the defini:ion applies

to any tn:>e of e:-:n!y fcor;>oration.

partnership. trust. etc.) or cot::bination

of entltlts ..... hether newly-formed or

already exi&:::--6. u long as ita principal

Pl!:"?Cse ia tc mair.e ar. acqi.:is:uon. The

-'efir.i::cn !1 not lun1:ec ro ent1t1es

e;;tec as evaSJon devices. Th:s :-ule

• p;::;i.u to al! new e:mt11!s· even where

the fo~ati.cn of :he e:"::i:y 1s dic:ated l:iy

aound bua1:-:ts! reas:ns. It includes all

ent111es except those that are

ntabliah.ed. ongoing businesees.

Ownen of an ongoing buainesa are

reqWnd to ttport acqui11ition1 of that

buainesa only i! the t:ranaaction mttu

the c:riteria off 801.90. that ia. if

atructund Mfor the purpoae o{ avoidir.g

the obli$ation to comply with the

requiremenu of the act.· Th.iJ ii made

clear by a p?'1lposed new example to be

added to that rule.

The Number of Young S«wities

Acquired

Section 801.13 establishes the method

o{ determuung how many voting

TM Val~ of Votzng Securitie3 and

As.reLS A.cquim .

Section !m.-14 establiabet the method

o{ determi.a.i.ng the aggregate value of

voting aecuritiea and auet1 held u a

reault of an ac:quiaition. The aggregate

total for each owner include:i. amens

oth~rs. Yoting aeo.uitiea and 111ets

acq~d by the acquiaitioi:i vehicle that

are attributed to it by propoa.ed

I 901.s{c). The attribution rules of

p&rqraph (c) are calculated in the aame

!ash.ion 11 the number of voting

aeewiti~ are calculated under propc.a.id

l 601.S(b ). The difference ia t.ha: the

dollar value treated u acquired by th

owner ia determined by a:.ultplyir:g the

qg:-egate value of voting sec-.mties and

useta held by the acquisiuon veh1c!e

inatead of by multiplying the total

number of voting aecunues heid by tl1t

acquisition vehicle.

aecunties are held as a result of a.n

acquisition. ACQ>~g tc that aec!lon.

an acquiring person hoid1 already held

votiJ18 1eewities. those to be acquired.

and.. as a result o{ p?'1lpoaed 1801.5.

those treated as beld or to be he!d.

Proposed 1801.S(b] pro,-ides the formula

for deter::n.i:Ung bow many 1barea held

When Attribution Cease3

by the acqu.ia1tion vehicle are at:ributed

Proposed l 801.S(d) declares that

to each of it• ow:lera. Paragraph (bl

votina seC'.iritie:i and useu helci by a:-.

eatabliahes two method:i. one for an

e:itlly shall not be treated as held b: it~

acquisition vehicle that i1 a 1\nile

ownen wbell the entity ceases to be ar:

corporation and the other for all other

acquisition vehicle. An enuty coses tu

ki..'ld1 of acqwsiuon vehicles.

be a:i acqu11ition vehic!e. punuttnt t.:i

When! the si."'l.g.ie corporation rule

·- the definition in propo1cd § 8011(nl.

applies. ead1 owner mult:pliu the total

when it commences ac::ive m.i:iage-nt~1

number of voting teciir:t1es wbicb will

of ii bua1nesa.

be held by the acqu.ialtion vehicle (for

A.~ia"oviLS R.~uired

example. lCXXl) tioe1 the J)f"rcer:tage of

ahues in the vehicle the owner hold11

The Cor:un:asion ;m:;io1e~ to est~'J!:~ 1 :

(for e:'l:ample. 2.5 percent) and that will

new proced~ to Worm t.~e acqi.:::-ec

pcnon of the acqui.·u·.g enury·s 1tat1..& 11s

give the nll:'lber o! voting seC'.iritles to

an acquisition ve!uc:le and the

be treated as acquired through the

cons'1:juent obligation of t..'ie acqu:red

acquisition vehicle (that i1. lCXXl x ..1!. or

pc!"!On to file notifications in response

ZSO votizli se~:uities). These vou:-..;

to filings by the owne:-3 of the veh1c:e

accuritiea would then be added to a::v

The new requin!:nents are similar to

other voting seewiues heid by the ·

those required by existing and propolt"d

owner to dete:mi.-ie if it had a repo:-nng

I 803.S(a) whid1 requires pel'3ons bu~ir:g

obligation.

votirli

securities to notify the isauer of

In other circumst&.ccea the number o!

iu obtigat:iona :o file a premerger

votins aecurities belc! by eec.h owner ia

notification form. The new procedures

determined by the 011t'tler' 1 beneficial

wi!l ret;uire owners to attacl. an

inten!st in the acquiai!jon vehicle. The

affidavit to their notification and re? or!

uae of beneficial ownU"siup criteria is

form"' stati.r.g that they have notified :!'H:

designed to facilitate t.ie calculation of

acquired enoty of the owner's 1tallJs u

proportional interetta where 1 aeries of · an acquiring person. The propostd

en:itiu including corporationa and

procedu.-es would be contained 1n a r:e"'

partnership:i obtain complex interests in

puagniph (c) of I 803.S These

an acquin!d entity. For these

amendments are di:icuned and set oi.;t

tranaac<Jon1 the formula i1 the same:

in proposal 9 of thi, Federal Re;is:er

only the calculation of the percentage ia

notice.

different. Each owner multiplies the

Elf

ec:s on Other Rules

total nucber of voting 1e..:urities the

acquisition vehicle will hold by the

L-i addition to rules 801.13 ar:d BO: : ~

.1L"'8er o{ the follo"';ng ratios: (l) the

mentioned abo\'e. aeveral otl':e: :"'.l:es a•l'

proportion of profi:s of the acqui,ltior:

effec:ed by the addition of t:.e

vehicle to which the owne~ would be

acquisition vehicle 1ule. Th:s sec~on

entitled if all prolita were diatributl!c!:· or. mentions acme of thou rules. nis is :l'JI

an exhaustive liat. nor does it provide

(2) the proportion of auets to whid1

comprehe:-:sive trutment of ead: :-ult

eec.'1 owner would be entitled upon

diacusaed.

di11olution of the 1cqui1ition vehicle.

Fed.er.tl R~r f Vol. SO. No. 1!5 I Tuesday. September 24. 19'35 I Prop~ed Rules

~r::ion aoz.J(o){2/ Entiryr."The term

securities: Wheo ac acquisition ~hi~

-acquis111cn vehicle- is a

ch.aracte:-.:a lion of the legal stztu.s of an

entity. Thu.s any entity-<erporallon.

partne~b.ip. trust. etc.-is a.n acqu.i.sition

vehicle when it meets the definition of

Pl"090SeQ I 801.l(r.).

