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Date
Rule
15 USC 18a(c)(4) - 7A(c)(4)
Staff
Michael Verne
Response/Comments
Agree Exempt under 18a(c)(4) - 7A(c)(4). No acquired person (see pt 6 of below / attached). DOJ concurs. 1 -The government is not an entity as defined in 801.1(a)(2) 2 -Therefore, it cannot be an ultimate parent entity as defined in 801.1(a)(3) 3 -Therefore, it cannot be a person as defined in 801.1(a)(1) -"person means an ultimate parent entity and all entities which it controls directly or indirectly" 4 -Therefore, the language in 801.1(c) "A person holds all assets and voting securities held by the entities included within it; in addition to its own holdings, an entity holds all assets and voting securities held by the entities which it controls directly or indirectly" -cannot apply to the government 5 -Therefore, if an entity (i.e., a corporation or non-corporate entity engaged in commerce) owned by the government buys or sells anything, it is its own ultimate parent entity and the transaction would not be covered by 7A(c)(4), because the government does not hold the assets, voting securities or non-corporate interests that the entity is buying or selling 6 -Conversely, if the government buys or sells assets directly, the transaction is not reportable because there is either no acquiring (if the government is buying) or acquired person (if the government is selling).

Question

From:

(redacted)

Sent:

Friday, April 13, 2012 2:48 PM

To:

Verne, B. Michael

Subject:

HSR Act (c)(4) Exemption

Mike-

Iwanted to confirm that the statutory (c)(4) exemption for "transfers to orfrom a Federal agency ..." applies to an acquisition of assets of a failedcredit union that has been placed into a conservatorship under the supervisionof the National Credit Union Administration ("NCUA").

Thetransaction will be between NCUA, as Liquidating Agent, and the buyer (anothercredit union), who will acquire substantially all assets of the credit union inthe NCUA conservatorship (largely consisting of consumer loans, residentialmortgage loans and cash). No commercial loans will be acquired. The buyer willalso assume all the deposits of the failed credit union, and the NCUA willprovide financial assistance to the buyer in the form of cash.

Thistransaction closely tracks several in which the PNO has agreed that (c)(4)exempts sales from FDIC and RTC receiverships or conservatorships (e.g., Interpretations1011008 (FDIC), 9101007 (RTC), 9205007 (RTC), 9011011 (RTC)). They follow onInterpretation 29 in the 1991 edition of the Premerger Notification PracticeManual, which states that "[w[hen RTC declares a conservatorship and takesover a financial institution, the sale of the financial institution, itsassets, its subsidiaries or assets of its subsidiaries will be exempt."Interpretation 12 in the current edition is consistent with that analysis.

NCUAis a federal agency, governed by a board that is appointed by the President andconfirmed by the Senate. Its conservatorships for failed institutions areessentially identical to what the FDIC does and the RTC did.

However,because I was not able to locate any informal interpretations in the FTCdatabase specifically addressing the application of exemption (c)(4) toNCUA-supervised sales, I thought I should confirm its applicability with you.

Iknow the PNO has also offered an alternative analysis-that the FDIC, RTC andother federal government agencies are not entities under 801.1(a)(2) so thatsales by them are not covered by the statute. Interpretations 11 & 12 inthe current edition of the Manual explain that reasoning. If that is now thepreferred analysis, can you confirm it applies to an NCUA sale of an institution'sassets in conservatorship, and that there is no reportable transaction here?

About Informal Interpretations

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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