UNITED STATES OF AMERICA (1994)

UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSION

WASHINGTON, D.C. 20580

JUL | 1 1996

Office of the Director

Bureau of Competition

PROGRAM CODE: AS

MEMORANDUM

To: Commission

From: William J. Baer Wf p

Director !

Subject: The Seventeenth Annual Report to Congress pursuant to

Section 201 of the Hart-Scott-Rodino Antitrust Improvements

Act of 1976

I recommend that the Commission approve the attached Annual Report to Congress

regarding the Hart-Scott-Rodino premerger notification program. The Teport covers fiscal year

1994.

UNITED STATES OF AMERICA ;

FEDERAL TRADE COMMISSION

WASHINGTON, D.C. 20580

Program code: AS

MEMORANDUM

To: Commission

From: Nancy M. Ovuka, Compliance Specialist

Premerger Notification Office

Subject: The Seventeenth Annual Report to Congress

Pursuant to Section 201 of the Hart-Scott-Rodino

Antitrust Improvements Act of 1976

Attached is the Seventeenth Annual Report to Congress

regarding the operation of the Hart-Scott-Rodino premerger

notification program. The report covers fiscal year 1994.

I request that the Commission approve the annual report and

authorize the Secretary to transmit a copy of the report to the

Assistant Attorney General for Antitrust for her concurrence.

The report has been reviewed by staff at the Antitrust Division

and their comments are included. I also request that the

Commission authorize the Secretary to transmit the annual report

to Congress upon receipt of the Assistant Attorney General's

concurrence.

Respectfully submitted,

7) sus), Stir krwa—

Nancy M. Ovuka

Approved:

Gobo M Arp Su. (7-35-95)

John M. Sipple, Jr.

Assistant Director for Premerger Notification

PURSUANT TO SECTION 201 OF THE

HART-SCOTT-RODINO ANTITRUST

IMPROVEMENTS ACT OF 1976

(SEVENTEENTH REPORT)

INTRODUCTION

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 U.S.C. Section 18a ("the Act"). Subsection

(j) of Section 7A provides as follows:

Beginning not later than January 1, 1978,

the Federal Trade Commission, with the

concurrence of the Assistant Attorney

General, shall annually report to the

Congress on the operation of this

section. Such report shall include an

assessment of the effects of this

section, of the effects, purpose, and the

need for any rules promulgated pursuant

thereto, and any recommendations for

revisions of this section.

This is the seventeenth annual report to Congress pursuant

to this provision. It covers fiscal year 1994.

In general, the Act requires that certain proposed

acquisitions of stock or assets must be reported to the Federal

Trade Commission and the Antitrust Division of the Department of

Justice prior to consummation. The parties must then wait a

specified period, usually thirty days (fifteen days in the case

of a cash tender offer and ten or fifteen days in the case of a

bankruptcy sale’), before they may complete the transaction.

Whether a particular acquisition is subject to these requirements

depends upon the value of the acquisition and the size of the

parties, as measured by their sales and assets. Small

acquisitions, acquisitions involving small parties and other

classes of acquisitions that are less likely to raise antitrust

concerns are excluded from the Act’s coverage.

The primary purpose of the statutory scheme, as the

legislative history makes Clear, is to provide the antitrust

enforcement agencies with the opportunity to review mergers and

acquisitions before they occur. The premerger notification

program, with its filing and waiting period requirements,

provides the agencies with both the time and the information

necessary to conduct this antitrust review. Much of the

information needed for a preliminary antitrust evaluation is

included in the notification filed with the agencies by the

3 The Bankruptcy Reform Act of 1994 amended § 363 of the

Bankruptcy Code providing in part that the waiting period

required for transactions involving an acquired person in

bankruptcy be fifteen days. The new provision applies to

entities that filed for bankruptcy on or after October 22, 1994.

Bankruptcy Reform Act, Pub. L. No. 103-394 [H.R. 5116], § 109,

108 Stat. 4106 (1994).

transaction. Such a request extends the waiting period for a

Specified Period, usually twenty days (ten days in the Case of a

Cash tender Offer), after the parties have complied with the

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

Person complies) . This additional time provides the reviewing

Final rules implementing the premerger notification program

were promulgated by the Commission, with the Concurrence of the

Assistant Attorney General, on July 31, 1978.2 At that time, a

comprehensive Statement of Basis and Purpose was also published

1983, the Commission, with the concurrence of the Assistant

Attorney General, made Several changes in the premerger

notification rules. Those amendments became effective on

August 29, 1983 3 Additional amendments were Published in the

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

notification Program, see the Second, third and seventh

annual reports covering the years 1978, 1979 and 1983,

respectively.

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

801 through 803).

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

BOl through 803).

5 52 Fed. Reg. 20,058 (1987) (codified at 16 C.F LR. Parts

801 through 803).