•cqui~ voting searibes. e&eh owner

~on 801.J{bJ Control:.The

acquisition Yehide n.iles do not alter the

~nition of control or the n:tle ~sed

on control. Thus an e!lfity may be both

an acquisition \"ehic!t and controlled by

an ultimate pareot entity. V\1lere both

statuses exist. pe:SOn.$ hoid~ a

minority of the votir.g securities of the

ac~u1s111o::i veh1cie will have t.be1r

obligation to file noti!ic:auons

de!e~ined by ?reposed § 801.5. Persons

holciing a majonty of the votir:g

sec-.Jrittts in a corpo!"llte aequisinon

vehicle will be the vehicle's ul:1r:.ate

parent enuty and

be l"l!quired ro

r?.port ac:ordingiy.

Ce~:lin premerge; :ules that come into

O?erallon oniy ....-hen an entity is

controlled neve: have an e!fact on

Cl\'\-:":en of minoritv interests of

•cqt;1sition veilic!es. For example the

· -secondary acqe1s1uons· descnbed in

§ 001.4. the .. controiled issuer .. thl"'l!'lhold

of~ ao:_"O(bJ and § ao~.51(b) all require

tht: pe~or: address~ in the rule~ to

h;;·:e a :on~:illin1t 1:::ercst.

Se!:::~n 8(1!.:fci Hold: The preme~cr

rJl<-s· -hoid"" conce;;t is the means by

whic.i the acquisition \·ehicle rules arc

inti:g~ared ..·i:h the rl!st of th,. ruies.

~:ipiJsd i scn.5 reo1m!S own!:rs of

•Cqu1s;11on \·eh1cles :o treat the number

of \Ctil!.g securit.es &nd I.he value of

;i~sets held b· the vehicle as held bY the

~ ... ,,~rs on a proponion;;! bl'lsi~.

Sr!rtion ~0!.2 Ac:umM and

c;:·::.:::-ed P":"'!o::s: It 1s t!:rou~!: the

C1p1::a1:on of the hold :::ince;it that tbi:

ow!':r~s of 2n acc;um:ior: veh1c!e bcco:::e

-acquim:g pe~sor:s- wben the vehicle

,.... kes an acqu:sitio::. However o""-ners

d:i not automit>.::.:;iiy btcome ""acquired

;ir:-sons:· ln a traru..o,uor. descnbed by

~ 8Cl1.:l1. for ex.imple. those acce;iting a

non·cash tender offer tif the acquis1t1on

\·ch1cie"s se-::ur:ties would" not hold

\·011n2 s~r:t1es of the owner unless the

v1:h1cie were also a controlled person.

Owners do not b~come acquired

rr:sons solely because the \·eh1cle i!i an

~cc;:.iired perso::.

S,.r:.ion 801.10 Faiue of voting

·~~ ~·rities and assets UJ be acq:i~:

W!-1t;:: an acqu1sit1on vehicle ;;cquires

•Ht:s of vouna secu:ities. it must v•lue

!~1·::-: ic aceor::lar:ce w11h § 801 .10. The

(·"-:,.:s of :he \th1cie then ap;iir

:-·:•;:icse-:l ! 801.5!cl ro d~ter:':'lrne the

i:;>o:::or. of that qluc attributal:!e to ta:h

.,.,;u

Sc :::or. 8;JZ. :: (:J c;id (bl

r-:!::'.J!c:1~~.r: pe:-::!!.'ltc;!!s of 1·o!:n;

mmt first determine the number of

voting &ea1ntie1 of each das:s attributed

to it by proposed i 601.S(b). and then

calailate aa:mding to pn>p05ed

I SJ'l.ll{b) the ~ntage of \'Oting

securities it bolds.

Section 807~ Acquisitions

subseque!1t to exceeding threshold:

o.....ners of 1cquisition \"'ehicles are

required by § 801.20 to n!'Calculate their

entire holdings to detennine if as a

res.ult of the vehicle·s acquisition the

owners w;11 mett or exceed a reponing

threshold. Similarly. owners must

C2!c'l!!ate whether th"v conr!nue to

qualify for the five year e.xempuon

provided by § ao:-""l or the amended

tender offer exemption of i 80Z.ZJ.

Scc:ior: 801.:JO Tende:- offers and

acq?.Jisrtio~ of voung secunt:e'S from

t/Jird por.Jes: As wtlh other rules. each

owner inust determine for itself whether

it has repon1n; obligations under

§ 801.JO. U auc."t obli@ations exist. the

acquisition vetucle c.arulot acquire

'·oting secuntles until all of the stan.itory

waiting jjeriOO.., have ex;ared. T'J ta.ke

down shares befort then would transfer

the shares to a person (one of the

o.,.,-ne:-3J tr: \,olauon of the pl"l!me~er

rules. The acquired persor: muat file a

separate aot:fic.ation in r"sponse to

filings from eaC:: owner.

S«:ion 801.40 Forrnot:on of joint

ventu.'T! or ot.f1~r co.,,ar;t.1or:s: Owners

ca:: ha\·e L-: obii2a11on to file

notiiica11ot:s for the for.nanon of an

ac:::iu1smon Yehicle under i 801.40 as

111.·e:l as a separate obligation to report

acquisitions of t!ie veh.tc!e under

proposed § 801...S. The vehicle also can

have a separate obligation to l"l!port

111.·ht:n it ma.ku 1c::qw11uon1.

Proposed§§ 80:..l. &:12.2 and 802.:J

Acquisition of ~rs: When aneu are

attributed to ownen Wider these

proposed ruin. t.bey maintain the

exempt or non-exempt character they

had as a resi.:lt of the acquisition by the

vehicle. Thus whe!l a vehicle acquires

substantially all I.he assets of an

operating division. a oae-llurd owt1er

caMot cla1:n it n~ not report the

transaction because it bolds only one·

third of the acquired enu1y·s asse!3. The

owner has an undivided one-third

interest in all the as.sets and therefore

the transaction is not execpt.

Sec:.ion 802.9 Acquisition SJJlely for

t/Je pur;Jose of 1nves:mf!r.t: ln contrast to

assets. a specific nwn.bt':' of share~ held

bv t..'le vehicle can be a.nd are attributed

to each o....-r:er because eac.i share

represe:::.s an unciivided interest ir. the

1cqull'ed enUt]·. Nevertheless. the

Coir.mis.sion belie\·es :hat the intent of

an acquisition veh1c!e to acquire control

of an entity is 11 factor indicatit:g that

aone of its ownen have the "1olely for

the purpose of inve-3tment" intent

~nired for the exe:nption established

by I 802.1 At tbe Hme time the

Com.mission recogn1%e-s that attributing

1uc.b a.n ia&ent in all ac::quaihota Wll!

c::ute reporting obligations for passive

investcm m. for example. lnenged

, buyoat tramacticma where there is no

intention to alter the management of the

business and no desire by those

investors to play any role ill the

mani,iement of t.be buai!J.ess. As these

~ssive Ulveston are unlikely to ruse

anlltn:st conce~ by the11 acqu1s1t1on:s.

the Commission would welcome

augge:stions on how to exempt the:':': ret

include others who are part of a plan to

tracsform an acCjuired eotity.

