2104004 Informal Interpretation

Date:

Tags:

Rule:
Item 3(b)
Staff:
Karen Berg
Response/Comments:

We are looking for non-competes that constrain the seller post-acquisition, so it doesn’t appear you need to produce these.

Question

From: Berg, Karen E. <KBERG@ftc.gov>


Sent: Thursday, April 15, 2021 10:49:21 AM (UTC-05:00) Eastern Time (US & Canada)


To: [Redacted]


Cc: [Redacted]


Subject: RE: Item 3(b) - Employment Agreements

We are looking for non-competes that constrain the seller post-acquisition, so it doesn’t appear you need to produce these.

From: [Redacted]


Sent: Tuesday, April 13, 2021 4:50:55 PM (UTC-05:00) Eastern Time (US & Canada)


To: [Redacted]


Subject: Item 3(b) - Employment Agreements

Hi PNO,

I’m looking at Informal 1702002 (https://www.ftc.gov/enforcement/premerger-notification-program/informal-interpretations/1702002) where you say “we are fine with not receiving non-competes that are in the form of a continuing employment agreement and the acquired person is not a party to said agreement.”

By “acquired person” does this mean the UPE/seller or the entire person, i.e., including the acquired entity?

I’m looking at a situation where, in connection with the sale of Target (a reportable transaction), Target signed employment agreements with a number of employees, and all of those include non-competes. Neither the buyer nor the seller is a party to these agreements, however.

Based on the language quoted above, I think I would need to include all of them since the acquired person is a party, since that “person” includes the acquired entity. But perhaps I’m misreading Informal 1702002?

 

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