The Federal Trade Commission's Premerger Notification Office (PNO), with the concurrence of the Assistant Attorney General in charge of the Antitrust Division, has now made public a Formal Interpretation under the Hart-Scott-Rodino (HSR) rules setting forth the conditions under which the creation, or acquisition of an interest in, a Limited Liability Company will be reportable under the HSR Act. This Formal Interpretation, which will be published in the Federal Register on February 5 and was previously scheduled to become effective on February 1, 1999, will now become effective March 1, 1999.
Formal Interpretation 15 has been modified from the original version published on October 13, 1998, published in the Federal Register See 63 Fed. Reg. 54713 (October 13, 1998). The revised interpretation is narrower in scope and now clarifies both the Interpretation and the mechanics for filing under it.
The PNO will now view as reportable only those formations of an LLC to which two or more pre-existing, separately controlled businesses will be contributed, assuming the HSR size-of-person and size-of-transaction requirements are met and at least one of the members will control the LLC (i.e., have an interest entitling it to 50 percent of the profits of the LLC or 50 percent of the assets of the LLC upon dissolution). Such formations will be treated as mergers or consolidations under § 801.2(d) of the HSR rules, similar to the PNO's long-standing treatment of the acquisition of non-profit corporations.