Procedures in Prior Approval Proceedings

FEDERAL TRADE COMMISSION

16 CFR Parts 2 and 4

Procedures in Prior Approval Proceedings

AGENCY: Federal Trade Commission.

ACTION: Final rule.

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SUMMARY: The Federal Trade Commission is amending its regulations,

which govern applications for approval of proposed divestitures,

acquisitions, or similar transactions that are subject to Commission

review under outstanding orders, and is also making a conforming

amendment. The principal changes accomplished by these amendments are

to clarify the nature of the materials that will be placed on the

public record in prior approval proceedings, to clarify the timing of

such placement, and to provide expressly that, in appropriate cases,

the Commission may shorten, eliminate, extend or reopen a comment

period.

DATES: The amendments are effective April 16, 1998.

FOR FURTHER INFORMATION CONTACT:

Marc Winerman, Attorney, Office of the General Counsel, 202-326-2451.

SUPPLEMENTARY INFORMATION:

I. Materials To Be Placed on the Public Record in Prior Approval

Proceedings

Amended Rule 2.41(f)(1) replaces the requirement that prior

approval applications under that rule be placed on the public record

``together with supporting materials.'' The revised rule explains that

applications shall ``fully describe the terms of the transaction and

shall set forth why the transaction merits Commission approval.'' It

provides for placement on the public record of the application,

together with any additional applicant submissions that the Commission

directs be placed on the public record.\1\ It also delegates to the

Director of the Bureau of Competition the authority to direct placement

of additional applicant submissions on the public record (subject to

confidentiality determinations by the General Counsel).

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\1\ Such disclosures would be made to further the goal of the

comment period. That goal is to inform the Commission's judgment,

and not to confer any substantive rights on submitters. Letter,

Donald S., Clark, Secretary (by direction of the Commission), to

Robert A. Hammond, Esq., Re: Institute Merieux, S.A. Docket No. C-

3301 (April 20, 1992). Cf. General Motors Corp., 103 F.T.C. 58, 63

(1984) (explaining rationale for the public comment period on

proposed settlements under Rule 2.34).

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The rule also clarifies a requirement for placing on the public

record any written or oral communication that concerns a prior approval

proceeding and that is directed to a Commissioner or ``any employee

involved in the decisional process.'' As construed by the Commission,

and as amended Sec. 2.41(f)(3) makes explicit, this disclosure

requirement applies only to communications between outside parties and

Commissioners or their personal staffs. The amended rule also replaces

the provision that such disclosures will be made ``immediately'' with a

provision that disclosures will be made ``expeditiously.''

Section 2.41(f)(5) makes clear that all disclosure requirements

under the rule are subject to confidentiality requests. If such

requests are denied, the submitter will receive notice before any

disclosure of affected information takes place. See also 15 U.S.C. 57b-

2(c). Section 2.41(f)(5) also explains that confidentiality requests

need not be

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resolved before, or at the time of, the application's disposition.

II. Provision To Shorten, Eliminate Extend or Reopen Comment

Periods

Amended Rule 2.41(f)(2) provides that the 30-day comment period for

a prior approval application may be shortened, eliminated, extended or

reopened in appropriate cases. The Commission has occasionally

shortened a comment period in the past or decided not to hold one,\2\

consistent with case law establishing that agencies can deviate from a

rule (like the public comment provision of the prior approval rule) if

the rule is not intended to confer important procedural benefits on

individuals and if the ends of justice require such action.\3\ Under

the revised rule, the Commission may determine, in light of the

relevant facts, to solicit comment respecting a prior application for

less than 30 days, or not at all. For example, the Commission might

shorten or eliminate a comment period if it had previously sought

comment on a similar or identical proposal. The Commission may also

reopen or extend a comment period if, for example, it wishes to elicit

comment on materials that are placed on the public record late in the

comment period or after the comment period closes.

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\2\ E.g., Press Release, ``Public Comment Period on Supermarket

Divestiture Shortened'' (November 4, 1996) (divestiture by

Knonklijke Ahold NV). In 1986, the Commission decided not to seek

comment on a divestiture application from Flowers Industries, Inc.,

where the Commission had denied a similar prior application after

receiving public comment, and Flowers had then submitted a further

application with additional materials.

\3\ See American Farm Lines v. Black Ball Freight Service, 397

U.S. 532, 538-39 (1970); Onslow County v. United States Dep't of

Labor, 774 F.2d 607, 611 (4th Cir. 1985).

