Formal Interpretation No. 16

Premerger Notification: Reporting and Waiting Period Requirements

AGENCY: Federal Trade Commission

ACTION: Notice of the Issuance of Formal Interpretation 16 Changing the Policy of the Premerger Notification Office to Require Filing Persons to Submit Only One Original Affidavit and Certification with their Filings

SUMMARY: The Premerger Notification Office ("PNO") of the Federal Trade Commission ("FTC"), with the concurrence of the Assistant Attorney General in charge of the Antitrust Division of the Department of Justice ("DOJ," collectively, "the enforcement agencies"), is issuing Formal Interpretation 16 addressing the number of original affidavits and certification pages which must accompany Premerger Notification filings. Section 803.5 of the Premerger Notification rules ("the rules") requires all acquiring persons in transactions falling under § 801.30 and all parties to non-§ 801.30 transactions to submit certain affidavits with their premergernotification filings. Section 803.6 of the rules requires a notarized certification for such filings. The PNO has required that each copy of the form be submitted with an original affidavit and certification. Pursuant to Formal Interpretation 16, from now on the PNO will require that one original affidavit and one original certification page accompany one of the two copies of the form submitted to the FTC. The other affidavits and certification pages may be duplicates. Only the originals need be separately notarized.

DATES: Formal Interpretation 16 is effective on September 24, 1999.

FOR FURTHER INFORMATION CONTACT: Marian R. Bruno, Assistant Director, Premerger Notification Office, Bureau of Competition, Room 301, Federal Trade Commission, Washington, DC 20580. Telephone: (202) 326-2846. Thomas F. Hancock, Attorney, Premerger Notification Office, Bureau of Competition, Room 301, Federal Trade Commission, Washington, DC 20580. Telephone: (202) 326-2946.

SUPPLEMENTARY INFORMATION: The text of Formal Interpretation Number 16 is set out below:

Formal Interpretation Number 16

Formal Interpretation Pursuant to § 803.30 of the Premerger Notification Rules, 16 CFR § 803.30, Concerning the Number of Original Affidavits and Certification Pages Which Must Accompany a Premerger Notification Filing

This is a Formal Interpretation pursuant to § 803.30 of the Premerger Notification Rules ("the rules"). The rules implement Section 7A of the Clayton Act, 15 U.S.C. § 18a, which was added by sections 201 and 202 of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("the act"). The act requires the parties to certain acquisitions of voting securities or assets to notify the FTC and the DOJ and to wait a specified period of time before consummating the transaction. The purpose of the act and the rules is to ensure that such transactions receive meaningful scrutiny under the antitrust laws, with the possibility of an effective remedy for violations, before consummation.

The act states that " no person shall acquire . . . any voting securities or assets of any other person, unless both persons (or in the case of a tender offer, the acquiring person) file notification pursuant to rules under subsection (d)(1) of this section . . . ." Section 803.1(a) of the rules states that the notification required by the act is the completed Antitrust Improvements Act Notification and Report Form for Certain Mergers and Acquisitions ("the form"), 16 CFR Part 803- Appendix.

Section 803.5(a) of the rules requires that ". . . [f]or acquisitions to which § 801.30 applies, the notification required by the act from each acquiring person shall contain an affidavit, attached to the front of the notification, attesting [that the acquired person has been notified of certain facts about the proposed transaction, that the reporting person has a good faith intention to make the acquisition, and, in the case of a tender offer, that the intention to make a tender offer has been publicly announced]." Section 803.5(b) requires that ". . . [f]or acquisitions to which § 801.30 does not apply, the notification required by the act shall contain an affidavit . . . attesting that a contract, agreement in principle or letter of intent to merge or acquire has been executed, and . . . to the good faith intention of the person filing notification to complete the transaction." Section 803.6(a) of the rules states that "The notification required by the act shall be certified . . . ."

One of the primary purposes of these requirements - particularly that of certification - is to preserve the evidentiary value of the filing. The Statement of Basis and Purpose ("SBP") for § 803.6 states that ". . . the certification is intended to estop the person on whose behalf the report is filed from later denying the completeness or accuracy of the information provided on the form in the event that either enforcement agency seeks to introduce any such information into evidence in any proceeding." 43 Fed Reg 33511 (July 31, 1978). The certification requirement is also intended to place responsibility on an individual to ensure that information reported is true, correct, and complete and that the form is filled out in accordance with the act and the rules. Id.

The affidavit requirement is intended to ensure that several important prerequisites are met before the review process begins. Thus the acquiring person must attest that it has made certain disclosures about the proposed transaction to the acquired person so the acquired person has knowledge of its obligation to file. Id. at 33510. In consensual transactions, the parties must also attest that a contract, letter of intent, or agreement in principle has been executed. Id. Its contents also ensure that the parties intend to consummate the acquisition and are not using the notification process to vet a purely hypothetical transaction with the agencies. Id. at 33511.

The Instructions to the form state that each person filing notification must "[c]omplete and return two notarized copies (with one set of documentary attachments) of [the form] to [the PNO] . . . and three notarized copies (with one set of documentary attachments) to [the DOJ] . . . ." The PNO has interpreted the instructions to require that each certification be originally signed and notarized and that each of the required affidavits also be originally signed and notarized. This has resulted in each party's submission to the enforcement agencies in a non-§ 801.30 transaction and acquiring persons' filings in non-§ 801.30 transactions having ten original signatures and ten original notarizations (five on the affidavits and five on the certifications). Acquired persons' filings in § 801.30 transactions must have five originally signed and notarized certifications.

The PNO has determined that multiple original signatures and notarizations, while not a great burden, is not a negligible one. Accordingly, the PNO has decided to modify its position on the necessity for original signatures and notarizations with premerger notification filings. From now on, filing persons need supply only one original signed and notarized affidavit (if required) and one original signed and notarized certification with one of the two copies of the form submitted to the FTC. The affidavits and certifications accompanying the other copies of the form may be copies of these originals. A copy is acceptable if the signature and notarization (including the embossed notary seal, if required in the jurisdiction of notarization) are clearly visible. Likewise, a person required to re-certify an amended filing because the original was deficient may submit one original certification and four copies with the new information.

This Formal Interpretation affects only the number of original signatures and notarizations which must accompany premerger notification filings. It does not change the affidavit or certification requirements themselves, who may sign the affidavit and certification, or the number of copies of the form and documentary attachments which must be provided. It also remains the case that any filing person, United States or foreign, can swear or affirm under penalty of perjury under the laws of the United States pursuant to 28 U.S.C. § 1746 in lieu of notarization.

Donald S. Clark