STATISTICAL PROFILE OF THE PREMERGER NOTIFICATION PROGRAM

The appendices to this report provide a statistical summary

of the operation of the premerger notification program. Appendix

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

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

investigations in which requests for additional information or

documentary material (hereinafter referred to as "second

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

requests for early termination of the waiting period were

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

fiscal years 1985 through 1994 the number of transactions in

which second requests could have been issued. (This information

appears in Appendix C and is explained in footnote 1 of that

appendix.) Appendix B provides a month-by-month comparison of

the number of transactions reported (Table 1) and the number of

filings received (Table 2) for fiscal years 1984 through 1994.

Appendix C shows, for fiscal years 1985 through 1994, the number

of transactions in which the agencies could have issued second

requests, the number of merger investigations in which second

requests were issued, and the percentage of transactions in which

second requests were issued. Appendix C may provide a more

meaningful measure of the second request rate than Appendix A

because Appendix C eliminates from the total number of

transactions certain transactions in which the agencies could

not, or aS a practical matter would not, issue second requests.’

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

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

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

as cash tender offers, options to acquire voting securities from

the issuer, options to acquire voting securities from someone

other than the issuer, and multiple acquiring or acquired persons

that necessitate separate HSR identification numbers to track the

filing parties and waiting periods. A particular merger or deal

may involve more than one transaction. Indeed, some have

involved as many as four or five transactions.

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

annual reports, the information regarding second requests in

Appendices A and C differs from that reported in those appendices

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

C in the 1979-1987 reports identified the number of transactions

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

the present report show the number of merger investigations in

which second requests were issued. A merger investigation may

include several transactions. We believe that reporting the

number of merger investigations in which second requests were

issued better reflects the agencies’ enforcement activities

because it represents the number of mergers or acquisitions that

were investigated to this extent under the Act by the agencies.

3

below, also show that clearance was granted to either agency for

1993 to 3.2 percent in 1994 based On Appendix A, and from 4.1

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

Statistical tables (Tables I - XT) containing information about

the agencies’ enforcement interest in transactions reported in

fiscal year 1994. The tables Provide, for various Statistical

requests were issued; the number of transactions based on the

dollar value of transactions reported and the reporting threshold

indicated in the notification; the number of transactions based

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

assets of th

based on the industry grou

DEVELOPMENTS IN FISCAL YEAR 1994 RELATING To PREMERGER

NOTIFICATION RULES AND PROCEDURES

1. HSR Premerger Notification Program Guide yv

In fiscal year 1994, the Commission released the fifth guide

in a series of instructional Pamphlets prepared by the Premerger

4

Notification Office and the Compliance Division of the Commission

regarding the HSR Premerger Notification Program.® The guides

are designed as an introduction to the Act and the rules in their

current form for persons who are

After an initial filing, in

agency examining the transaction

and documentary material in what

Guide V provides a model request

unfamiliar with them.

some instances, the enforcement

will seek additional information

is called a "second request.”

that outlines the type of

information the agency usually requests if it seeks additional

material.’

2. Amendment to the HSR Form

On June 14, 1994, the Commission published a notice of

proposed rulemaking concerning amendments to the Premerger

Notification and Report Form.?® The proposed revisions to the

form are intended to improve the program’s efficiency in insuring

a prompt, thorough, initial investigation of the competitive

implications of proposed acquisitions. The proposed amendments

require new and more up-to-date information in some instances,

but reduce the burden of compliance in other cases by raising the

thresholds of several items. The Commission received sixteen

comments in response to the notice. The proposal is still under

consideration.

3. Increase in Filing Fee

In fiscal year 1994, legislation was signed into law that

increased the premerger notification filing fee to $45,000,

effective August 29, 1994.41 The new measure amends legislation

mandated by Congress in 1992 which provided for the collection of

8 In March 1995, the antitrust enforcement agences issued

a joint model second request with annotations in order to

increase consistency between the agencies and reduce compliance

burdens on business. This joint model request supersedes the

original Guide V. See Fourteenth Annual Report to Congress

concerning Guides I and II. Guides III and Iv have not been

issued.

9 Neither this guide, nor any other guide in this series,

constitutes an interpretation, formal or informal, of the Act or

the rules.

20 59 Fed. Reg. 30,534 (1994).

a1 H.R. 4603, Pub. L. No. 103-317, amends Section 605 of

Title VI of Public Law 101-162 (103 Stat. 1031), which originally

mandated the collection of a filing fee beginning November 28,

1989. See Thirteenth and Sixteenth Annual Reports to Congress.

5

i te EUAN

statute specifies that the waiting period required under the Act

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

4. Compliance

compliance through a variety of methods, including the review of

newspapers and industry Publications for announcements of

transactions that may not have been reported in accordance with

competitors, customers and suppliers,

the public often provide the agencies with information about

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

the Commission Staff, under authorization of the Department of

Justice, filed one complaint in fiscal year 1994. The complaint

alleged a violation of the Act and sought Civil penalties under

Section 7A(g) (1) 43

In United States y. Pennzoil Company,** the complaint

alleged that Pennzoil had violated the Act when it acquired

voting securities of Chevron Corporation during September through

December 1989. According to the complaint, the companies are

competitors in the oil and gas industry. Ags a result of the

approximately 8.9 percent of the stock. The United States

contended that Pennzoil’s acquisitions of Chevron stock were not

"solely for the Purpose of investment "35 as it asserted,

32 59 Fed. Reg. 50,762 (1994), See Exhibit B.