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III. Conforming Amendment to Sec. 4.9

Finally, the Commission has made a conforming amendment to

Sec. 4.9, which identifies the materials that are placed routinely on

the Commission's public record. Rule 4.9(b)(7)(ii) formerly provided

for disclosure of certain specified materials in prior approval

proceedings, and Rule 4.9(b)(7)(iii) provided, with some overlap, for

disclosure of ``requests for advice concerning proposed mergers and

materials required to be made public under Sec. 2.41(f).'' The

Commission has replaced these provisions with a new subsection (ii),

providing for disclosures of ``[m]aterials required to be made public

under Sec. 2.41(f) in connection with applications for approval of

proposed divestitures, acquisitions or similar transactions subject to

Commission review under outstanding orders.'' \4\ Rule 2.41(f), in

turn, specifies the applicant submissions, third party submissions, and

Commission responses that routinely will be placed on the public

record.

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\4\ The reference to ``requests for advice concerning proposed

mergers'' in former Rule 4.9(b)(7)(ii) has been deleted. It is a

vestige of a previously deleted provision in Sec. 1.1 of the

Commission's rules. See 54 FR 14072 (1989).

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IV. Procedural Matters

The proposed amendments are exempt from the notice and comment

requirements of the Administrative Procedure Act as ``rules of agency

organization, procedure, or practice.'' 5 U.S.C. 553(b)(A). They do not

entail information collection for purposes of the Paperwork Reduction

Act of 1980, 44 U.S.C. 3501 et seq., and are not subject to the

requirements of the Regulatory Flexibility Act, 5 U.S.C. 605(b).

List of Subjects

16 CFR Part 2

Administrative practice and procedure, Reporting and recordkeeping

requirements.

16 CFR Part 4

Administrative practice and procedure, Freedom of information.

Accordingly, the Federal Trade Commission amends Title 16, Chapter

1, Subchapter A, the Code of Federal Regulations as follows:

PART 2--NONADJUDICATIVE PROCEDURES

1. The authority for part 2 continues to read as follows:

Authority: Sec. 6, 38 Stat. 721; 15 U.S.C. 46.

2. Section 2.41(f) is revised to read as follows:

Sec. 2.41 Reports of compliance.

* * * * *

(f)(1) All applications for approval of proposed divestitures,

acquisitions, or similar transactions subject to Commission review

under outstanding orders shall fully describe the terms of the

transaction and shall set forth why the transaction merits Commission

approval. Such applications will be placed on the public record,

together with any additional applicant submissions that the Commission

directs be placed on the public record. The Director of the Bureau of

Competition is delegated the authority to direct such placement.

(2) The Commission will receive public comment on a prior approval

application for 30 days. During the comment period, any person may file

formal written objections or comments with the Secretary of the

Commission, and such objections or comments shall be placed on the

public record. In appropriate cases, the Commission may shorten,

eliminate, extend, or reopen a comment period.

(3) If a Commissioner or a member of a Commissioner's personal

staff receives a written communication from a person not employed by

the agency concerning a proposed transaction that is subject to this

section, such communication will be placed on the public record

expeditiously after its receipt. If a Commissioner or a member of a

Commissioner's personal staff receives an oral communication concerning

such a transaction from a person not employed by the Commission, the

recipient shall expeditiously prepare and have placed on the public

record a memorandum setting forth the full contents of such

communication and the circumstances thereof.

(4) Responses to applications under this section, together with a

statement of supporting reasons, will be published when made, together

with responses to any public comments filed under this section.

(5) Persons submitting information that is subject to public record

disclosure under this section may request confidential treatment for

that information or portions thereof. Such requests shall be made in

accordance with 16 CFR 4.9(c) and the General Counsel will determine

whether to grant confidentiality in accordance with 16 CFR 4.9(c).

Nothing in this section requires that confidentiality requests be

resolved prior to, or contemporaneously with, the disposition of the

application.

PART 4--MISCELLANEOUS RULES

1. The authority for part 4 continues to read as follows:

Authority: Sec. 6, 38 Stat. 721; 15 U.S.C. 46.

2. Section 4.9 is amended by removing paragraph (b)(7)(iii) and

revising paragraph (b)(7)(ii) to read as follows:

Sec. 4.9 The public record.

* * * * *

(b) * * *

(7) * * *

(ii) Materials required to be made public under 16 CFR 2.41(f) in

connection with applications for approval of proposed divestitures,

acquisitions or similar transactions subject to Commission review under

outstanding orders.

* * * * *

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By direction of the Commission.

Benjamin I. Berman,

Acting Secretary.

[FR Doc. 98-10078 Filed 4-15-98; 8:45 am]

BILLING CODE 6750-01-M