UNITED STATES OF AMERICA (1992)

UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSION

WASHINGTON, D.C. 20589

BUREAU OF COMPETITION

Program code: as

MEMORANDUM

To: Commission

From: Mary Lou Steptoe

Acting Director

pursuant to Section 201 of the Hart-Scott-Rodino

Antitrust Improvements Act of 1976

Fifteenth Annual Report to Congress regarding the Hart-Scott-~

Attachment

UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSION

WASHINGTON, D.C. 20580

BUREAU OF COMPETITION

Program code: AS

MEMORANDUM

To: Commission

From: Nancy M. Ovuka, Compliance Specialist

ind Premerger Notification Office

Subject: The Fifteenth Annual Report to Congress

Pursuant to Section 201 of the Hart-Scott-Rodino

Antitrust Improvements Act of 1976

Attached is the Fifteenth Annual Report to Congress

regarding the operation of the Hart-Scott-Rodino premerger |

notification program. The report covers fiscal year 1992.

I request that the Commission approve the annual report and

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

Respectfully submitted,

Nancy Ovuka

Approved:

John M. Sipple, Jr.

Assistant Director for Premerger Notification

Barbara A. Clark

Director for Litigation

UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSION

WASHINGTON, D.C. 20580

OFFICE OF THE SECRETARY

The Honorable Albert Gore, Jr.

President of the Senate

United States Senate

Washington, D.C. 20510

The Honorable Thomas S. Foley

Speaker

House of Representatives

Washington, D.C. 20515 =

Dear Mr. President and Mr. Speaker:

It is a pleasure to transmit the Fifteenth Annual Report to

Congress pursuant to Section 201 of the Hart-Scott-Rodino

Antitrust Improvements Act of 1976, Pub. L. 94-435. The report

Provides statistics on the operation of the premerger

notification program, discusses recent developments and describes

the Commission's and the Antitrust Division's merger enforcement

activities during fiscal year 1992. The Assistant Attorney

General for Antitrust has concurred in the report.

By direction of the Commission.

Donald S. Clark

Secretary

Enclosure

UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSION

WASHINGTON, D.C. 20580

OFFICE OF THE SECRETARY

The Honorable Anne K. Bingaman

Assistant Attorney General for Antitrust

Department of Justice

Washington, D.C. 20530

Dear Ms. Bingaman:

In accordance with subsection (j) of Section 201 of the

Hart-Scott-Rodino Antitrust Improvements Act of 1976, the

By direction of the Commission.

Donald S. Clark

Secretary

Enclosure

Bureau of Competition

~- Document Logging Form --

FILE COPY

Director's Office

To: Bureau of Competition (Room 372)

Date Forwarded:

Prom: Staff Attorney(s): Nancy Ovuka, Compliance Specialist

Approved By: John M. Sipple, Jr., Asst. Director for Premerge]y

Notification & Barbara Clark, Director for Litigation

Addressed to: Commission

Document Subject: Fifteenth Annual Report to Congress - Pursuant to

Caption: Section 201 of the Hart-Scott-Rodino Antitrust Improvements

Act of 1976 (Fiscal Year 1992)

Original and Copy forwarded to Barbara Clark on

May 18, 1993.

Notes:

(To be completed by Director's Office)

Date Referred

Received: to:

Assistant-to Deadline:

Assigned:

Completed: Sent to

Processing:

Forwarded from Date

BC to: Forwarded:

Notes:

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| Log Book

Pade Numhar.

DOCUMENT CODING FORM

Oftice of the Secretary

Federal Trade Commisssion

Please complete and submit this form with every document filed with,

Or subsitied to, the Otfice of the Secretary.

1. NAME OF PERSON SUBMITTING DOCUMENT

Nancy Ovuka

Instructions are on the reverse of this form.

2. TELEPHONE NUMBER UNCLUDE CO0E)

(202)-326-2600 “MEA

* SOURCE ORGANIZATION (COMPANY NAME, LAW FIAM NAME OA FTC ORGANIZATION CODE

Premerger Notification Office ; 1093

4. OCOCUMENT TITLE

Fifteenth Annual Report to Congress -- Pursuant to

Section 201 of the Hart-Scott~Rodino Antitrust

Improvements Act of 1976 (FY 1992)

5. DOCUMENT DATE

6. NUMBER OF COPIES SUBMITTED

7, MATTER

P110014

6. MATTER NAME

HSR Premerger Notification

9. BRIEF SUMMARY

Fifteenth Annual Report to Congress regarding the

Hart-Scott-Rodino premerger notification program.

The report covers fiscal year 1992.

