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Global Competition Law

  Section 7A of the Clayton Act lists exemptions from the notification requirement. They include purchases of real estate or goods in the ordinary course of business, acquisitions of securities other than voting securities, acquisitions where the buyer already has 50 percent voting control, acquisitions subject to antitrust exemptions by other Federal agencies, certain acquisitions by banks, trust …

Exemptions from notification

HSR notification requirements are governed by the pre-merger Notification Rules (HSR Rules) adopted by the FTC (16 CFR §§801-803). If the thresholds requirements of the Clayton Act are met, filing the transaction is mandatory.

Filing fees range from US$ 45,000 to US$ 280,000 depending on the size of the transaction.

On 10 July 2013, the Federal Trade Commission published amended premerger notification rules designed to provide a framework for the withdrawal of a premerger notification filing under the Hart Scott Rodino Act (HSR). The new rules, which came in effect on 9 August 2013, set forth the procedure for voluntarily withdrawing an HSR filing, establish when an HSR filing will be automatically withdrawn if a filing publicly announcing the termination of a transaction is made with the U.S. Securities and Exchange Commission (SEC) and lay down the procedure for resubmitting a filing after a withdrawal without incurring an additional filing fee.  

Context

The first step in determining notification under the HSR Rules is to identify the “acquiring person” and the “acquired person”. A “person” is defined as the ultimate parent entity of the buyer or seller. An “acquiring person” is defined as any person who will hold voting securities or assets as the result of an acquisition. In this context, a “person” is defined as the ultimate parent entity and all of the entities that it directly or indirectly controls, as that term is defined in Section 801.1(b). The types of entities that can together constitute an “ultimate parent entity” include natural persons, corporations, partnerships, joint ventures, unincorporated associations, and trusts. As noted above, the Governments of foreign nations, the United States and the States of the Union, as well as their agencies and political subdivisions, are not persons and thus are not subject to the notification requirement. Given that the term “hold” is defined to mean beneficial ownership, an agent or other entity acquiring on behalf of another entity need not file notification; only the beneficial owner need do so where the other statutory criteria are satisfied.

Likewise, any party is defined as an acquired person if after the transaction “the assets or voting securities of any entity included within such person will be held by any other person”. Thus, in the case of mergers, consolidations and other acquisitions combining all or part of the business of two or more parties, each party to the acquisition is defined as both the acquiring and the acquired person.

Under Section 7A of the Clayton Act, as amended by the HSR Act, modified in 2001, “both persons” involved in a covered transaction must file Pre-Merger Notification forms with the FTC and the DoJ (15 U.S.C. § 18a). Where a party is both an acquiring person and an acquired person for the same transaction, then the party must complete the portions of the Notification and Report Form separately as acquiring and acquired persons but need not file two separate forms. Alternatively, where a transaction involves more than one separately reportable acquisition, separate Notification and Report Forms must be filed.

The dual designation as both an acquirer and acquired person is useful in situations where an issuer of stock included within one of the “persons” is not to be merged or consolidated. In these cases, when such an issuer is reporting as an acquired person, it completes the Notification Form only with respect to the entities involved in the merger or consolidation.

In the case of a tender offer, only the acquiring person must notify the transaction.

Notifying undertakings

There are no specific filing deadlines under the HSR Act. The parties can submit their notification at any time after the execution of a letter of intent, even if it is non-binding, or a definitive agreement. However, if a transaction is covered by the HSR Act, it cannot be implemented until all required fillings have been made and the applicable waiting periods have been observed. The applicable waiting periods are 15 days for a cash tender offer and 30 days for other types of transactions. The waiting period begins on the date of receipt by the FTC and the Assistant Attorney General of the DoJ of the completed notification. The agencies have discretion to extend the 30-day waiting period (or in the case of a cash tender offer, the 15-day waiting period) for an additional period of not more than 30 days (or 10 days in case of a cash tender offer) upon issuing a request for additional information and documentary material. In this initial period, the agency asks the merging firms to voluntarily provide information, such as descriptions of all overlapping products, product/marketing brochures, business plans, market studies, strategic plans and information on market shares and competitor positioning, a list of competitors, suppliers and customers, readily available data regarding sales and output, and any analyzes or studies regarding the transaction. The DoJ or the FTC also attempts to dispense with transactions that are not candidates for further investigation, and to narrow and refine issues for transactions likely to progress to formal HSR Second Request inquiries.

The waiting period may also be terminated earlier (early termination), upon request of the filing persons. Early termination is granted if one of the notifying undertakings so specifies on the notification form, if all the undertakings concerned have submitted forms that comply with instructions, and if both antitrust agencies have completed their review and determined not to take any enforcement action during the waiting period. Early termination decisions are published in the Federal Register.

Waiting period

  Section 7A of the Clayton Act lists exemptions from the notification requirement. They include purchases of real estate or goods in the ordinary course of business, acquisitions of securities other than voting securities, acquisitions where the buyer already has 50 percent voting control, acquisitions subject to antitrust exemptions by other Federal agencies, certain acquisitions by banks, trust, investment and insurance companies, and acquisition of voting securities solely for investment purposes.

Global Competition Law

1487. Exemptions from notification

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Les notions juridiques connexes

1487. Exemptions from notification

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les notions juridiques connexes

Demandez un accès gratuit
au contenu exclusif Livv – juristes d’entreprise