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The parties should submit their explanation letter with the filings submitted to both agencies, but should not delay their filing if additional time is needed to prepare the explanation letter.

The letter should be addressed to:

Robert L. Jones, Assistant Director
Bureau of Competition, Premerger Notification Office
Federal Trade Commission, Constitution Center Building
400 7th St., SW, Room 5301
Washington, DC 20024

All parties to a transaction must submit an explanation letter except for the acquired party in non-consensual (801.30) transactions.

The letter may be prepared by the lawyers of the parties. It must, however, be signed by the acquiring or acquired individual or by a company official if the acquiring or acquired entity is not an individual.

When the acquiring person has made a series of acquisitions that require multiple corrective filings, the same letter that describes all of the acquisitions should be attached to each corrective filing.

The letter must contain details explaining:

  • The date of the violation
  • The type of transaction (e.g., vesting of restricted stock units, open market purchase, purchase from a shareholder of issuer)
  • Other parties involved
  • The HSR filing threshold crossed
  • Why the violation occurred, and specifically whether the filing party:
    • conducted an analysis of the transaction under the HSR Act
    • was aware of its HSR obligations
    • had previously filed an HSR notification, and/or
    • had previously failed to file a required HSR notification
  • When and how the violation was discovered
  • Whether the parties realized any advantage (such as tax, contractual, financial or regulatory benefits) that would not have been realized had they filed and observed the appropriate waiting period under the HSR Act
  • A detailed list of all acquisitions of (1) assets from the same seller or (2) voting securities in the same issuer between the acquisition immediately prior to the initial violation and the time of the explanation letter, briefly noting the date of the transaction, type of transaction, number of shares acquired, percentage held as a result of the acquisition, and the total value of the shares held as a result of the acquisition, and
  • A detailed description of the steps that have been taken to ensure future compliance with the HSR Act. Examples of such steps include, but are not limited to: implementation of training programs with antitrust counsel; monitoring of company dealings for HSR purposes by the Chief Financial Officer and the General Counsel; establishment of an HSR review committee; or inclusion of HSR provisions on acquisition checklists.