TO BE COMPLETED BY FTC STAFF

10. LEGAL RESEARCH SYSTEM INDEX TERMS (OPTIONAL)

FILE

HEADING

SUBHEADING (F ANY)

Hart-Scott-Rodino Fifteenth

Annual Report to Congress

11. DOCUMENTS SUBMITTED

RECOMMENDATIONS 0 0 QO 0 ACTION DOCUMENTS D

TO BE COMPLETED BY THE OFFICE OF THE SECRETARY

DOCUMENT TyPE CONFIDENTIALITY | OK FOR ENTRY | ENTRY INITIALS] DOCUMENT NUMBER

CODE

DOCUMENT LOCATION

FIC Form 336 (6°12/84)

UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSJON___

WASHINGTON, D.C 29880

BURE 4U UF SCMP=TITION

Program code: AS

MEMORANDUM

To: Commission

From: Nancy M. Ovuka, Compliance Specialist

Premerger Notification Office

Subject: The Fifteenth Annual Report to Congress

Pursuant to Section 201 of the Hart-Scott-Rodino

Antitrust Improvements Act of 1976

Attached is the Fifteenth Annual Report to Congress

regarding the operation of the Hart-Scott-Rodino premerger

notification program. The report covers fiscal year 1992.

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 his 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,

Nancy M. Ovuka

Approved:

John M. Sipple, Jr.

Assistant Director for Premerger Notification

Barbara A. Clark

Director for Litigation

UNITED STATES OF AMERICA

-~ FEDERAL TRADE COMMISSION .

WASHINGTON, D.C 29580

BURE4U UF DCCMPTITION

Program code: AS

MEMORANDUM

To: Commission

From: Mary Lou Steptoe

Acting Director

Subject: The Fifteenth 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

Fifteenth Annual Report to Congress regarding the Hart-Scott-

Rodino premerger notification program. The report covers fiscal

year 1992.

Attachment

UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSION

WASHINGTON, D.C. 20580

OFFICE OF THE SECRETARY

The Honorable John W. Clark

Acting Assistant Attorney General for Antitrust

Department of Justice

Washington, D.C. 20530

Dear Mr. Clark:

In accordance with subsection (j) of Section 201 of the

Hart~Scott-Rodino Antitrust Improvements Act of 1976, the

Commission requests your concurrence with the enclosed Fifteenth

Annual Report to Congress regarding the premerger notification

program. The report covers fiscal year 1992.

By direction of the Commission.

Donald S. Clark

Secretary

Enclosure

UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSION

WASHINGTON, D.C. 20580

OFFICE OF THE SECRETARY

The Honorable Albert Gore, Jr.

President of the Senate

United States Senate

Washington, D.C. 20510

The Honorable Thomas S. Foley

Speaker

House of Representatives

Washington, D.C. 20515

Dear Mr. President and Mr. Speaker:

It is a pleasure to transmit the Fifteenth Annual Report to

Congress pursuant to Section 201 of the Hart-Scott-Rodino

Antitrust Improvements Act of 1976, Pub. L. 94-435. ‘The report

provides statistics on the operation of the premerger

notification program, discusses recent developments and describes

the Commission's and the Antitrust Division's merger enforcement

activities during fiscal year 1992. The Acting Assistant

Attorney General for Antitrust has concurred in the report.

By direction of the Commission.

Donald S. Clark

Secretary

Enclosure

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 fifteenth annual report to Congress pursuant to

this provision. It covers fiscal year 1992.

In general, Section 7A requires that certain proposed

acquisitions of stock or assets must be reported to the Federal

Trade Commission and 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 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 to

conduct this antitrust 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 waiting period.

If either agency determines during the waiting period 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

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 agencies with the opportunity

to review the information and to take appropriate action before

the transaction is consummated. If either agency believes that a

proposed transaction may violate the antitrust laws, the agency

may seek an injunction in federal district court to prohibit

consummation of the transaction.

Final rules implementing the premerger notification program

were promulgated by the Commission, with the concurrence of the

Assistant Attorney General, on July 31, 1978.1 At that time, a

comprehensive Statement of Basis and Purpose was also published

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

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

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

1983, the Commission, with the concurrence of the Assistant

Attorney General, made several changes in the premerger

notification rules. Those amendments became effective on

August 29, 1983. Additional amendments were published in the

Federal Register on March 6, 1987,° and May 29, 1987.4

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 each fiscal year in which the program has been in

operation, the number of transactions reported,*® the number of

1 43 Fed. Reg. 33,450 (1978). The rules also appear in

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

the development of the rules and operating procedures of the

premerger notification program, see the second, third and seventh

annual reports covering the years 1978, 1979 and 1983,

respectively.

2 48 Fed. Reg. 34,427 (1983) (codified at 16 C.F.R. Parts

801 through 803).

3 52 Fed. Reg. 7,066 (1987) (codified at 16 C.F.R. Parts

801 through 803).

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

801 through 803).

5 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

(continued...)

filings received, the number of merger investigations in which

requests for additional information or documentary material

(hereinafter referred to as "second requests") were issued, and

the number of transactions in which requests for early

termination of the waiting period were received, granted, and not

granted. Appendix A also shows for calendar years 1981 through

1984 and fiscal years 1985 through 1992 the number of

transactions in which second requests could have been issued.