Exempt tran.sac:ions gene.-ally: In

gene:eL the exempt character of •

transaction ia aot a.ff!1:1~ by the

attnbuuoa of a.sets or voting secun!Jes

pursuant to propo1ed f 801.5. For

example. transfe!"3 to or from I f~e~a!

agency (exempted by sectlon 7A(c)(-tiJ

or transac:rions subject to the approval

of the Federal Deposit Insurance

Cor;iorauon (exempted by ser::;on

7 ~cl(7)) will be exe:npt for both :.he

acqw.siuon vehide and its owners.

Owaers ne-ed nor re;iort transac::c::s or:

the baai1 of a~isillon' made by the:r

acquisition veiuc!e if the o.,.,-ners would

be exe:npt from reporn.ng a direc:

1cqui1illon equivale::t to I.he o::e

att.'ibuted 10 t.bem by proposed i 801 ..5.

A. Authority

The authonty for Puu 801~3

continues to read as follo""T

Authority: Sec. 7A/dl of the C!ayto!': Ac:. :5

U.S.C. lSat d l. u adl:ec !ly 1ec. 201 of t..'ie

Han-Sc:ott·Rod~o A.:::.it..""U61 lz:lp:-ovr~er::s

Act of 1;;e.. Pub. I.. ~3S. go S1a1. t:oo.

B. The Commission proposes to

amend it3 rules by the additior: of

I 80'1.l(n). I 80'1 ..S. and an Example 3 to·

I 801.90. as tel forth below.

PART 101-COVERAGE RUL.ES

f 101. 1 Deflnttlon&.

(n) Acr;uisiu·on vehicle. The temi

-1cquis111on vehicle .. means ar.y e::::ty

or senes of entlues Conned or il\·a1ied or

principally for the purpose of acquir:r.g

voting sKUl"ities or use!s. A.". e::t::y is

(or a series of entities are) an

acquisition \•ehicle notwithstanc::i; :he t

the particular orgamzat1or.i! for~ r1q.

pa:-:nership. corpora non. etc.I chose!":

fur.hers a legitimate busir.es~ pur;:ost ur

that the enury e::gages (or en:.llles

engage) in incidental or aunor bus:::es~

1C!1v11ies p:-ior to lbe acqumuon of

3at.;a

Federal Register / Vol. 50. No. 185 / Tuesday, ~te:::::!::er Z4. 1985 I Proposed Rules

.."ting secunties or assets. An entity

su to be an ac:iuis1tion vehicle when

-·~ entity commences acti~

management of a business other than

the buainess of acquiring voting

MCUntiH and HHlS~

~1JJ11pfn: 1. A parmrnhip is formed by a

CDfl)Orauon. A. 411d two indiv1duala. B and C.

A has &Mual net salts of S1 billion and is

enut1ed to 40 percent of the 1'1"0fits of the

partnership (or 40 percent of the uuu upon

dissolution 1. Tbe partnenhi~ wh1::."i l:as r.o

bus.neu of itJ own. acquires Oldeo for SSO

111111ion ,..th b11n'- loans gt:uantee!I by A. B

and C. Tbc partnel"Sh1p 1s an 1cqu1srnon

qr.id,. ~ard!ess of the ;)u,.,,osl! for •••h1ch it

"'"s fomied. :ncai:se 11 the :i:ne it acoual'Yd

Oidc.;u its iole f.incuon· "'U to mair.e the

acq.iis111nn. S'!auSI! ~?"?orauon A is an

acqu1smon ¥eh1cle. ··A · w11i be req1.11rec to

report tile a~ui•1Uon of 01.:lco punuant to

l !ll.'1.5 unle" the transa:ticin is otherw:se

e).t:mpt.

and -C' may also be re~::1red lo

file r.utificanons if thn mnt till! siu-of·

person and othll!r repnn1n! Cl"ltll!na.

%. !'<ewco is forr.1ed by c:orp!:!ra::or.s .-\. B. C

anJ 0. for thr purpon of buyn:g And

~-.,Ullw=a Olar.a. Each c:o:;iorauon has

a~1val nM s.;c:1 or total uuu 1n u.cess of

$1 b1i!ion. Al thll! lirne

is Fomill!d. A

c:.;r::rii:11.. 1ll!s a ;)alent tl:•1 will mAt.e th!

oi;e:-anuns of C!.:!c:o more c:er:-:oll!nnve. B

Cflntr:bu1" 545 million to bl! ui,.d to •c~:;1re

OIJui. C C.O!ltnbutes a i111!t' o{ truclo.1 which

w1li bte unci to cie!i\tr Oldco products and a

· •ory wh11:.i 1s sold to obtain I.he ren:ainllli

:n1lhon nncill!d to acquire Oldcc. 0

""nrrililitei $10 ITllliion in capnal 10 be .used

to rP' :!.;;u and expand the Oldc:o

ope! .111ons ~ewco 1s an acqu1s1tion ¥Chicle

bt~:;ivsll! th,. ;)11r.r.ipal pur;iose for ... ric:n 1t

w.is formed wu to acquire OIJc:o. 1.t had no

bu.,incss oo,.~!1ons o::o~ to rhar acquis1t1or..

Tl:t! con!nbu11on of thl' palll!nt and c:ap1t;il

.. nJ thll! sei• of tne !ector;· are tnCJd!nt•I to

th.it ac:uu1s111cin.

3. A1sur:-:e the same filc:s as 1:1 "arnplt' 2

exc:epr tl:.1 .-.ll!wco "'as 1r.111.;l!y formed u a

svbs1d:ary of A cor;:>ora11o:i :o e~port A·s

pr.,!iucn. Altl'IC'i:'h !ht cor;i~m1t1on wu

formll!d ar.d .. board or dirll!cton mer. the

r.or;ior.won nrvu be3;ir: operauons. Thrre

vf'ar1 later A c.,ntr.b11tcd 115 p;;tent to ~r,,.co

•nd sold sh•~ts of Nll!wco to B. C •nd 0 on

thl' tr.rms outlinll!d abo"' whll!:: :hr four

C:01'i'•.1r•Uo!ls C:rc::drd tc l:>v\ Olceo. Sll!""co is

an acQ:.1s11:or: ,-eh1eie b-.e.ai:n it nll!ver !'lad

any h•J~·~··~ o~erauc::s ar:d is now be1:i~

a,.,i .. ..! ui pr.,c::pally for the puryon of

acouinnv O;i::o.