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

Ply with the Act’s notification and

34 United States v. Pennzoi] Company, Cv. No. 394~-CVO-2077

(D.D.c. complaint filed September 26, 1994).

a5 Section (c) (9) of the Act and section 802.9 of the

Rules, 16 U.S.C. § 802.9, exempt acquisitions made SOlely for the

purpose of investment, if the acquiring person would hold ten

(continued. ..)

and thus were not exempt from the Act’s reporting and waiting

requirements. Under the terms of the final judgment, Pennzoil

agreed to pay a civil penalty of $2.6 million to settle the

case .7°

MERGER ENFORCEMENT ACTIVITY DURING FISCAL YEAR 1994°’

1. Department of Justice

The Antitrust Division challenged twenty-two merger

transactions that it concluded could lessen competition if

allowed to proceed as proposed during fiscal year 1994. In ten

of these instances, the Antitrust Division filed a complaint in

U.S. District Court.’ Seven of these cases have been settled

18(.. continued)

percent or less of the outstanding voting securities of the

issuer.

16 United States v. Pennzoil Company, 1994-2 Trade Cas.

q 70,760 (D.D.C. October 28, 1994).

7 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.

a8 United States v. General Motors Corp., ZF

Friedrichshafen, AG, ZF AG Holding, Inc., 2F Acquisition Corp.

and ZF Industries, Inc., Cv. No. 93-530 (D. Del. filed November

16, 1993); United States v. Baroid Corporation, Baroid Drilling

Fluids, Inc., DB Stratabit (USA) Inc., and Dresser Industries,

Inc., Cv. No. 93-2621 (D.D.c. filed December 23, 1993); United

States v. International Association of Machinists and Aerospace

Workers, Tom Ducy, William O'Driscoll, and William W.

Winpisinger, Cv. No. 94-0690 (D.D.C. filed March 30, 1994);

United States v. Flow International Corporation and

Ingersoll-Rand Company, Cy. No. 94-CV-71320 (E.D. Mich. filed

April 4, 1994); United States v. Tele-Communications, Inc. and

Liberty Media Corporation, Cv. No. 94-0948 (D.D.C. filed April

28, 1994); United States and The State of Florida v. Morton Plant

Health System, Inc. and Trustees of Mease Hospital, Inc., Cv. No.

94-748-CIV-T-23E (M.D. Fla. filed May 5, 1994); United States v.

Mercy Health Services and Finley Tri-States Health Group, Inc.,

Cv. No. 94-1023 (D. IA filed June 10, 1994); United States v. MCI

Communications Corporation and BT Forty-Eight Company ("Newco"),

Cv. No. 94-1317 (TFH) (D.D.Cc. filed June 15, 1994); United States

vy. AT&T Corp. and McCaw Cellular Communications, Inc., Cv. No.

(continued...)

**(...continued)

1:94-CVO01555 (D.D.C. fileg July 15, 1994); and United States v.

Outdoor Systems, Inc., Cv. No. 194-CV-2393 (N.D. Ga. filed

September 8, 1994).

19 In eight instances, the Department of Justice issued

Press releases. Department of Justice press release issued

November 2, 1993, involving the transaction between Goldman Sachs

Group L.P. and National Gypsum Company in the SJypsum wallboard

industry; Department of Justice press release j

1993, involving Cyprus Minerals Company’s acquisition of Amax

that is used mainly to Prepare strong heat-resistant alloys

Suitable for certain Specialty applications, Primarily in the

nse industries; Department of Justice press

release issued December 11, 1993, involving the acquisition of

Chipsoft Inc. by Intuit Corporation, manufacturers of the two

Bancorporation, the two largest banking Organizations in

Wisconsin; Department of Justice press release issued August 4,

In addition to the eight instances in which the Department

issued press releases, th i

the proposed acquisition by Pacific Industries of Michigan

California Lumber Co. was likely to have anticompetitive effects

in the timber industry; the Department also informed the Parties

the parties restructured the proposed transactions. In four

instances, the parties abandoned the proposed transactions.

In United States v. General Motors Corp., 2F

Friedrichshafen, AG, ZF AG Holding, Inc., 2F Acquisition Corp.

and ZF Industries, Inc., the Division challenged the proposed

sale of General Motors Corporation’s automatic transmission

division (Allison Transmission) to 2F Friedrichshafen, AG, a

German company with American operations headquartered in Chicago.

Allison and ZF compete in the United States in the manufacture of

medium and heavy automatic transmissions for trucks and buses.