(This information appears in Appendix C and is explained in

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

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

1979 through 1992. Appendix Cc shows, for calendar years 1981

through 1984 and fiscal years 1985 through 1992, the number of

transactions in which the agencies could have issued second

requests, the number of merger investigations in which second

requests were issued, and the percentage of transactions in which

second requests were issued. As we explained in the Eighth

Annual Report, we believe that Appendix C provides a more

meaningful measure of the second request rate than Appendix A

because Appendix C eliminates from the total number of

transactions certain transactions in which the agencies could

not, Or aS a practical matter would not, issue second requests.°

The statistics set out in these appendices show that the

humber of transactions reported in 1992 increased approximately

3.9 percent from the number of transactions reported in 1991

(1,589 transactions were reported in 1992 while 1,529 were

reported in 1991). The statistics in Appendix A also show that

°(...continued)

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.

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

annual reports, the information regarding second requests in

Appendices A and C differs from that reported in those appendices

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

C in prior reports identified the number of 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.

the number of merger investigations in which second requests were

issued in 1992 decreased approximately 31.3 percent over the

number of merger investigations in which second requests were

issued in 1991 (second requests were issued in 44 merger

investigations in 1992 while second requests were issued in 64

merger investigations in 1991). These numbers indicate a

decrease in the number of second requests issued as a percentage

of reported transactions from 1991 to 1992 (from 4.2 percent in

1991 to 2.8 percent in 1992 based on Appendix A, and from 4.7

percent in 1991 to 3.0 percent in 1992, based on Appendix C).

The statistics also show that in recent years, early

termination was requested for most transactions. In 1992, early

termination was requested in 88.3 percent (1,403) of the

transactions reported while in 1991 it was requested in 86.4

percent (1,321) of the transactions reported. The number of

requests granted increased in 1992 compared to 1991 (from 907 in

1991 to 1,020 in 1992). In addition, the percentage of requests

granted increased (from 68.7 percent in 1991 to 72.7 percent in

1992).

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

statistical tables (Tables I - XI) containing information about

the agencies' enforcement interest in transactions reported in

fiscal year 1992. The tables provide, for various statistical

break downs, the number and percentage of transactions in which

clearances to investigate were granted by one antitrust agency to

the other and the number of merger investigations in which second

requests were issued; the number of transactions based on the

dollar value of transactions reported and the reporting threshold

indicated in the notification; the number of transactions based

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

assets of the acquired entity; and the number of transactions

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

acquiring person or the acquired entity derived most of their

revenues. These statistics have been included in prior annual

reports for the calendar years 1981-1984, and for fiscal years

1985-1991 (excluding 1986).’

? Due to resource constraints, statistics for fiscal 1986

transactions were not prepared.

DEVELOPMENTS IN FISCAL YEAR 1992 RELATING TO PREMERGER

NOTIFICATION RULES AND PROCEDURES

1. Program for Federal-State Cooperation in Merger

Enforcement

On March 6, 1992, and May 22, 1992, respectively, the

Department of Justice and the Commission announced the

implementation of new procedures to facilitate cooperation

between federal and state authorities investigating proposed

mergers or acquisitions.® To implement the Department of

Justice and Commission programs, parties to a transaction are

required to supply states with material furnished to the

antitrust agencies pursuant to the Act.’ The parties also must

consent to a waiver of certain confidentiality provisions

provided under federal law.

Under these conditions, the Department of Justice and the

Commission will provide state regulators with copies of all

requests for additional information, as well as copies of civil

investigative demands or third-party subpoenas with the

identities of recipients redacted. In addition, the federal

antitrust agencies will identify the expiration dates of all

applicable waiting periods, and provide limited assistance to the

states in analyzing the transactions.

2. Clarification to the Statement on Filing Fees

On July 14, 1992, the Commission published a Clarification

to the Statement of the Federal Trade Commission on Hart-Scott-

Rodino Filing Fees Issued November 21, 1989 ("clarification") .1

8 See attached Department of Justice Press Release issued

March 6, 1992, and Commission Notice appearing in 57 Fed. Reg.

21,795 (1992) for specific information (Exhibit B).

9 The programs only apply to states participating in the

National Association of Attorneys General Voluntary Pre~Merger

Disclosure Compact.

10 57 Fed. Reg. 31,205 (1992). On November 21, 1989,

President Bush signed into law the Commerce, Justice, State, the

Judiciary and Related Agencies Appropriations Bill for fiscal

1990. Section 605 of that Statute, as enacted, requires the

payment of a filing fee by each person acquiring voting

securities or assets who is required to file a premerger

notification by the Act. Departments of Commerce, Justice, and

State, the Judiciary, and Related Agencies appropriations Act,

1990, Pub. L. No. 101-162, § 605, 103 Stat. 1031 (1989).

5

The clarification is intended to alleviate any misunderstanding

by filing persons concerning the refunding of filing fees."

3. Compliance

The Commission and the Department of Justice continue to

monitor compliance with the premerger notification program's

filing requirements and initiated a number of investigations to

assure compliance in fiscal year 1992. The agencies monitor

compliance through a variety of methods, including the review of

newspapers and industry publications for announcements of

transactions that may not have been reported in accordance with

the requirements of the Act. Industry sources, such as

competitors, customers and suppliers, and interested members of

the public often provide the agencies with information about

transactions and possible violations of the filing requirements.

