NEW HSR RULES ADOPTED
January 25, 2001
The HSR reform legislation, Pub.L. No. 106-553, 114 Stat. 2762, enacted the first significant changes in the HSR Act, 15 U.S.C. 18a, since passage of the Act in 1976. These changes to the HSR Act took effect on February 1, 2001. The Commission, with the concurrence of the Assistant Attorney General for Antitrust of the Department of Justice, has approved interim HSR rules enabling the new legislation to be implemented smoothly.
Changes to the HSR Act which affect filing requirements include: increase in the size-of-transaction threshold to $50 million; elimination of the 15% size of transaction threshold; transactions valued at greater than $200 million will be reportable without regard to "size-of-person;" the size-of-transaction and size-of-person dollar thresholds will be adjusted each fiscal year, beginning with FY 2005, for changes in GNP during the previous year; Implementation of a tiered fee structure based on the value of the voting securities or assets held as a result of the transaction; the length of the waiting period that follows substantial compliance with second requests will be 30 days for most transactions; and the end of any time period that would be a Saturday, Sunday or legal public holiday will be the next regular business day.
The interim rules include changes that are necessary to implement the changes in HSR reporting requirements contained in the legislative amendments and also incorporate several of the minor administrative changes proposed and commented upon in1994. The majority of changes to the rules consist of either the simple substitution of the figure "$50 million" for "$15 million" in the rules, or of some figure greater than $50 million for any figure in the examples that represents a reportable transaction amount. In some rules and examples we simply removed language pertaining to the15 percent test; however, we have removed Section 802.20 in its entirety, as that rule addressed only situations where an acquisition satisfies the 15 percent test but not the $15 million test. In addition:
- the notification thresholds in Section 801.1(h) have been amended so that they mirror the fee thresholds Congress created, but retain two percentage thresholds we believe are important for notification of acquisitions of voting securities. The thresholds will be: $50 million, $100 million, $500 million, 25 percent of the outstanding voting securities of an issuer if valued in excess of $1 billion, and 50 percent of the outstanding voting securities of an issuer (if valued in excess of the act's $50 million threshold).
- Section 802.21, dealing with acquisitions between notification thresholds, has been modified by the addition of a subsection that provides for a transitional period for persons who filed under the 1978 thresholds.
- A new Section 803.9, has been added dealing with the payment of filing fees.
- references to Clayton Act section numbers have been changed to reflect the elimination of Section 7A(a)(3) (the $15 million /15 percent test);
- language has been added to clarify whether the size-of-transaction test or the size-of-person test of Section 7A(a)(2) is at issue since the 2000 Amendments define both tests in that same section;
- "30 days" has been substituted for "20 days" in Sections 803.10 and 803.20 dealing with waiting periods and second requests respectively;
- language has been added in Section 803.10 to extend any waiting period ending on a weekend or holiday to the end of the next business day;
- bankruptcy transactions have been added to Sections 803.10 and 803.20.
- the 2000 Amendments have been added to the definition of "the act" in Section 801.1(m);
- the cite to the Standard Industrial Classification Manual in Section 801.1(j) has been updated to the current1987 edition;
- DOJ and FTC street addresses have been updated; and
- the FTC's web site has been added as a source for obtaining the Form and Instructions in Section 803.1
Changes to the Form and corresponding changes to the Instructions are primarily in the administrative portions of the Form. The first three items have been reorganized for ease of completion and processing. Some of the changes are ministerial items from the 1994 Form change proposal. Most changes are the direct result of the institution of the graduated filing fee schedule. Form changes include:
- a "Fee Information" section has been added.
- the FTC address, and number of copies required has been updated.
- the instructions for acquired persons have been clarified.
- questions regarding bankruptcy and corrective filings have been added, as well as an optional question regarding filings with foreign antitrust authorities.
- language that previously requested the "approximate value" or "estimated total value" of assets provided in Item 2(b)(i) (now 3(d)(iv)) of the Form is removed.
- percentage of assets (former Item 3(a) ) has been removed.
- percentage of each class of voting securities (former Item 2(c)(vii)) has been removed.
- addition of Item 2(e). This item requests identification of the person or persons responsible for making a fair market valuation of the transaction, if such a valuation was required.
- the notification threshold section has been modified accordingly to display the 2001 notification thresholds: $50 million; $100 million; $500 million; 25 percent valued at over $1 billion; and 50 percent. The instruction for this item has also been modified in the same way.
- Former Item 10 (contact persons) is now part of Item 1.
- Former Item 8 (vendor/vendee) is removed and Former Item 9 (prior acquisitions) is redesignated Item 8.
- In addition, the instruction to Item 4(a) has been changed to update the name of a required SEC document (from a Schedule 14D-1 to a Schedule TO)
The Instructions to the Form also note that filers are encouraged to use the PNO "Valuation Worksheet" which can be found on this web page. Filers should find the Worksheet helpful in performing a valuation of their transaction. This Worksheet is a step-by-step guide to how to value different types of transactions under the existing valuation rules. The Worksheet is not part of the rules, nor will its submission be required, but the Instructions urge filers to utilize it and to retain it in their files should questions arise regarding the valuation of their transaction.
As always, should you have any questions, call the Premerger Notification Office at (202)326-3100.