The suit alleged that the proposed transaction would

substantially lessen competition in two heavy duty transmission

markets in the United States: the manufacture and sale of

automatic transmissions for transit buses and for heavy refuse

trucks. The complaint also alleged that the merger would reduce

substantially worldwide technological innovation in the design

and production of automatic transmissions for medium and heavy

duty commercial and military vehicles by combining two of the

three firms capable of such innovation. Thereafter, on November

18, 1993, the parties abandoned the transaction and the

government voluntarily dismissed the case without prejudice on

December 3, 1993.

In United States v. Baroid Corporation, Baroid Drilling

Fluids, Inc., DB Stratabit (USA) Inc., and Dresser Industries,

Inc., the Division challenged the proposed $900 million merger of

two of the nation’s largest oil field service companies, Dresser

Industries, Inc., and Baroid Corporation, in two markets: the

production and sale of drilling fluids and the manufacture and

sale of diamond drill bits in the United States. Simultaneously,

a consent decree was filed settling the suit, and requiring

divestiture of one complete drilling fluid business, Baroid’s

domestic diamond drill bit business and licenses related to

Baroid’s worldwide diamond drill bit business. Drilling fluids

and diamond drill bits are used in drilling for crude oil and

natural gas.

19(., .continued)

that the acquisition by First National Bank & Trust of McAlester

of the McAlester branch of the Bank of Oklahoma was likely to

have anticompetitive effects in the banking services business; on

February 16, 1994, Dean Foods Company announced the termination

of negotiations to purchase the assets of Flav-o-Rich, a

subsidiary of Dairymen Inc.; and on May 6, 1994, the Department

issued a letter to the Office of the Comptroller of Currency

involving the proposed acquisition of First Eastern Corporation

by PNC Financial Corporation.

ing as an officer or director of certain sized

(Northwest) , The machinistg’ union secured board representation

when the union members acquired Stock in both airlines for wage

concessions.

Rand Company, the Division Challenged the merger of the

nation’s two dominant waterjet pump manufacturers. The companies

are the two major producers in the United States of ultra-high

components of waterjet Systems, and

have a combined market Share of about 90 percent. Waterjets are

components and Spare parts, Thereafter, on May 2, 1994, the

Parties abandoned the transaction.

Simultaneously with the filing of the complaint, a consent

decree was filed settling the suit. The decree prohibits the

merged firm from discriminating against independent video

programmers with respect to the terms and conditions of carriage

on its cable systems and against its multichannel subscription

television competitors with respect to the terms and conditions

of licensure of this video programming, where the effects of such

actions would be unreasonably to restrain competition.

In United States and The State of Florida v. Morton Plant

Health System, Inc. and Trustees of Mease Hospital, Inc., the

Division and the Florida Attorney General challenged the proposed

merger between two central Florida hospitals that provide nearly

60 percent of the general acute care hospital services in North

Pinellas County, Florida, a market in excess of $300 million.

The complaint alleged that the merger would create a dominant

provider of general acute care hospital services, thereby

reducing options for managed care plans that have been

instrumental in containing hospital costs. On June 17, 1994, a

consent decree was filed settling the lawsuit. The settlement

bars the merger of the hospitals, while permitting them to act

jointly in providing certain health care services in which

competition is plentiful and to share some administrative

functions. Under the agreement, the two hospitals may form a

joint venture partnership for care in which there are numerous

competitors or for which patients might seek attention far from

home. The partnership will manage the joint services and will

contract to provide them to each of the hospitals at cost. Most

acute care hospital services will continue to be provided by the

two parties independently. The settlement permits the hospitals

to merge procurement efforts, certain administrative services,

telephone services, accounting, billing and collections and

medical records, while providing appropriate confidentiality

measures. This action was the first settlement of a case in the

health care industry since the issuance in September 1993 of the

joint Commission and Department of Justice Statements of

Antitrust Enforcement Policy in the Health Care Area and the

first case involving a joint prosecution with a state.

In United States v. Mercy Health Services and Finley Tri-

States Health Group, Inc., the Division challenged the merger

between Mercy Health Center and The Finley Hospital. Mercy and

Finley are the only competitors for acute care hospital inpatient

services within the county of Dubuque and are the two largest

hospitals within a 70 mile driving distance of Dubuque. The

Division alleged that the merger would create a monopoly provider

of general acute care hospital services, reducing competition

among hospitals. The complaint alleged that the merger would

likely lead to higher prices and lower quality services for

consumers in the Dubuque, Iowa, area. The complaint alleged that

the proposed combination would likely lessen competition and

:

restrain trade unreasonably in the acute care inpatient hospital

il

services in the Dubuque area in violation of Section 7 of the

Clayton Act and Section 1 of the Sherman Act, and would have a

monopoly over those services in and around Dubuque. On October

27, 1995, the district court issued an Opinion and judgment

refusing to enjoin the merger (902 F.Supp. 968), and the

government has appealed.

In United Stateg Vv. MCI Communications Corporation and BT

Forty-Eight Company ("Newco"), the complaint alleged that the

1 integrated BT-MCI joint venture to provide

local telephone monopoly in the U.K., the venture could have

In United States y. ATET Corp. and McCaw Cellular

Communications, Inc.,

acquisition by AT&T of McCaw, the nation’s largest cellular

telephone carrier. The complaint alleged that the Proposed

vertical mer

cellular services, interexchange, and equipment markets.