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

the Department of Justice filed three complaints at the

Commission's request in fiscal year 1992. The complaints alleged

violations of the Act and sought civil penalties under Section

7A(q)(1) of the Act.”

In United States v. Atlantic Richfield Company and UF

Genetics,'> the complaint alleged that Atlantic Richfield

("ARCO")and UF Genetics ("Genetics") had violated the Act when

Genetics acquired 100 percent of the voting securities of ARCO

Seed Company ("Seed"), a subsidiary of ARCO, in 1986. According

to the complaint, beneficial ownership of Seed transferred to

Genetics on December 29, 1986. However, the parties failed to

file premerger notification and report forms until December 30,

1986. Under the terms of the final judgment, ARCO agreed to pay

" The Commission issued an amended statement on October

7, 1992, in connection with advising the public about an increase

in the filing fee to $25,000. 57 Fed. Reg. 47,466 (1992).

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

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

waiting period requirements is liable for a civil penalty of up

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

5 United States v. Atlantic Richfield Company and UF

Genetics, Cv. No. 91-3267 (D.D.Cc. complaint filed December 20,

1991).

a Civil penalty of $290,000" and Genetics agreed to pay a civil

penalty of $150,000" to settle the charges.

In United States v. William F. Farley,’ the complaint

alleged that Farley had violated the Act when he acquired certain

voting securities of West Point-Pepperell, Inc. ("WPP").

According to the complaint, Farley was in violation from March

24, 1988, when his holdings of WPP's stock exceeded the $15

million threshold, until June 22, 1988. The complaint alleges

that Farley's acquisitions of WPP's stock were not made solely

for the purpose of investment as he asserted. The Northern

District of Illinois dismissed the case with prejudice on

February 12, 1992. The Antitrust Division is appealing the

judge's order on behalf of the Commission.

In United States v. Beazer, PLC, the complaint alleged

that Beazer had violated the Act when it acquired certain voting

securities of Koppers Company, Inc. The complaint alleged that

Beazer began acquiring Koppers' stock in September 1987, and

exceeded the $15 million HSR threshold on October 19, 1987.

According to the complaint, Beazer created a partnership

acquisition vehicle for the purpose of avoiding the notification

and waiting period requirements of the Act. Under the terms of

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

$760,000 to settle the charges.

The Department of Justice, at the Commission's request,

filed a stipulation in one case in fiscal year 1992 involving a

complaint filed in fiscal year 1991.

In United States v. General Cinema Corporation," the

complaint alleged that General Cinema had violated the Act when

it acquired certain voting securities of Cadbury Schweppes PLC.

According to the complaint, General Cinema was in violation from

4 United States v. Atlantic Richfield Company, 1992-1

Trade Cas. f 69,695 (D.D.C. January 27, 1992).

15 United States v. UF Genetics, 1992-1 Trade Cas.

1 69,803 (D.D.C. April 23, 1992).

%6 United States v. William F. Farley, Cv. No. 92-1071

(N.D. Ill. complaint filed February 12, 1992; dismissed with

prejudice February 12, 1992).

wv United States v. Beazer, PLC, 1992-2 Trade Cas.

1 69,923 (D.D.C. August 14, 1992).

18 United States v. General Cinema Corporation, 1991-2

Trade Cas. 4 69,681 (January 8, 1992).

September 11, 1986, when its holdings of Cadbury Schweppes' stock

exceeded the $15 million threshold, until February 25, 1987. The

complaint alleged that General Cinema's acquisitions of Cadbury

Schweppes’ stock were not made solely for the purpose of

investment as General Cinema contended. Under the terms of the

stipulation, General Cinema agreed to pay a civil penalty of

$950,000 to settle the case.

MERGER ENFORCEMENT ACTIVITY DURING FISCAL YEAR 1992'9

1. Department of Justice

The Antitrust Division filed four complaints in merger cases

during fiscal year 1992. a1] of these cases have been settled

by the entry of consent decrees.

In United States v. Borland International, Inc. and Ashton-

Tate Corporation, the Division challenged the proposed

acquisition of Ashton-Tate Corporation by Borland International,

Inc. Simultaneously, a consent decree was filed. The complaint

alleged that the proposed acquisition would lessen competition

substantially in the sale of relational database management

System software for personal computers in the United States.

Borland International and Ashton-Tate were the two leading

sellers of rational database management system software for

personal computers in the United States. Total sales in 1990 of

relational database management system software in the United

States were approximately $200 million. The consent decree

enjoined Borland from suing competitors for copyright

infringement based on Ashton-Tate's dBase programming language, a

widely-used standard in relational database system software. The

consent decree further directed Borland to attempt to resolve

Ashton-Tate's suit against Fox Software, and to dismiss its claim

9 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.

20 United States v. Borland International, Inc. and

Ashton-Tate Corporation, Cv. No. C 91 3666MHP (N.D. Cal. filed

October 17, 1991); United States v. Tidewater, Inc. and Zapata

Gulf Marine Corporation, Cv. No. 92-0106 (D.D.C. filed January

13, 1992); United States v. Society Corporation and Ameritrust

Corporation, Cv. No. 1:92CV0525 (N.D. Ohio filed March 13, 1992);

and United States v. Cookson Group plc, Electrovert Ltd., and

Electrovert U.S.A. Corp., Cv. No. 92 2206 (D.D.C. filed September

29, 1992).

against Fox, if Fox dismissed its counterclaims against Ashton-

Tate. Thereafter, Fox and Borland/Ashton-Tate moved for

dismissal and the court granted the motions.