~·. s~.:co. an acqu1s111on veh1cl!. tranafr:-s

all 111 assets 1n uchan~r for .4Q pll!rcen1 of the

vottnJ sec11rit1es of Oldc:o. Nll!wco uses it•

O!dc:o ne-.:.nues to norr.in•lf d:rtc:ton of

01..leo. Newco ceases to b• an acqumnon

'teh1cle ,.-he:-: it bll!a1n1 to direc:: or pan1c:pate

in tlle mar:a@ .. ment of Olcico notw11hs1anding

that :'.ll!wc:o·s only aue:s are voti::~ sl!C:.U'llles

or Oldc:o.

··s-

s,.,,..._..

§ 101.5 AcQulalllons tly an acQui11Uon

'11cie·.

,a 1Owne~s (holde~s of vot:::g

securities. ?a~tners. etc.] of an

1cqum11on vehicle shall. until the t\'ent

ahall no longer be treated u if they are

desi=ibetl in paragraph (d) of thia

al10 b..eld by iu (or"the!!) owners.

aecuon. be treated Under these rules u

if they auo hold on a proportional baa11

~a.rnplt!s: 1. A Cofl)Ontion t1>311!ther with B

voting securities or uaeu held by the

Cor';>oranon form• partDenhip for thll!

acquisition vehicle.

purpou o( buyicl 01dco for SlOO million. Tbe

(bl The number of voting aecurities

par:nll!rlltip (orm.1 Ne-c= to buy the Miam of

Oldco. Tbe parm.nhlp and Nll!wco are an

held by an acquisition vehicle that are

ae.quis1oon Teftide bec.llUM. puna1n1 to

treated as if they are or will be held by

I s:n.1(11~ they are a ac'lft o( enuuu formed

eacb of its owners 1hall be c::alc:u.lated u

lor tb.11! p!Ul)OM of .cquinng voting ftClltlOH.

follows:

A baa '\otal 111et.t •alued at S1 billion. B

(1 I If the acquisition vehicle is 1 1ingle

Cofl)Oranon has 11aet1 totalling $iii million

corporation or a single corporation and

and had net .. In o( SS cillion in thll!

wholly owned subsidiaries of that single

pre!lous year. B i1 entitlll!d to 5 pe=r of thP

corporation. the nu.'?lber of any clau of

proliu of I.he p&rmPl"lhip and would receive

voting ~curitiet attributed to each

lll'On di11olu11on 10 pereent of it• a11ets.

o""'-ner 1s the total number of uc.'l class

A!tho~ _A .. dou not c.ont?1)1 the

partnersiup punuant to t 801.l(bl. it will i:-~

of voting securities held by the .

reqlUl"ed to file a nonfic:anon bll!cau1e -,a,··

acq:;isition ....ehicle muluphed by the

meets the n:.11!-of·peraon O"lten~ of 1K11on

percentage of voting secuntie.s iuued by

1 A(a J(:J of I.he act and bec:av•e. punuant ro

the single corporation held by eac."1

l &01.S. A bu atlJ'lbuted to i! an a~u1s1111Jn

owner.

I.hat meets the aize-of·tranaa ::ion O"ltr:-:1 ol

(Z) In circumstances other than those

lll!Ctlon 7 A{a)(Jl(Bl of the act. Tbe ,·aiut oi

described by paragraph (bl(ll of this

the shares 1n Oldco that will be dll!emed

aection. the number of any clan of

acquired by A i• S95 cnillion. tiat 11. $100

voting securities attributed to each

million (thl' ac:qu1s1uon pnee t times 9S

owner 1s the total number of each clasa

pll!reent (the ;nooportion o( ;irofits :o wl:1c.~ A

ia mmlcd). -a·· ia not requ1M to fill! 1

of voting securities held by the

notification both becauar rta aull!!I and

acquisition vehicle multiplied by tht'

aMual net sale1 are Ina than the m1n1m11m

larger of the follbwing ratios:

au.e apll!Ofied in tl\e act and beca11se the

(i) The proporuon of profits of the

value of Its acqui11uon re1vlts 1n ..s·· hoic:,.,i:

acquisition ven1cle to wh1c.'l each owner

lll!ts than the SlS aullion in uaeu and ¥011n~

would be entitled iI all profits were

~nues.

distr.butec: or.

· • %. Cor;:>orauon1 A. B. C and 0 formed

(ii) The proportion of assets to which

Newco 1 tn wh1c.i eacli hii!ld ~ percent of:~~

each owner becomes entitled upon

voting sll!CUMllll!a. £.aeh carporauon hu

dissolution of the acquisition vehicle.

annual salu and to~l uaru Ill excess of 51

(cl The value of voting secunt1e5 and

billion. Aft!f formation Newco I r...ga~e~ '"

no bu11neu act1vlly bec:auu the bu11npu

assets held by an acquis1uon veh1c:e

o~orn.:ruty for wlucli it waa formll!d

that ane treated as if thev are or wtll be

diaapprtM. Subaequently A. B. C ar::! :l

held by eacn owner 1hafl be ~lc.ilated

dll!Clded to buy Oldco for SlOO lllJllion u11r.;

as follows:

~ewco I. !'lewco I then fomte-d ....ewcc U :o

(1 J If the acquisition vehicle is a single

buy certain uaeu of Oldc:o and ~ewcc II! :o

corporation or a single corporation and

acq11ire the ¥OUJ\8 secunues of Oldco ..i,. !!. C

wholly owned subsidiaries of that aingle

and 0 c:orporauotu ere uc!i. pun11ant :o

corporation. the value of an acqws:!ion

f aOl.S. de•med to be ac=lumng S:S :n1i;,.;:: :n

attributed to eac.'l owner ia the value of

aanta and ¥OUJ\8 tecurilles of Oldco anc: w1il

voung sec:.i.nnes and asaet1 held by the

bavll! to file not1fic:1uon1 pnor to the

acqvisiuon. They an! aharehoiders of Sewcu

acqu1s1tion vehicle multiplied by the

L wbu:h. although fanned for othu puTj)osu.

percentage of voting aecurities iasued by

wu at the time st became a fune:ionrng

the 1ingle corporation held by each

• buainll!st entiry ued pnnc:ipally for t.h,

owner.

purpoSll! of ac:qultifli Oldco. Nll!wco I will alsu

(Zl In drcw?Utances other than those

ba¥e to me a nonficauon for the acqu111t:or: u

described in paragraph (c)(l j of this

it mHtJ thll! ss:t of ~on teat of aecuon

aecuon. the value of the acquisition

1A(al(2) of thll! act.

attributed to each owner is tht' value of

. Aftu thll! 1cqui1iuon of OldCl:l and it'

the voting securities or assets held by

assets. Newco II wu mersed inlo Newco I.