Simultaneously, a consent decree wag filed sett]

The decree estab

that AT&T will not interfere with those customers’ ability to

change equipment suppliers. Under the decree, long-distance

rivals of AT&T will have access to McCaw systems equal to AT&T’S

access. The decree also requires certain separations of

personnel between AT&T and McCaw, including marketing and

development, to guard against discriminatory conduct and to make

the other injunctions more effective.

In United States v. Outdoor Systems, Inc., the Division

challenged the proposed acquisition of Capitol Outdoor

Advertising, Inc., by Outdoor Systems, Inc. (OSI), the two

largest outdoor advertising firms in the Atlanta area.

Simultaneously, a consent decree was filed settling the suit.

Capitol and OSI competed in the business of renting billboards in

the City of Atlanta and Clayton, Cobb, DeKalb, Fulton and

Gwinnett Counties. Under the consent decree, OSI was required to

divest its existing outdoor advertising business in Atlanta.

Additionally, the consent decree in United States v.

Primestar Partners, L.P., et al. (S.D.N.Y. filed 6/9/93) was

entered by the court.”°

During fiscal year 1994, the Division investigated two bank

merger transactions for which divestiture was required prior to

or concurrently with the acquisition. A "not significantly

adverse" letter conditioned on divestiture prior to or

concurrently with consummation of the transaction was sent to the

appropriate bank regulatory agency in both instances.”

2. Federal Trade Commission

The Commission authorized its staff to seek injunctive

relief in four merger cases during fiscal year 1994, only one of

which was filed in district court. In one of these cases, the

20 See the Sixteenth Annual Report to Congress for a

description of this case.

2a On March 28, 1994, a "not significantly adverse" letter

was sent to the Board of Governors of the Federal Reserve System

regarding the application by Deposit Guaranty Corporation,

Jackson, MS, to acquire First Columbus Financial Corporation,

Columbus, MS; on May 5, 1994, a "not significantly adverse"

letter was sent to the Comptroller of the Currency regarding the

application by PNC Bank, National Association, Pittsburgh, PA, to

acquire First Eastern Bank, National Association, Wilkes Barre,

PA.

13

ene eee HOT ET ERIN

parties abandoned the transaction.” Two of these cases were

settled by consent decree, one in connection with a related

administrative complaint, 23

In Hospital Board of Directors of Lee County, doing business

as Lee Memorial Hospital,** the Commission filed for a

preliminary injunction in A

Proposed acquisition of Cape

Health System, Inc., would lessen competition substantially for

acute care inpatient hospital services in Lee County, Florida.

Lee Memorial and Cape Coral are, respectively, the largest and

third largest of the four general hospital competitors in Lee

County (the Fort Myers metropolitan area). At that time, the

result

22 FTC news release issued January 31, 1994, concerning

the proposed consolidation of Parkview Episcopal Medical Center

and St. Mary-Corwin Regional Medical Center. The press release

reported that the Commission had reason to believe the

transaction would lessen competition substantially for general

acute care hospital services in Pueblo County, Colorado, by

combining the only two general hospitals. On February 9, 1994,

the parties abandoned the transaction.

1994, in connection with the acquisition by Red Apple of Sloan’s

Supermarkets. Subsequently, the Commission accepted a consent

agreement to resolve the complaint. See Red Apple Companies,

Inc., John A. Catsimatidis, Supermarket Acquisition Corp., and

Designcraft Industries, Inc., Docket No. D-9266; see P. 21 infra.

24 Federal Trade Commission v. Hospital Board of Directors

of Lee County, d/b/a Lee Memorial Hospital, Civ. No. 94-137-Civ-

FTM-25D (M.D. Fla.) filed April 28, 1994; 1994-1 Trade Cas.

q 70,593 (M.D. Fla.), aff'd, 38 F.3d 1184 (llth Cir. 1994); FTC

Docket No. 9265 complaint issued May 6, 1994; dismissed July 10,

1995.

14

In Healthtrust, Inc. - The Hospital Company,” the

Commission authorized seeking a preliminary injunction to block

Healthtrust’s proposed acquisition of three acute care inpatient

hospitals owned by Holy Cross Health System ("Holy Cross").

According to the complaint, Healthtrust operated two hospitals

that competed with the Holy Cross hospitals in the greater Salt

Lake City metropolitan area which includes Salt Lake County,

Davis County and Weber County. On July 8, 1994, the Commission

accepted a consent agreement for public comment and issued a

decision and order on October 20, 1994. Under the order,

Healthtrust was permitted to acquire Holy Cross-Jordan Valley

Hospital and St. Benedict’s Hospital provided that it divest Holy

Cross Hospital in downtown Salt Lake City, as well as certain

related assets, to a Commission-approved purchaser within six

months .7®

The Commission accepted consent agreements for public

comment in sixteen other merger cases in fiscal year 1994. A

complaint and decision and order were issued in seven of those

cases during the fiscal year, and consent agreements became final

in an additional seven cases after September 30, 1994. In two of

the sixteen matters, the parties abandoned the transactions

during, or shortly after, the public comment period.?’