In United States Vv. Tidewater, Inc. and Zapata Gulf Marine

Corporation, the Division challenged the proposed $30 million

acquisition of Zapata Gulf Marine Corporation by Tidewater, Inc.

Simultaneously, a consent decree was filed. The complaint

alleged that the acquisition would lessen competition

substantially in the anchor-handling services market in the U.S.

Gulf of Mexico. Tidewater and Zapata were two of only six firms

that provided anchor-handling services in the U.S. Gulf of Mexico

and both firms operated several vessels in areas outside the

Gulf. The consent decree directed Tidewater to divest two

anchor-handling/towing supply vessels which provide anchorhandling services to semi-submersible drilling rigs.

In United States v. Society Corporation and Ameritrust

Corporation, the Division challenged the proposed merger of

Society Corporation and Ameritrust Corporation, two Cleveland,

Ohio, bank holding companies. Simultaneously, a consent decree

was filed. The complaint alleged that the proposed merger would

lessen competition substantially in business banking services,

including business checking accounts and commercial loans, for

small business customers in Cuyahoga and Lake counties. Society

was the third largest depository institution in Cuyahoga County,

where Cleveland is located, and the fourth largest depository

institution in adjacent Lake County. The holding company, with

subsidiaries in three States, had total assets of $15.3 billion.

and total deposits of $11.6 billion. Ameritrust was the largest

depository institution in Cuyahoga County and the second largest

depository institution in Lake County. The holding company, with

subsidiaries in three states had total assets of $10.6 billion

and total deposits of $8.7 billion. The consent decree directed

the parties to divest 26 branch offices in Cuyahoga County and

two branch offices in Lake County, as well as more than $1

billion in deposits and more than $40 million in loans to small

businesses in those counties.

In United States v. Cookson Group plc, Electrovert Ltd., and

Electrovert U.S.A. Corp., the Division challenged the acquisition

of Hollis Automation Co. by Electrovert U.S.A. Corp.

Simultaneously, a consent decree was filed. The complaint

alleged that the acquisition would lessen competition

substantially in the United States high performance and mid-range

wave soldering machines markets. Wave soldering machines are

used to attach electronic components to printed circuit boards.

Electrovert was the largest North American producer of mid-range

wave soldering machines and the second largest North American

producer of high performance wave soldering machines. Hollis was

the second largest North American producer of mid-range wave

soldering machines and the largest North American producer of

9

high performance wave soldering machines. The consent decree

required Electrovert to grant North American rights to all of

Hollis' wave soldering technology to two other firms presently

selling wave soldering machines in the United States. The

technology licensed included Hollis’ patented "hot air knife,” a

device that improves the quality of soldering. About 75 percent

of the wave soldering machines sold by Hollis in 1991 contained a

hot air knife.

The Division also filed a brief before the Interstate

Commerce Commission ("ICC") on September 25, 1992, stating its

objection to the Wisconsin Central Railroad's proposed

acquisition of Green Bay and Western Railroad and Fox River

Valley Railroad. That application is still pending.

Additionally, the litigation in United States v. Archer-

Daniels~Midland Company and Nabisco Brands, Inc.,*' filed

December 14, 1982, in the Southern District of Iowa and described

in previous annual reports, was concluded in fiscal year 1992

when the court, after trial, entered judgment in favor of the

defendants. The United States did not appeal. Previously, the

district court had in 1987 granted summary judgment for the

defendants and the Eighth Circuit had in 1988 reversed and

remanded for a full trial.

Two consent decrees were entered in cases brought in fiscal

year 1991.#

During fiscal year 1992, the Division investigated three

bank merger transactions for which divestiture was required prior

to or concurrently with the acquisition. A conditionally "not

significantly adverse" letter was sent to the appropriate bank

regulatory agency in all instances. On March 3, 1992, a

conditionally "not significantly adverse" letter was sent to the

Federal Reserve Board regarding the BankAmerica Corporation, San

Francisco, California, merger with Security Pacific Corporation,

Los Angeles, California. BankAmerica was required to divest 211

branches in five states (California, Washington, Oregon, Arizona

and Nevada) together with deposits, loans and other assets. On

2 United States v. Archer-Daniels-Midland Company and

Nabisco Brands, Inc., 695 F. Supp. 1000 (S.D. Iowa 1987), rev'd

and remanded for trial, 866 F.2d 242 (8th Cir. 1988), 781 F.

Supp. 1400 (S.D. Iowa 1991).

22 United States v. General Binding Corporation, et al.,

Cv. No. 91-1822 (D.D.C. consent decree filed July 24, 1991, and

entered October 31, 1991); United States v. Fleet /Norstar

Financial Group, Inc., Cv. No. 91-0221-P (D. Me. consent decree

filed July 5, 1991, and entered November 27, 1991). These cases

are discussed in the Fourteenth Annual Report.

