Question
(redacted)
June 4, 1987
Premerger Notification Office
Bureau of Competition
Federal Trade Commission
6th & Pennsylvania Avenue, NW, Room 303
Washington, D.C. 20580
Attention: Joseph Price
Dear Sirs:
We are hereby requesting an informal interpretation of the applicability of the Hart-Scott-Rodino Antitrust Act of 1976 (the Act) and the rules promulgated thereunder (the Rules) pursuant to 803.30 of the Rules as regards the definition of the term engaged in commerce contained in Rule 801.1(a) (2) when applied to determine whether a foreign governmental corporation constitutes an entity for purposes of the Act. The transaction and relevant facts are described below.
(Redacted) intends to purchase certain assets (the Assets) of (redacted) including, inter alia, the assets of (redacted) an (redacted) corporation controlled by (redacted) in turn, is an (redacted) bu (redacted) per illegible (redacted) and agent of the (redacted) A creature of statute, (redacted) Group has no outstanding capital stock and is funded, when necessary, by grants from the (redacted) government.
Both (redacted) intend to file Notification Forms under the Act in connection with the acquisition of the Assets by (redacted) by ( redacted) We believe that by reason of Rule 801.1(a) (2) our client, (redacted) should be deemed to be its own ultimate parent entity within the meaning of the Rules. Our parent entity within the meaning of th Rules. Our reasons for this conclusion are set forth below.
Section 801.1(a)(2) provides in pertinent part, the term entity shall not include any foreign state, foreign government, or agency thereof (other than a corporation engaged in commerce), nor the United States, any of the States thereof, or any political subdivision or agency of either (other than a corporation engaged in commerce).
In prior conversations with the staff of the Commissions Premerger Notification Office, it has been agreed that, by reason of 801.1(a) (2) of the Rules, (redacted) is exempt from the reporting requirements of the Act because it is a non-corporate governmental agency. Thus (redacted) is not an entity within the meaning of the Rules. Similarly we believe that (redacted) is not an entity because it is also an agency of the (redacted) and, while corporate in form, is not engaged in commerce within the meaning of the Rules.
(Redacted) is a holding corporation which coordinates and controls the activities of companies in mechanical related industries. The operating companies held by (redacted) are the following: (1) (redacted) (research planning manufacturing of (redacted) and (redacted) and (redacted) and (redacted) and (redacted); (2) (redacted) (research planning and manufacturing of (redacted) illegible and other projects related to (redacted)); (3) (redacted). (Manufacturing of components for the (redacted) and (redacted); and (4) (redacted) (manufacturers of (redacted) As described above, these companies are established and coordinated so that each company deals in a wholly different industry from the other companies.
On a worldwide level, (redacted) does not manufacture products or sell any services in any market. Its only function is to assist the (redacted) companies within its holding structure, and in this spirit, (redacted) has in the past issued financial instruments in the (redacted) to raise capital.
In the United States, (redacted) provides only administrative advisory and support services for the (redacted) companies through its offices at (redacted) entire (redacted) staff is employed directly by (redacted) consists of only four persons, including secretarial and administrative personnel.
Significantly, (redacted) does not provide services to any companies other than those within the (redacted). Thus, it cannot be deemed engaged in commerce because its activities are on behalf of and conducted entirely within a single corporate family. While it may be argued that a single party can affect commerce, Rule 801.1(a) (2) is expressly limited to parties engaged in commerce and (redacted) cannot be said to be so engaged, as it does not sell or otherwise provide services or goods to any third parties.
In addition, it should be noted that (redacted) only office within the United States and only U.S. personnel are located only in (redacted) No services are provided outside of (redacted) Thus (redacted) activities can be described as being entirely intrastate. Accordingly, for this additional reason, 9redacted0 should not be deemed engaged in commerce.
For the reasons set forth above, we respectfully request that the Commission concur with our conclusion that, for purposes of the definition of term entity set forth in Section 801.1(a) (2), the phrase corporation engaged in commerce does not include (redacted) Because (redacted) would like to file its Notification & Report Form with respect to the acquisition of the Assets in the very near future, we would appreciate your advice as respects this request by no later than June 10, 1987.
If you need further information with respect to our request, please call (redacted) or (redacted) collect at (redacted) Thank you for your prompt attention to this matter.
Sincerely,
(Redacted)
(Redacted)
cc:(redacted)