25 Healthtrust, Inc. - The Hospital Company, Docket No. C-

3538 (issued October 20, 1994).

26 In April 1995, the Commission approved the divestiture

of Holy Cross Hospital of Salt Lake City (now known as Salt Lake

Regional Medical Center) to Champion Healthcare Corporation.

27 59 Fed. Reg. 46429 (September 8, 1994). In First Data

Corporation, et al., the complaint alleged that First Data’s

proposed acquisition of certain assets of Western Union Financial

Services, Inc., from New Valley Corporation would lessen

competition substantially in the market for domestic consumer

money wire transfer services. According to the complaint, First

Data's "MoneyGram" and "Western Union" are the only providers of

consumer money transfers in the United States. Under the

proposed order, First Data was required to divest either its own

consumer money wire transfer business or that of Western Union

within fifteen months. On August 17, 1994, the Commission

accepted a consent agreement for a 60-day public comment period.

Subsequently, First Data abandoned the proposed transaction.

Thereafter, the Commission withdrew acceptance of the proposed

consent agreement and closed the investigation on November 7,

1994.

58 Fed. Reg. 63167 (November 30, 1993). In Tele-

Communications, Inc. and Liberty Media Corporation ("TCI" and

(continued...)

15

In The Valspar Corporation and McWhorter, Inc.,

complaint alleged that the Proposed acquisition by McWhorter,

Valspar's wholly-owned subsidiary, of Cargill, Incorporated’s

Resin Products Division would lessen competition Substantially in

the United States market for the manufacture and sale of coating

g resins, modified

ting resins and

coating resins, are used in the manufacture

gs for architectural, industrial and special

purpose applications. Under the order, Valspar was permitted to

acquire the Resin Products Division, but was required to divest,

within twelve months, all facilities Operated by Valspar at

Carpentersville, Illinois; Portland, Oregon; and Philadelphia,

Pennsylvania; ag well as the Cargill assets utilized in the

Production of coating resins.

In Alvey Holdings, Inc., and Alvey, Inc.,?° the complaint

alleged that Alvey’s Proposed acquisition of White Storage &

Retrieval Systems, Inc., would lessen competition Substantially

in the United States market for the manufacture and sale of

horizontal Carousels. A horizontal Carousel is a continuous

loop, horizontally revolving device for materials handling and

Division of The Buschman Company, a wholly-owned Subsidiary of

Alvey, within six months.

*7(.. continued)

"LMC"), the complaint alleged that the Proposed acquisition by

tions, Inc. ("Paramount") , would lessen

competition substantially in the United States premium cable

movie market and in subscription television programming

1993, the Commission

for public comment. The order

required TCI and LMc to divest all of their Ownership interests

in QVC or Paramount. Subsequently, the parties abandoned the

Proposed transaction. Thereafter, the Commission withdrew

acceptance of the Proposed consent a

investigation on March 16, 1994,

28 The Valspar Corporation and McWhorter, Inc., Docket No.

C-3478 (issued January 25, 1994).

29 Alvey Holdings, Inc., and Alvey, Inc., Docket No. c-

In July 1995, the Commission

j ompany to Diamond

16

In Columbia Healthcare Corporation and HCA-Hospital

Corporation of America,*° the complaint alleged that the

proposed acquisition by Columbia Healthcare Corporation of HCA-

Hospital Corporation of America would lessen competition

substantially in the market for acute care hospital services in

the Augusta-Aiken hospital market encompassing the three-county

area of Richmond and Columbia, Georgia, and Aiken, South

Carolina. Under the order, Columbia was permitted to acquire

HCA, but was required to divest the HCA Aiken Regional Medical

Center ("HCA Aiken") within twelve months .**

In TCH Corporation and Green Equity Investors, L.P.,*? the

complaint alleged that TCH’s proposed acquisition of PayLess Drug

Stores Northwest, Inc., from Kmart Corporation would lessen

competition substantially in the sale of prescription drugs in

retail stores in the areas of Bishop, Fort Bragg/Mendocino, Mt.

Shasta, and Taft, California; Florence, Oregon; and Ellensburg,

Washington. Thrifty Drug Stores, which is controlled by TCH, and

PayLess are two of the largest drug store chains in the United

States. Under the order, the parties were permitted to proceed

with the transaction, but TCH was required to divest certain

pharmacy assets of either PayLess or Thrifty located in the

relevant markets within one year.”

In Martin Marietta Corporation,™ the complaint alleged

that Martin Marietta Corporation’s proposed acquisition of the

Space Systems Division of General Dynamics would lessen

competition substantially in the United States market for the

research, Gevelopment, manufacture and sale of satellites.

Martin Marietta is a significant competitor in the market for the

manufacture and sale of satellites while General Dynamics’ Space

Systems Division manufactures the Atlas expendable launch vehicle

("ELV") designed for launching intermediate-weight satellites.