Newco I then 1ought to acquire Othe!'OIC:cc.

the acquisition.vehicle multiplied by the

Becauall! Neweo I i• no lonaer a c:orporatt

larger of the following ratios:

ehell with neglible bv1inu1 ac:tiV'lty 113

(i) The proportion of profits of the

acqui11tion of Ot.heroldc.o i1 no long'~

acquisition vehicle to which each owner

attnbulablll! to it• 1luireholden pursuar:: •o

would be en tit.led if all profits we~

I 801..!. The obli11tion to file 1 nottfic•oen !!

distributed: or.

there ii one. will rtit aolely Wlth Se"' cc l.

(ii] The proportion of assets to which

f I01.90 Tranaac1Son9 or devices tor

eac.'l owner becomes entitled upon

8¥04dane4.

dissolution cf the acquisition vehic!e.

(d) When an enti!y ceasl!' (or a series

of entities ceast') to be an acquisit!on

E.t.ampies: •

3. Corponuona A. B. C and D. uc.!-... ,:•.

vehicle. the \'Oting securities or uset~

annual net aalll!s or total aull!t1'1n ex:eH ol

held by that entity (or those en:ities)

fe<l~ral Re-gister / Vol. SO. No. 185 / Tuesday. Septecber 24. lSS.S

Uion. decide to buy Oldco for $100 ·

does not have a regularly prepared

balance aheet. However. by implication.

the rule requires the preparation of a

the four a>l"porauons decide on the foUoWUlg

balan~ 1heet for person.a who have

aiu:u of acuon for the PW"POff of avoacilni

filina 1 ooti/icacon under the act. A.'B. C and none. See 43 FR 33474 Uuly :n. 19'78). In

advising newly-formed persons of their

O cori>arationa ead! acquire one quaner of

obligation to prepare balance 1heets. the

the out111nding 1ecunt1es o! 1.ittleco for a

tDtal of S'l million. Littleco ia an ntab!Uhed

Comm.inion aaff bu advised that

canwacturing c:cnce:n wtth annual net aales

acquiring persom should not include u

and total use11 of leu than $'10 million. They

assets cash or loans that will be used to

Ulen lend Littleco $'100 millioo and cause it to

make an acquisition. The Commission

ac:qt.liiT Oldco. Bcc.auae the purpose of

now proposes to adopt thia staff position

a~uinng Oldc:c through Littleco (whic:h does

and incorporate it in a new §SC1.1l(e)

not mttt the siu of penon test of t 7A(a1(2)

which establishes the procedure for

of the ac:J wu to avoid tTporung the

calculating the total assets of newlytn.nsac::on. the u1s1ence of Littleco u an

for.ned penons. The proposed rule diJes

o:igotr.JJ corporation....;11 be disr"!ga!"ded.

not alter the manne! in which ongoing

WIUC uttleco wtil be tnaied IS 1f it wer"! a

business entity forr.:ed o~ ••·11led of to

firms detemune whether they meet the

~::1:-e O!dco punuant tot 801.5. -A-.'"!!"".

act's size-of-penon citeria. because

-C- and ·o·· each "'·ill be required to M!pon

they have regularly prepared financial

!!le acqi.:ismon of :.S peree::t or Oldco.

atatemenu 1ubject to § 801.ll(aHdJ.

The distinctior: between the

1.. Section 801.11 Total Asseta of a

calculation of assets for ongoing

l'\ewly-Formed PenC'D

business entities and newly-formed

The Commission proposes to amend

entities is based on the compet!tive

§ e~.11 to cod~fy a longs:and!::g

poten~ial of a newly-for::ned entity and

in!o~al ;:iositlon of the staff tb~t a

on the certainty and simplicity of the

newly-formed entity ge::erally should

existing balance sheet rule. In most

not include funds used to·make an

circumS\ances the s1u of an acqumng

acquis;:ion in ciete!'::li::1g its si:e. Under

penon provides scme measure of its

th:s ;:i:-ep:::sed rule. if an en!lt;"s on!y

competitive presence. Congress

asse!s are cuh tr.at w;Il be used to

. concluded that the amount of saies and

~e the ac:;uis1t1on and sec.:rities of

auets were useful c::tena. These size

e::t1:y it is ac:;uinng. it generally will

c::itena can be :1slead!ng. however.

not l':a\·e to file for :.':at acqu1liition

when applied to entities formed !or the

be:::ause the new ent:ty w:Ji be deemed

purposes of making acquisitions. Si.ch .

too s::lall to mee! the acf! size-of' enuties t;-pica!:y have had no sales ano

pe!"Sor. test. Cod1!ica11on of this inforr.:al

frequent!y ha ..·e no uaets other than tlle

posrnon is i.'lte::ced to limit cove:aie of

cash or loans used to make the

the ;:irer::e~3e:- ruies :o t~ose situations

acquisition. In suc.i circumstances the

whe:-e a:-: a::tit:-.:s: Yiolation is most

acquinng person !las no compet!l1ve

lil.e!y to be ;>resent. that is. where one

presence. The ac~u1S1tion does not

busanl"~• c:::1ry of a subs:antial s;ze

combine businesses and t.iercfore

a:::;u1res anothe: :i\!s1::ess entity of a

cannot reduce cor::petltion. The

s1.bs:c:r::1al size. The basic rule i.s

transaction ine?"e!y c:.l.:anges the .

cxpia:ned bti:w. The proposed r-~Je

ownenh1p of a 1i.n.gle Oll801ng b111a.ness.

contains an excr~tton where the new

Accordir.2ly. the Commission has

er:::1y acGutres asse:s or voting

concluded that no purpose is ser.,.ed by

M?::-.1:;!;es of rr.c:t than one pe:-son.

requiring such acquisitions to be

reported. The Commission will not coWlr

Tf:t P..Jt;.tost o.f tf.t P.-:;postd_.Rult

the cash whicil flows through the newlyA nouficatioo must be !iied prior to an formed entity to ~ake an 1u:quisition.

acqu:s;~1on oniy :! ti:! acqumng ar:d

because those assets do not add to the

acquired pe!'sor.s meei the minimum size competitive presence of the business

c:ite:-:a of sec:1on : A(a )(:) of the act. In

entitv whic.i results from the

genera! thi! requires one of ~e parties

acqutsition. (Of course. competition

to have at least &Mual net sales or total

could be lessened if the newly-formed

assets of S10 rrallion and the other at

business were owned by C".ll'Tent or

leas: annual ne! sales or total assetJ o!

potential competitors of the person

$100 million. Se::::io:: 801.'ll establishes

being acquired. P:-opoaed t 801.5 1s

the _procedure by which the size of

designed to ale~ the antitrust

parties to an acquis:::on is to be

enlorcement agencies to such

dete~1ned. Ex1san~ ~ &n.11 p~vides

acquisitions by requiring certain owners

that the anr:ual ne'. si!es and total

of newly-formed entities to !iie

·se!s of a pe:-sor: shail be 1he sales and

notification,.)

