Resetting our views on HSR Items 4(c) and 4(d)

When submitting a Hart-Scott-Rodino (HSR) premerger notification filing to the FTC and DOJ, a filing party must complete the HSR Form. The HSR Form requires detailed information about the transaction and the filing party’s business, and requires the submission of certain documents.

In particular, Item 4(c) of the HSR Form requires filers to submit documents prepared by or for officers or directors used to evaluate or analyze the acquisition with respect to market shares, competition, competitors, markets, potential for sales growth, or expansion into product or geographic markets. Item 4(d) of the Form requires filers to submit certain documents prepared by or for officers or directors that relate to the acquisition, including confidential information memoranda, documents prepared by third party advisors, and documents evaluating or analyzing synergies. These documents often reveal important aspects of the competitive environment in which the transaction takes place, and are key to the agencies’ initial review of a transaction.

The PNO frequently receives questions about how to identify responsive documents and offers informal guidance to help filing parties determine which documents are responsive to Items 4(c) and 4(d). The PNO provides informal advice, and at times, has excluded categories of documents because of their limited relevance to our initial review.

One of these exclusions applies to Item 4(c) and Item 4(d) documents that discuss only foreign markets. For years, the PNO’s position has been that if a document is otherwise responsive to Item 4(c) or Item 4(d), but discusses only foreign markets, it does not have to be submitted with the filing. This position is currently included in informal guidance as well as in a tipsheet to Items 4(c) and 4(d).

Given the increasingly interconnected global marketplace, we have determined that excluding documents that discuss only foreign markets can impair the agencies’ initial competitive analysis. In particular, documents that discuss foreign markets or competitors located only in other countries without any specific reference to a U.S. market could be relevant to our review. Consider the following illustrative examples:

1. The transaction involves the acquisition of a manufacturer of Chemical X. A board presentation regarding the transaction discusses the location and capacity, including shares, of all manufacturers of Chemical X, none of which is located in the United States. Under the PNO's current informal guidance, this document could be excluded from the filing, even though it may be highly relevant to an initial competitive analysis of the U.S. market for Chemical X.
2. The acquisition involves a Chinese manufacturer that sells Chemical Y in the United States acquiring a German firm working to develop a potentially competitive product. The PNO's current informal guidance permits the exclusion of a potentially responsive e-mail chain among the officers discussing how the new German product may be exported beyond Europe, if the email chain does not explicitly reference the United States. These written communications between officers would likely be highly relevant to issues of potential competition or rapid entry.

The rationale for excluding documents from Items 4(c) or 4(d) based on geography no longer holds and their exclusion could impair the ability of the agencies to make the correct assessment of competitive impact prior to issuing a second request. Consequently, the PNO is revising its informal guidance to require the submission of any documents that are responsive to Items 4(c) or 4(d), even when those documents discuss only foreign markets.

Going forward:

As of this posting, filers may not exclude a document responsive to Items 4(c) or 4(d) based on a determination that the document's evaluation or analysis is limited to geographies or operations outside of the United States. Informal guidance and the tipsheet on our website will be updated accordingly.

Please note that the PNO is retaining its prior guidance that filers need not produce documents that relate solely to an exempt portion of a transaction. See, for example, Informal Interpretation 9905012.

If you have questions about HSR filings, contact the PNO.