As a result of the transaction, Martin Marietta would be the only

30 Columbia Healthcare Corporation and HCA-Hospital

Corporation of America, Docket No. C-3505 (issued July 5, 1994).

32 In June 1995, the Commission approved the divesture of

HCA Aiken to Universal Health Services, Inc., or any of its

affiliates.

32 TCH Corporation and Green Equity Investors, L.P.,

Docket No. C-3519 (issued August 16, 1994).

33 In December 1995, the Commission approved the divesture

of the pharmacy businesses in Bishop and Taft, California, to The

Vons Companies, Inc., and Preston Forayter, respectively.

34 Martin Marietta Corporation, Docket No. C-3500 (issued

June 22, 1994).

17

ee TE OTE

the transaction, but Prohibits Martin Marietta from a

Sharing of Proprietary information between its ELV division,

which would include the General Dynamics ELV assets it intends to

("MMD") of Rugby-~-Darby Group Companies, Inc., would lessen

competition substantially in the United States market for

dicyclomine hydrochloride Capsules and tablets. Rugby-Darby

a drug used to treat

irritable bowel Syndrome. MMpD manufactures and sells the brand

Bentyl. Under the order, mmp would be required

fo manufacture and Supply the drug dicyclomine, aS well as to

license the relevant dicyclomine technology, to a Commission-

approved potential new entrant.

In Kiwi Brands Inc. and Sara Lee Corporation,®© the

complaint alleged that the acquisition by Kiwi Brands Inc., a

subsidiary of Sara Lee Corporation, of certain assets of Knomark,

Inc., a subsidiary of Paper Craft Corporation, and certain assets

the United States market for the sale of chemical shoe Care

S used in the maintenance, Cleaning, and Protection of

shoes, including but not limited to aerosol, liquid, wax, and

cream products, through grocery stores, drug Stores, and mass

merchandisers. According to the complaint, Kiwi, Knomark and

Reckitt & Colman Produced, distributed and 80ld chemical shoe

Care products through the mass market channel under the "Kiwi,"

"Esquire" and "Griffin" brand names, respectively. The order

requires Sara Lee to divest the "Esquire" and "Griffin" brand

names to Hickory Industries, Inc., within one month.

In Revco D.s., Inc.,?” the complaint alleged that the

acquisition of Hook-SupeRx, Inc. ("HSI"), by Revco would lessen

competition substantially for the sale of Prescription drugs in

35 The Dow Chemical Company and Marion Merrel] Dow Inc.,

Docket No. C-3533 (issued September 23, 1994),

36 Kiwi Brands Inc. and Sara Lee Corporation, Docket No.

C-3523 (issued August 24, 19594).

37 Revco D.S., Inc., Docket No. ¢-3540 (issued October 31,

1994),

18

retail stores located in Covington, Marion and Radford, Virginia.

Revco and HSI are two of the leading drug store chains in the

United States, and two of only a few retail outlets of any type

selling prescription drugs to customers in those areas of

Virginia. The order would permit the transaction, but require

Revco to divest the pharmacy businesses of either HSI or Revco in

the three Virginia counties within twelve months.**

In Adobe Systems Incorporated and Aldus Corporation,*’ the

complaint alleged that Adobe’s acquisition of Aldus would lessen

competition substantially in the development and sale of

professional illustration software for use on Apple Macintosh and

Power Macintosh computers in the United States or worldwide.

Adobe’s "Illustrator" and Aldus’ "FreeHand" are the only two

illustration programs for graphics arts professionals. Under the

order, Adobe is required to divest "PreeHand" to Altsys

Corporation within six months. *°

In Roche Holding Ltd. and Syntex Corporation,** the

complaint alleged that the acquisition by Roche of Syntex would

lessen competition substantially in the manufacture and sale of

drugs of abuse reagent products. Drugs of abuse reagent products

are diagnostic products used to screen for the presence or

absence of illegal drugs in urine. The order requires Roche to

divest the assets relating to Syntex’s drugs of abuse testing

business within twelve months.

In Rite Aid Corporation,*? the complaint alleged that the

proposed acquisition by Rite Aid of LaVerdiere’s Enterprises,

Inc. ("LEI"), would lessen competition substantially in the

retail sale of prescription drugs in Bucksport and Lincoln,

Maine; and Berlin, New Hampshire. Rite Aid and LEI are the only

38 In March 1995, the Commission approved Revco’s request

to divest pharmacy assets in two Radford, Virginia, retail

stores, formerly owned by HSI, to Rite Aid Corporation. In

February 1996, the Commission appointed a trustee to sell the

Marion and Covington pharmacy assets because the twelve-month

period required to accomplish the divestiture had elapsed.

39 Adobe Systems Incorporated and Aldus Corporation,

Docket No. C-3536 (issued October 18, 1994).

“0 The divestiture of "FreeHand" to Altsys was consummated

on January 1, 1995.

