1107002 Informal Interpretation

Michael Verne

Kate and I have talked this through and here is our take. Let us know
if any of this is unclear.
Other entities managed by ABC are associates Any entity that controls
ABC or is controlled by ABC is an associate Other entities that are under
common control with ABC, LP2 or LP3 are associates
Yes - any entity under common control with EFG is an associate
A GP is always an associate of the LP it is the general partner of The
UPE of a GP is always an associate of the LP it is the general partner of
No -managing third party properties is not the same as managing
investment decisions. The property manager is not an associate of entities
whose properties it manages  


From: (Redacted)
Sent: Friday, July 15, 2011 9:34 AM
To: Walsh,Kathryn
Subject: Associates


Hereare a few questions some of us are considering related to the definition of"associate." References to "examples" are those that werepublished by the FTC last week. We appreciate any guidance you can provide.



Example1. ABC Investment Group ("ABC") has organized a number of investmentpartnerships LLP1, LLP2, and LLP3, each of which is its own ultimate parententity ("UPE"). ABC makes the investment decisions for all three.LLP1 is planning to make a reportable HSR acquisition. LP1's associates are:ABC, LLP2, LLP3. [What about other entities managed by ABC? What about anyentity that controls ABC or is controlled by ABC? What about other entitiesthat are common control with ABC or with LLP2 and LLP3?]

Example3. PRS Corporation ("PRS") is its own UPE and is planning to make areportable acquisition. EFG Group ("EFG") has the contractual powerto determine the investments of PRS. EFG has contracted with Mr. X, who is notan employee of EFG, to act as its investment manager. PRS' associates are: EFG,any entity over which EFG has investment authority, any entity that controls oris controlled by EFG, Mr. X, any entity over which Mr. X has investmentmanagement authority, and any entity which is controlled by Mr. X. [Whatabout any entity under common control with EFG?]

Example4/Example 12. Is the GP of an LP always an associate of such LP? Example 4,among others, implies this. However, Example 12 can be read to imply that therebe a contract between the GP and the LP under which the GP exercises investmentdiscretion over the LP's investments. (If a company "controls" apartnership, is the UPE of the GP always an associate of such company?)

Isa company in the business of managing third party properties (quite common inthe real estate industry) necessarily an associate of all entities whoseproperties it manages?

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Informal interpretations provide guidance from previous staff interpretations on the applicability of the HSR rules to specific fact situations. You should not rely on them as a substitute for reading the Act and the Rules themselves. These materials do not, and are not intended to, constitute legal advice.

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