,e!s s:;;;.ted on its las: regu!ady

Similary. whe~e the newly.formed

pre;:iarec !:r:ar::::a! sta te:-::e::ts. I: does

businesa acquires voting sec:.uitles or

no: d::e::::!v add:ess :he questtcn of how

aueu of one-pe:-son (including

to cak:.:la:~ the size of a pe:-sor: that

aecu.nt1es iuued by ~ntitie1 wtt.lun that

~ •.ion. !Uther than ac:qwre Oldco directly or

from a new businesa entity to a~wre Oldco.

I .Proposed Rule~

38749

penon) in 1everal transactions._ the prior

poaaeseion of voting or non-voung

aecurities of that person generally does

not enhan~ the anticompetitive

potential of tbe tranaaction. The al.ready

acquired tealrities do t10t a:in1titute a

business enlity which when combined

with additioua.I aecuritiet of that iasuer

will lessen competition. There ia only

one busineaa being bought. However. if

the newly-formed entity acquires assets

or voting securities of more than one

person an anticompetiti\'e combination

could result. For that reason an

exception in propoaed l 801.ll(e)

requltes counting cash. loans and

1ec:.irit1es in those c'.rc:.imstances and

would make 1uch transactions

reportable.

Although it might be argued tl':at

existing corporations also should be

directed to deduct cuh or loans which

are earmarked for making the

acquis1uon and aecurittes issued by :he

entity being acquired from their tot~l

assets. the desirability of such a ru1e is

more questionable. To direct that sue!':

deductions be made would require mar.y

persons to prepue a new balance sheet

to dete:mine the reportability of

acquis1t1ons. Rules explaining how to

prepare that balance 1heet would

reintroduce the complexity of

compliance with t~e rales that the

Commission eliminated when it

promulgated the existing financial

stater::en:s rule of§ 801.ll (see 43 FR

3J4i3-4 (July n. 1978)). The

considerations set out below conf::-::: :hr

ongmal conclusion that the~e is no ne!-:

to revise paragraphs (aHd) of :he

existing rule.

Fint. the existing rule. to a large

degr-ee. automatically ar.fres at the

same result for ongoing cor;:iorat1ons as

proposed § 801.ll(e) does for new!y·

formed cor;:iorations. Unde~ :he ex1s::r.;

balance sheet rule. loans made to

ongoing corporations for the pur;>ose of

making an acquisition usually are not

included when calculating an ac:;:.iir.~g

pe!'Son·s total assets. Such loans are

normally made just prior to

conswnrnauon of the acquisition and are

the!'efore not reflected on the pe:-son's

last regularly prepared financial

atatement. Con.aequently even if loar:s

ought not to be aiunted there is little

need to deduci these aaaeta because

they usually are not included.

Second. there is value to the

predictability and convenience of the

balance sheet approach of the c:.irrent

rule even if it reaulta in small

inconsistenciea in measunng corporate

1ize. That approach ailows the vast

majority of1irm1 to rely on their balance

aheets to determine whethe:- they have

Federal RePst.u I Vol. so.. No. 1a.s I Tue.sdiy. Seo-c~"1~ 24. 1985 I Propose"rl Rules

a.n obligation to file a no.tiflcation..

Businesses can quickly deterinine from

existing record$ whether they must file ..

That convenience outweigM the value

o( tryifli to make mOT!! preciM! or more

uniform tbe calc-.ilaticn o{ d:ie dollar sue

criteria (whi'c::!! al"!! at be3t cmty very

preliminary ineuurn a{ emrrpe!lt!ve

1ignifican~ ). Acomfingfy the

CommiS"Sicm will C"Ontinue to rely on

~larly ~red balan~ sheets for

d~~ining the size a{ ongoing

bu.sineues. To do otJ:rerwiu would •

~arily complicate the roles.

introduce uncmainty aboat coverage

and make the i)roc"s of c:alc-.!!ating size

much more e:uc: than is wam1nrec b;·

the l'CU!h measure f!'!tab!ished by

Congress.

The Propos~ Rule

Cene!"al Rule

P:-ooosed s~:ion 801.ll(el states t.'lat

it applies only where the pe:-son does

not !'lave a regular!;; prepared balance

shee!. At. a prac!lcal matter the see:ion

a;:-plies on!;· :o newty.forr.led entities

(that are nor controlled by· any othe~

pe:"Son). Persons with outc!ated or

othel"'Ntse inc:impiete balar.ce sheets are

re~uired to rec::nst:-.Jc: the~ !i::ar:c1ai

documer:!s ln ac:orcfance wit.lo:

parag:aphs (aHd! of this sec:ion.

3ubsec:ion (e!(l) sets for:h the general

.rule :hat asse!S i.r.cfa:!ing cash or

sec:;:'itles are alwavs included on a

·pe~son·s !:laiance sheet. except for cash

th::it will be used :o z:3ke ar. aca.:isltion

an:l se:-.:..,lles issued b~· the acc;~ired

pe:-son (or an ent::y within the acquired

pe!"sor.l.

The exclusion of cash. loans or

secu:it1es es:abi1shed by ;iroposed

i ao:.:lfel con::::ues 1.:nul the acqui:-:::g

pe7so:: has a :egu!ar!y ir,e;::ared balance

s!':e~t. ~.. ! o::ks1on ~eans. for

exar.:pie. that a seri" of separate

acqi..is111ons of voting secur::1es of one

;ierso:: O\'e: a four mon:.i period by one

ar:quinng person will be treated as if the

st!;iu·are trar:sac:?ons all ~c-.:r:-ed at the

sa:ne r:r.ie because the non-ir:::lusior: is

not en~c!c. by thr !irst acquisition.

Ne. '.!ler t::? :ash to be used to acquire

acdi:1ona! \'Citing secunt:es ::or an~·

v.i:ing secuntles of the sa:ne acquired

person a!ready heid by the acqui:-:::g

person are counted as asse!s unnl :.iey

appear o:: its rqular!y pre;:iared balance

shee! Thus. if the acquir:ng person

w:ti'lot.:! a rPg>Jlar!y ;ir!;:a!"'ed ba:ance

s!:ee: accl::':':~!atl'd s:oo million in voting

se:u:-:t ..~s of o:ie person ov~!" the four

:::or:!!: ;ie!"iod. i' wcul.:l not rnee! t!':e

siu·cf·;>e!"s::::-. tPs! if :ts on!y 8'5f!!s "''e!"e

!'lose \'Ot:ns sec:.;:-:t1es and cash 10

ac:;u::e :':lore vo11r:s stcunli"' oi 11':;,1

same ;>e!"Son. In contrist. the proposal

has no effect OD the aql.1.Uiti.o:i of

assets. A.sets miuzt be rt:Lec.:.e.d oo !.he

newly·Cormed f!lltity'a b&!ao.ce sb.eet u

aeon as they are acqttired.