10

March 25, 1992, a conditionally "not Significantly adverse"

letter was sent to the Federal Reserve Bank of St. Louis,

Missouri, regarding the acquisition by Mercantile Bancorporation,

Inc., St. Louis, Missouri, of Ameribanc, Inc., St. Joseph,

Missouri. Mercantile Bancorporation, Inc. was required to

divest Ameribanc's subsidiary bank, American Bank of North

Central Missouri, Trenton, Missouri. On April 9, 1992, a

conditionally "not significantly adverse" letter was sent to the

Federal Deposit Insurance Corporation regarding the merger

between Marine Bank, Warren, Pennsylvania, and The First National

Bank of Pennsylvania, Meadville, Pennsylvania. Marine Bank was

required to divest 13 branches plus the name of First National

Bank of Pennsylvania.

Finally, on three other occasions during fiscal year 1992,

the Antitrust Division informed the parties to a proposed

transaction that it would file suit challenging the transaction

unless the parties restructured the proposal to avoid competitive

problems or abandoned the proposal altogether. In each

instance, the parties restructured the proposed transaction.

2. Federal Trade Commission

During fiscal year 1992, the Commission accepted consent

agreements for public comment in five merger matters. The

Commission issued a complaint and decision and order in all five

of those cases during the fiscal year.

In Service Corporation International,** the complaint

alleged that Service Corporation International's ("SCI")

acquisition of Pierce Brothers would lessen competition

substantially in the funeral home industry in the California

counties of San Bernardino and Riverside. According to the

complaint, the proposed acquisition would increase the likelihood

25 Department of Justice Press Release issued February 3,

1992, involving the proposed joint venture by Ingersoll-Rand Co.

and Dresser Industries, Inc., to combine virtually all of the

worldwide pump manufacturing and sales Operations of the two

companies; Department of Justice Press Releases issued July i,

1992, and September 28, 1992, involving the proposed merger of

SABH, Inc., and Mor-Flo Industries, Inc., two Manufacturers of

residential water heaters; Department of Justice Press Release

issued August 20, 1992, involving Page Avjet Airport Services,

Inc.'s, proposed acquisition of Butler Aviation International,

Inc., in which the Department announced it would not oppose the

acquisition after the parties eliminated competitive concerns at

Boston's Logan International Airport.

24 Service Corporation International, Docket No. C3372

(issued February 25, 1992).

ll

that funeral establishments in those markets would raise prices

and restrict services in the near future and in the long term.

Under the order, SCI was allowed to acquire Pierce Brothers, but

was ordered to divest four Pierce Brothers funeral homes located

in the San Bernardino/Riverside areas.2

In Hanson PLC/H B Acquisitions,** the complaint alleged

that Hanson's acquisition of Beazer would lessen competition

substantially in the manufacture and sale of cement ina 48

county area of northern California. Beazer is a 50 percent owner

of the Cencal Cement Company ("Cencal"), which owns a deep sea

cement import terminal in Port of Stockton, California. Under

the order, Hanson was permitted to acquire Beazer, but was

required to either sell the 50 percent share of Cencal to

Ssangyong Cement, Inc., Cencal's other 50 percent holder, or

acquire Ssangyong's interest and then divest the entire Cencal

company to a Commission approved buyer within twelve months. In

addition, Hanson is prohibited from acquiring any assets or

voting securities of more than 3 percent of any company that

manufactures, sells, Ships, or distributes cement in the northern

California market for the next ten years without Commission

approval.

In Mannesmann AG,*’ the complaint alleged that Mannesmann's

acquisition of the Rapistan Corporation from Lear Siegler

Holdings would lessen competition substantially in the United

States market for high-speed, light-to-medium duty conveyor

systems. Both Rapistan and Mannesmann's Cincinnati-based

subsidiary, The Buschman Company, manufacture and sell conveyor

systems which are used to transport and sort cartons weighing up

to 75 pounds. Under the order, Mannesmann was permitted to

acquire Rapistan, but was required to sell Buschman to a

Commission approved buyer.

In Rohm and Haas Company/Union Oil Company of California,®

the complaint alleged that Rohm and Haas' acquisition of Union

Oil Company's ("Unocal") emulsion polymers business would reduce

25 The four funeral homes in California to be divested

include Cortner-Pierce Brothers Chapel in Redland, Pierce

Brothers Ingold Chapel in Fontana, Mark B. Shaw in San Bernardino

and Rubidoux Mortuary in Riverside.

26 Hanson PLC/H B Acquisitions PLC, Docket No. C3374

(issued March 9, 1992).

27 Mannesmann AG, Docket No. C3378 (issued March 24,

1992).

28 Rohm and Haas Company/Union Oil Company of California,

Docket No. C3387 (issued July 31, 1992).

