January 5, 1983
Federal Trade Commission
7 Pennsylvania Avenue, N.W.
Washington, D.C. 20580
Attention:Mr. Wayne Kaplan
Re:Advice Concerning Hart-Scott-Rodino
Antitrust Improvements Act of 1976
Dear Mr. Kaplan:
This letter is to confirm the advice which you gave
me during our telephone conversation yesterday regarding the
Federal Trade Commissions position with respect to partner-
ships and the size-of-persons test under the Hart-
Scoot-Rodino Antitrust Improvements Act of 1976 (the Act).
As I explained to you, a client of this firm is a
partner in an unincorporated joint venture with a subsidiary
of our client and an unrelated party. Our client and the
unrelated party are each a person within the meaning of
Rule 801.1(a)(1) under the Act with total assets and annual
net sales in excess of $100 million.
The joint ventures principal asset is a subleasehold
interest in a hotel property which it is now proposing to sell
to an unrelated third party. The question I raised with you
was whether the Federal Trade Commission is continuing to take
the position that a partnership entity is its own ultimate
parent entity for purposes of determining whether the size
of the persons threshold under the Act is satisfied.
You advised me that the Federal Trade Commission
continues to take the position that a partnership entity is
its own ultimate parent entity for purposes of determining the
relevant person under the Act. You further advised me that
for purposes of determining whether the size of the person
threshold is satisfied reference need only be made to the total
assets or annual net sales of the partnership (as stated in
its most recently prepared financial statements) and not to
those of its partners or entities controlling its partners.
I also explained to you that the purchaser of the
subleasehold interest has been granted an exclusive franchise
by an unrelated third party to operate hotel and restaurant
businesses in the state in which the subject hotel property
is located. I asked you whether under those circumstances the
unrelated franchisors total assets and annual net sales
would be aggregated with those of the purchaser for purposes
of determining whether the purchaser satisfies the size of
the Persons test under the Act. You advised me that the total
assets and annual net sales of the franchiser would not be
aggregate with the total assets and annual net sales of the
purchaser for purposes of determining the size of the purchaser.
I also understand that the advise of the Justice
Departments Antitrust Division need not be sought regarding
the matters described above since it follows the Federal Trade
Commissions advice on such matters.
The parties would like to consummate the above-
mentioned transaction in the near future. Accordingly, if you
are unable to concur with any part of the foregoing summary
of our telephone conversations, or if you have any questions or
further comments, I would appreciate it if you would contact me
not later than January 16, 1984. Thank you for your assistance.
Very truly yours,