The first two exampl.n ill¥scate how.

in zenenL proposed i 801.ll(eJ

me~ures size . .E.x.ampJe 1 i.Iluse-ate-s the

applicability o{ pa.ragrap.b (el whe::i only

cash is used in the ac:qtrisition. Example

Z illu.strates the applicability of tfle rule

when the newly-formed CDmpany bas

non-c.ash assets. .Ex.ample Z dso

illustrates treatment of cash u an asut

. of an acquired person. Since the rule

only allows a person to exclude cash

·used to :naie an act;uisi.tion. • other

. cash is always included as an use! of a

newly.formed acquir!d pe:-son in

determir.i::g ill si:e.

competitive li"gnilia.DCL Ho...._u. the

~tea i.a Got awweoi good

b~ renaa• for C'N,,ljng 1 new

mtity with c:irsil aa its primary u:te! far

the purpo9'!! f1l becoming .n aeq?rTSrt1on

ta~ nor is !iris a typical farm of

transaction. Thi.IA it docs oot seem

aecess.at')' fer the pre.merger nb.es lo

Ire.at n.ewly-(or=ed ~red person.s 1.he

e.IJ1le u newly-htrmed ecq11inng

~ens. Aceord:ing.ly pro9QSed

I 801.ll{c)(2l c.alci&lates tbe tocal assrts

of a newly-fomte'Ci ~ ~on by

,including all aS"Sets.

C. Commission proposes to 11!\'ise

f 801.ll(a} acd add a new I 801.ll(e) as

aet forth below. New l&n~ge is

•

in di ca ted by arro...,: (• aew lan.gu.aS'I! ~ l

f I01.11

Annual net ..-- and tclJtl UM<1.

Exceptions to the Cen~al Ru.le

(a) The acnual net sales znd i.otal

As. explained above. the general rule

assets of a person ahall mclude all net

of i)roposrd t &O'l.ll(e) i• appropriate

sales and all auers beld. woethe:

because rrans&alons that may pose an

fore:gn or domestic;. except u provldec

antit:-ust concern are t.io" in wn1ch rwo

in paragraph ... ,~ (d] ... and [e)• of

or more par.ies of ~:fic:a::t si:e

this sec:1on.

combine. !n two ~.unt.tancf!'!. !.he

general rule cannot be applied because

•(el Exce?I in acqu.is1tions in wb1c..'i

the u.nde:'iying annt:'U~ ninonale does

l 80'1 ..Wlcl is applicable. an.d su!:1ect to

not apply. These situations a.-e (1) where

the

limitations of parar.aph (d) of :h:s

a new e:inty ie":iuires a:rsets ar TOt~a

sec:ion. the total as.sets of:

aecuriries of rwo or more ;1el"SOTIS. and

(1} An acquiring person :ha r does not

(Zl where a new en!'Trj' ts for:=:e-.l :o

have the regularly pre;Jared fi~a:;c;.:

make an acquisition and the ow:i~ of

staleme::ts desc:.-ibed Ill par<1g:a;::: (c: or

that entity mee! the si:e·of·pe:-son

this sec:1on shall be. for acqui5it1on of

citeria and are the:-efore ?"eqt:i:-ec :o

each aquired person:

repoM the transaction pursuant to

(i) All assets held by the acqum::;

proposed ! 801.S. The method :n

person at the ome of the acqui.saion.

proposed l 801.ll(e){ll for ealc:'.:la:;r.g

(ii) Less all case that will be 1.1sed b~

the total asset! of a newly·for::'!ed

the ac::iuinng pe?:3on as cor.side~at:c!:: ,r,

acquired pe:-son requires s~ara !I!

an acquisition of assets from. or v-ot:::.g

ealcuJauons ..for acquis1hons of eac!'t

seCW'llles iuued by that acquired

acquired person." This me-9ns that if a

person (or an e:i!lty wit."'.ln tha: acqt.:::t-c

newly.formed entity will acq:i::-e use:s

pe:"Sor:J and less all secan:1es oi tne

or vor1ng 5~.Jnties of ;ie~on A and of

pe~son B. then. in determining if th-e

acquired person (or an ent::y ""i:!'::n :i'..•

newly.formed entity i1 Large enough :o

1cqu1red person~ and

ha\'e an obligation to re;:ion the

(ZJ An ac::iu1red person tha; does n::r

acquisition of A. the newly-for.:ied

have the regularly prepared f:.~.onc.iai

entity mus! include as pen of its !otal

start:ments described in paragapl': (cl of

assets the cash it will use to act;ui:-e 9

this section shall be all usf'!s helc! !:>\

anc! any securiues of B that it holds.

the acquired person at the hme of tr..!

Sir:iilarly. in ineuuring the size of the

acq14is:ion .....

newly·!ormed entity to dete:-m:ne

.. ~pies: 1. A11YD1e that A 1s • new 1)·

whether the 1cquis1tion of B must be

· formed company wluc:il ia not c:onU"Ci!eo b;

re;iorted the ennty must include !he

any othe~ tnmy and whose formar1on "nc.1

securities of A it holt!s and casn lt:at

1ub1111:t to t 801.40. A.uu:-.. al.so &.at .:. hH

no Hits and doe' DO( liavt the firtar.c:.il

will be u3ed to acquire assets or \'Oti:ig

11a1e:r.e::ts dnc."'lbed in puagra;:il t'I oi :~.. !

sec:ir:ties of A. EJtar:iple 3 i!lust:a tes the

see!ion. A planJ 10 borrow S"lOS 1T.1 !!ior. ::-:

caic1.llation or total asse:s wben the

cuh and pun:han 1Sft!s ~ B fo~ !":nQ

·newly-formed e:i!ity will make two (or

auilior. A., total Hftts •~ dete=.1~"c ~'

mer!!) acquisitions after its (o!":':lanon.

1ub::ac:t1ng tht SlCXl lalllio11 rt:a~ 11 wC:i .;S• · ..

acqutt"f e·s· .Ull!tl frocn tne S'J05 1:":''.1on '.,.• :

Newiy-Fooed Acquired Persons

A "'ii! ha't ar the ti~ o! tlie 1cc::.1s1'..;.-.