12

competition substantially in the Straight acrylics emulsion

polymers market in the United States. Straight acrylics, a

special type of emulsion polymer, are a primary ingredient in

exterior latex house paints. Under the order, Rohm and Haas was

permitted to acquire Unocal's emulsion polymer assets, but was

required to sell Unocal's straight acrylics polymer business,

including all acrylics paint-related product inventories,

technology, customer information, licenses to applicable patents,

copyrights and trademarks, to Union Carbide or another

Commission-approved buyer. Rohm and Haas, and Unocal also were

required to assist the buyer in making the transition to full

production in order to ensure market competitiveness.

In The Vons Companies, Inc.,? the complaint alleged that

Vons' acquisition of three Williams Brothers’ ("Williams")

supermarkets would lessen competition substantially in the San

Luis Obispo, California, market area. The complaint alleged that

Vons’' acquired the Williams stores, and sold its existing

Supermarket in San Luis Obispo to a drugstore chain that did not

intend to operate the facility as a grocery store. According to

the complaint, Vons rejected a higher offer for the store from

another supermarket operator in order to reduce market capacity

and increase its market share. Under the order, Vons was

required to divest one of the three supermarkets it acquired from

Williams in San Luis Obispo. fhe order also requires Vons to

obtain Commission approval for ten years before purchasing a

grocery store anywhere in the United States within nine months

after closing or selling all of its Supermarkets within seven

miles of the acquired store, if the buyer will not operate the

stores as supermarkets.

The Commission issued decisions and orders in two merger

cases during fiscal year 1992 involving acquisitions in which the

administrative complaint was issued before October 1, 1991.

In University Health, Inc.,™ University Health agreed to

settle charges stemming from its proposed acquisition of St.

Joseph Hospital from Health Care Corporation of the Sisters of

St. Joseph of Carondelet. According to the complaint, University

Health's acquisition of St. Joseph would lessen competition

substantially for acute care hospital services in the Augusta,

Georgia, area. The Commission's motion for a preliminary

29 The Vons Companies, Inc., Docket No. C3391 (issued

August 7, 1992).

30 Vons must divest the supermarket located at 1314

Madonna Road, but can retain the other two acquired supermarkets.

4 University Health, Inc., Docket No. 9246 (issued

September 9, 1992).

13

injunction was denied by the U.S. District Court for the Southern”

District of Georgia in April 1991. However, the parties

abandoned the transaction after the U.S. Court of Appeals for the

Eleventh Circuit directed the district court to grant the

Commission's request for a preliminary injunction to enjoin the

acquisition. The order prohibits University Health from

acquiring St. Joseph Hospital, or any other acute care hospital

in the Augusta, Georgia, area for ten years without prior

approval of the Commission.

In Hoechst AG,™ the Commission gave final approval to a

consent agreement settling charges stemming from Hoechst's 1987

acquisition of the Celanese Corp. The 1989 administrative

complaint alleged that the acquisition would lessen competition

substantially in the manufacture and sale of acetal in world

markets, including the United States. Acetal, an engineering

thermoplastic polymer, is used as a replacement for metal in

small mechanical parts such as gears and rollers in automobiles

and in consumer products, including videotape recorders, lawn

sprinklers, pens and disposable lighters. Under the order,

Hoechst is prohibited, for a period of ten years, from entering

into an agreement with any producer of acetal products to divide

markets. The order also precludes Hoechst from restricting the

United States operations of Polyplastics Company, Ltd., of Japan,

a joint venture between Hoechst and Daicel Chemical Industries,

Ltd 4

The Commission issued a decision and order in four merger

cases during fiscal year 1992 in which it had previously accepted

consent agreements for public comment before October 1, 1991.

In Nippon Sheet Glass Company ,* Nippon agreed to settle

charges that its acquisition of 20 percent of the voting

securities of the Libby-Owens-Ford Company ("LOF"), a subsidiary

of Pilkington, PLC, would lessen competition substantially in the

North American wired glass market. Wired glass is a specialty

flat glass used primarily in shower and bath enclosures and in

fire-retarding applications, such as fire doors. All wired glass

sold in the United States is imported. According to the

complaint, the acquisition agreement gave LOF the sole right to

32 Federal Trade Commission v. University Health, Inc.,

1991-1 Trade Cases § 69,508 (11th Cir. 1991), rev'g 1991-1 Trade

Cases J 69,400, ff 69,444 (S.D.GA filed March 20, 1991;

preliminary injunction denied, April 4, 1991).

33 Hoechst AG, Docket No. D.9216 (issued September 12,

1991).

34 Nippon Sheet Glass Company, Docket No. C3346 (issued

October 7, 1991).

14

distribute wired glass for both Nippon and Pilkington in North

America, eliminating competition between the two firms. Under

the order, Nippon and Pilkington are prohibited, for a period of

ten years, from jointly manufacturing, marketing or distributing

polished wired glass through LOF or any other entity in North

America without obtaining the Commission's prior approval.

In PepsiCo, Inc.,* PepsiCo agreed to settle charges that

its acquisition of Twin Ports Seven-Up Bottling Company ("Twin

Ports") would lessen competition substantially in the carbonated

soft drink industry in the Duluth, Minnesota, area. According to

the complaint, Twin Ports sells non-Pepsi brands in competition

with Pepsi brands in the Duluth area. The complaint alleged that

the acquisition would increase the likelihood of inter-brand

collusion. Under the order, PepsiCo was required to divest Twin

Ports within a nine-month period to a Commission approved buyer.