41 Roche Holding Ltd. and Syntex Corporation, Docket No.

C-3542 (issued November 22, 1994).

42 Rite Aid Corporation, Docket No. C-3546 (issued

December 15, 1994).

19

competitors in those areas of northern New

England. Under the order, Rite Aid would be permitted to acquire

Care America ("MCA") would lessen competition substantially in

the production and sale of Outpatient Surgery services in

Anchorage, Alaska. In Anchorage, Columbia/HCA and MCA each own

services. Under the order, Columbia/HCA must divest, within

twelve months, the MCA outpatient surgery facility, Alaska

Surgery Center.

In Sulzer Limited, “the complaint alleged that the proposed

isition by Sulzer of the Metco Division of The Perkin-Elmer

Sumitomo Chemical Company Limited, the Producer of the aromatic

Polyester that is the key ingredient in "Amdry 2010, "47

43 In February 1996, the Commission appointed a trustee to

divest retail Pharmacy assets located in Rite Aid stores in

Bucksport and Lincoln, Maine, and in Berlin, New Hampshire.

“4 Columbia/HCa Healthcare Corporation, Docket No. C-3544

(issued December 6, 1994),

“5 In January 1996, the Commission approved the

Lon of Columbia/HCA to divest its 94 percent Partnership

interest in the Alaska Surgery Center to Surgical Care

Affiliates, Inc.

“6 Sulzer Limited, Docket No. C-3559 (issued February 23,

1995),

” In February 1996, the Commission approved Sulzer’s

application to divest the information necessary to launch an

aluminum polyester powder Product to Sherritt, Inc., a Canadian

firm.

20

In Red Apple Companies, Inc., John A. Catsimatidis,

Supermarket Acquisition Corp., and Designcraft Industries, Inc.

(d/b/a Sloan’s Supermarkets, Inc.),*® the complaint alleged that

the acquisition by Red Apple, et al., of Sloan’s Supermarkets

between 1991 and 1993 would lessen competition substantially for

the retail sale of food and grocery products in supermarkets in

certain New York County residential neighborhoods. On September

23, 1994, the Commission authorized staff to file a motion for a

preliminary injunction to prevent the sale by Red Apple of

certain of Sloan’s supermarkets that were subject to possible

divestiture in the complaint against Rite Aid Corporation.

Subsequently, the matter was withdrawn from adjudication for the

purpose of considering a proposed consent agreement. On December

5, 1994, the Commission accepted a consent agreement for public

comment and issued a decision and order on February 28, 1995.

The order required Red Apple to divest a combination of six

Manhattan supermarkets in the Upper East Side, the Upper West

Side, Chelsea and Greenwich Village to a Commission-approved

purchaser within twelve months. ‘?

ASSESSMENT OF THE EFFECTS OF THE PREMERGER NOTIFICATION PROGRAM

Although a complete assessment of the impact of the

premerger notification program on the business community and on

antitrust enforcement js not possible in this limited report, the

following observations can be made.

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

premerger notification program’s primary objectives, eliminating

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

requirement that parties file and wait ensures that virtually all

significant mergers or acquisitions occurring in the United

States will be reviewed by the antitrust agencies prior to

consummation. The agencies generally have the opportunity to

challenge unlawful transactions before they occur, thus avoiding

»

the problem of constructing effective post-acquisition relief.

Second, in most cases the parties provide sufficient

information to allow the enforcement agencies to determine

promptly whether a transaction raises any antitrust problems. In

addition, over the years, parties have increasingly supplied

information voluntarily to the Commission and the Antitrust

“8 Red Apple Companies, Inc., John A. Catsimatidis,

Supermarket Acquisition Corp., and Designcraft Industries, Inc.

(d/b/a Sloan’s Supermarkets, Inc.), Docket No. 9266 (issued

February 28, 1995).

“9 In May 1996, the Commission approved the parties’

application to divest the Sloan's supermarket at 530-534

Amsterdam Avenue in New York City to 530 Food Corp.

21

Division during the initial waiting period. This cooperation has

resulted in fewer second requests than would otherwise have been

necessary.

Finally, the existence of the premerger notification program

alerts businesses to the antitrust concerns raised by proposed

transactions. In addition, the greatly increased probability

that antitrust violations will be detected Prior to consummation

The Assistant Attorney General of the Antitrust Division

concurs with this annual report.

22

Appendix A

Appendix B

Appendix C

Exhibit A

Exhibit B

List of Appendices

Summary of Transactions, Fiscal Years 1985-

1994

Number of Transactions Reported and Filings

Received by Month for Fiscal Years 1985-1994.

Transactions in Which Additional Information

Was Requested for Fiscal Years 1985-1994.

List of Exhibits

Statistical Tables for Fiscal Year 1994,

Presenting Data Profiling Hart-Scott-Rodino

Premerger Notification Filings and

Enforcement Interest.

Federal Register Notice issued

October 5, 1994.

23

Appendix A

Summary of Transactions;

Fiscal Years 1985-1994

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Appendix B

Number of Transactions Reported and

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