The~e appear to be go"d M!asons for

Therefore. A bas 101ail uaets oi s.5 ~.,;· .:.·.

c:'!a~in; a new e:::i:y with (ew ass!'s

and does not m~I the 11zr·of·pt~sn·. :.;· '·

ot.!':e~ than cash to make en acc;uis111on.

sec::1on iA(a)(:?).

2. In example 1 a!:iove. assi.::nt :::, : ..i. •· .:

Suc!i transac:ions are frequent and. as

at the nme 11 acquires !rs usets. !".a' t S?~

discussed above. 11nlikely IO hlYe direct

Federal Register / Vol. SO. No. 185 / Tu~day. Se?tembeT 24. 1985 / Propo11ed Rule'

m1!Jio:: in cash and a factory value:! at S:O

· n1iiion. A w1il exchange I.he factory and SBG

million oash for B's assets. To determine A's

total assets A should subtract from the sas

aullion cash 11 has bol'T'Owed the S80 m1ll1on

that will be used to acquire assets from B &nd

cdd tht l'l!m11nder to the value of tr.e factory.

Thus. A has total auets o{ S::S atiJ.lion. Even

thou~h A wt!! use the factory as part o{ the

consideration for the a~u1S1hon. the value o(

the factory must still ~included in A"s total

asHU.

Note that A and B may also have to re~r.

the a~u1s11ion by B oi A"s con-ash assets

(i.e_ tl:e fact=ry \. for that acqui~1ttcr- the

value of the cuh A will use to buv e·s uae:s

is not excluded fro:":": A ·s total u,~ts. TI:us. in

the acqu1s1uon bv B. A·s total assets are S10:

tr;~~~.o~.

J. ::i exa~;:!e 1. us1;::.e :ha: .14,. bom:w•

Si 5') r:u:i1on 10 acq111r~ 5100 mi!li'>n or Ust!S

!ro~ ;:>erson B ar.e 5-15 m1!!;or. oi .,.ot;n;

sec1.:"'.::~= cir pe:-s.Jr. C. To d!:emune .r.S s111;

for ;:>w:;lnses of lls icq1:1!ll1on l!cr:: pe!'"Son e.

A s.;~strac::s the SiOO mtl!ion tb: ;t ,...,II ..:H

ro~ :!:at ac:::ussn;un. The:i:fore. }. l:.a!- tot•!

<;~; .. :s of S50 ~s!ho!". for :iu:-;ic:!~ cf 1•s

;,c:::.:1s:t1C'!'I fr:m B. To de•e:-::1;ne .ts s:z~ wit~

re~::cct ·.o 1a acc:.1s111on fmm pt'!'"SCn c;. A

s1.~ .. : .. ::!i. t::e 5-1:5 ::-::llior: thi6: w1ii be paid for

c) \"':'!I!':; seci.::-::1Ps Tnus. fo~ ;;.1:-;:-:.ses o{ :t~

.. c:::1.,::on i::::-: C. .'\ r.as ro:"i ;s~<:ts o! Si05

r::.:::o::. S;.11h •c:qu1s:::,.:::- • ., :!arc!:ir~

,,,., ~.~::.: 41

3. 5ection 801.l:?:!::l

C•lt1.1lctillg

Pf~e:icac;e of \"oti:ig Secu:ities To Be

HeiC: or Acquired

Se-:: •.~:: wu:;b! rs o:it th~ n~e!~::!

h~ .... ~.::!': ;:!'~sons a~e to de:e:-::-:ine tht'

p!~:~!':~i~~ c! votir:~ sec!:.~:!-:~ oft~

i:.;i;t~ :r..1 :!':e: !'tole o:- w1!l hold a! ~

:i <·_'.:of .c.:: l::.;:.i:~:::o::. Thi.' Co!!::r.!:;sici:::

p:::;:-M!'~ to refint the r.-:tthl"'d to reflcc:

rr.c·., ac::'Jrattly t=:t am::i'Jnt of \'Otir.~

~::;;~:-:ce one per~on l'.os O\"e~ a!'lothe~.

• r.~ ;a:-:~'.:0£!' of:~" e:-.;1~1::-:g foo.::·.;Jz.

w!':t:r: il;:':'t:!': litc~:.i\. p:oC'..!Ces a

~-c,;s!~ d:s:c:ted rp:-~e~!'!":!"t:o!'. of

votin~ power ;f differtr.l classes of an

i.ss.;e(s \·ot:r.g stc:.:r::ies posse~~

~-= 1 ~s1;.r.::3il~ c::rfe~er:! \"Oting powe~. For

:hat r!uc:-: the Ccmmission staff has

~esp.jr.:'!~ to inquir" conce~!r:g S!J(""'i

transac:ior:s by ach·is:ng-persons filing

no:::"::at:C1::s to we!sb :ho: nurnbe~ of

\·c:r~ tha1 ud: c!ass of s:ock may cast

b:: ~he n01:::!.>~r of dirr.ctors that each

l"!4S! may tler.t. The Cor::rr.ission new

p;oposes to codify ::.:s staff advice by

rens•r:! the fo:-:n:.:la for cakulattng

holdir:~s of \'C1t1r.6 !!'cur:r:e~ con:ained

in § 801.12{\J).

The \'O!::-:;: s:~er:2:h for:T'.1.ila is

i:::i)Ntar.t to- the ao!':"',::":!Strahon of the

pre~er~e~ noc;fi~a •?on orC'~rar.. Stveral

~<'' :o?'lcr?ts in the r:.:les and 1r. the ac:

tu::: O?'l w~:?t pe::r:::.:;c Clf a pa::icular

c.::-~;ar::... s vo:~~~ ,.tc!.:·:t;es ancthe;

pe~so:i ::cl=s. For ins:an~e. a person is

cee~t~ to ccr:troi a corpo~a:ior. when it

holds at least 50 ;:ierce?'l: of that

COfl'Oration's voting sec-Jrities

(§ 801.l(b)): the proper noufication

thnshold is usually determined by the

pen:entage of voting securities held

(§ 801.l{h)):.and the uinvesanent only"

exemption i1 available only for voting

1ec-..:riti" holdings of 10 percent or less

(section 7 A(c)(9) of the act anci i SOLJJ.

For all these reasons it is important Lliat

accuratr. determi.-:a~ons be made of the

percen:a@e of vottng securities held by

business entities.

Although th: proposed revisi-,n is a

great i.mpro"ement it does not describe

fully the voting power associaled with

an acqu1s:non of shares. The

Commission has fo\;Ild no obj~c:1ve and

adminis::aole crite!"la that w1l! reflect

for a!l si~ations t!':e actual i)ower

resulting from an act;uis:ucn cf shares.

Be:aun of the shcrtccmings cf this

propr.sed ru!:. the C.:irr..miss:;:n

par.i:u~arly invites su£~e~:1cns on how

to bette: ca!culate hoid:::p of voting

securite~.

The d:!fic~lties of formu

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