Pepsi must also obtain approval from the Commission before

purchasing the rights to distribute non-Pepsi soft drinks, or

acquiring an interest in an entity with such rights, in the

Duluth area.

In Sentinel Group, Inc.,* Sentinel agreed to settle

charges that its acquisitions of funeral homes in recent years

lessened competition substantially for funeral services in six

cities in Georgia and Arkansas. According to the complaint,

Sentinel's acquisitions in Waycross, Summerville, Gainesville,

Savannah and Rome, Georgia, and in Ft. Smith, Arkansas, would

enhance significantly the possibility of collusion. Under the

order, Sentinel was required to divest one of its funeral homes

in each of Waycross, Summerville and Gainesville, Georgia.

In Alpha Acquisition Corporation/RWE~DEA Akteingesellschaft

Fur Mineraloel Und Chemie/RWE Aktiengesellschaft/Vista Chemical

Co.,*’ RWE agreed to settle charges that its acquisition of

Vista Chemical Company lessened competition substantially in the

world market for high-purity alcohol process alumina. Alumina is

a chemical intermediate product used in making catalysts for the

petroleum refining, chemical and automotive emissions control

industries. According to the complaint, RWE and Vista were the

only two companies to employ a process that yields alumina as a

by-product in the production of linear alcohol. Under the order,

35 PepsiCo, Inc., Docket No. C3347 (issued October 15,

1991).

36 Sentinel Group, Inc., Docket No. C3348 (issued October

23, 1991).

37 Alpha Acquisition Corporation/RWE-DEA

Aktiengesellschaft /RWE Aktiengesellschaft/Vista Chemical Co.,

Docket No. C3349 (issued October 29, 1991).

15

RWE must grant to a licensee the rights to patents, trade secrets

and other information relating to the processing of this alumina.

The Court of Appeals for the Ninth Circuit affirmed a 1990

civil penalty judgment in fiscal year 1992. In United States v.

Louisiana-Pacific Corporation,™® the Antitrust Division, in

September 1981, filed a complaint at the Commission's request

alleging that Louisiana-Pacific ("LP") failed to divest its

Rocklin, California, fiberboard plant as ordered by the

Commission in 1979.°° The U.S. District Court for the District

of Oregon ordered LP to pay a $4 million civil penalty for

violating the order. The U.S. Court of Appeals for the Ninth

Circuit vacated the penalty and remanded the case in 1985. In

1990, the district court reimposed the civil penalty. On June

24, 1992, the court of appeals affirmed the $4 million civil

penalty. This penalty is the largest ever awarded to the

Commission.

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 is not possible in this limited report, the

following observations can be made.

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

premerger notification program's primary objectives, eliminating

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

requirement that parties file and wait ensures that virtually all

significant mergers or acquisitions occurring in the United

States will be reviewed by the antitrust agencies prior to

consummation. The agencies generally have the opportunity to

challenge unlawful transactions before they occur, thus avoiding

the problem of constructing effective post-acquisition relief.

Second, in most cases the parties provide sufficient

information to allow the enforcement agencies to determine

promptly whether a transaction raises any antitrust problems. In

addition, over the years, parties have increasingly supplied

information voluntarily to the Commission and the Antitrust

Division. This cooperation has resulted in fewer second requests

than would otherwise have been necessary.

38 United States v. Louisiana-Pacific Corporation, Cv. No.

81-813-RE (9th Cir. decision and order issued June 24, 1992).

39 Subsequently, the plant was divested in December 1983

after the U.S. District Court for the District of Oregon

appointed a trustee to sell the facility.

16

Finally, the existence of the premerger notification program

alerts businesses to the antitrust concerns raised by proposed

transactions. In addition, the greatly increased probability

that antitrust violations will be detected prior to consummation

may deter some competitively questionable transactions. Prior to

the premerger notification program, businesses could, and

frequently did, consummate transactions which raised significant

antitrust concerns, before the antitrust agencies had the

opportunity to adequately consider their competitive effects.

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

transaction continued in place (and afterwards as well, where

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

Because the premerger notification program requires reporting

before consummation, this problem has been significantly reduced.

The Assistant Attorney General of the Antitrust Division

concurs with this annual report.

Date:

17

Appendix A

Appendix B

Appendix C

Exhibit A

Exhibit B

List of Appendices

Summary of Transactions, Fiscal Years 1979-

1992

Number of Transactions Reported and Filings

Received by Month for Fiscal Years 1979-1992.

Transactions in Which Additional Information

Was Requested for Calendar Years 1981-1984

and Fiscal Years 1985-1992.

List of Exhibits

Statistical Tables for Fiscal Year 1992,

Presenting Data Profiling Hart-Scott-Rodino

Premerger Notification Filings and

Enforcement Interest.

Department of Justice Press Release

issued March 6, 1992; and

Federal Register Notice issued

May 22, 1992

18

Appendix A

Summary of Transactions;

Piscal Years 1979-1992

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