Formal Interpretation No. 1

888 Sixteenth Street, N.W.
Washington, D.C. 20006

August 15, 1978

Malcolm R. Pfunder, Esq.
Associate Director, Premerger
Notification and Screening 
Federal Trade Commission
Pennsylvania Avenue at 16th Street
Washington, D.C. 20580

Dear Mr. Pfunder:

I write to record my understanding, based upon our telephone conversation of August 14, that it is the staff's position that so long as companies will be filing premerger notification reports as to a merger or acquisition under the requirements of the Hart-Scott-Rodino Act, they need not also file letters of notification and reports as to such merger or acquisition under the Commission's existing notification requirements. I refer, of course, to transactions which are agreed on in principle before the effectiveness of the new regulations but which will not be consummated until after effectiveness. This interpretation sensibly avoids unnecessary and duplicative filings.



Edwin M. Zimmerman

Dear Mr. Zimmerman:

Your letter of August 15 gives me the opportunity to explain a couple of points which have been the subject of numerous telephone and letter inquiries over the past few weeks. I have taken the liberty of putting your letter and my response on the public record, in order to clarify the relationship between the Commission's existing premerger notification program and the new program which is to be implemented under Section 7A of the Clayton Act, as added by Section 201 of the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

The existing program, in its present form, dates back to 1974 (39 Federal Register 35717, October 3, 1974). That program required that certain mergers or acquisitions be reported to the Commission by filing of a letter of notification and one or more "Special Reports." In most situations covered by that program, each of the parties to a merger or acquisition was required to file a Special Report within ten days after reaching an agreement or understanding in principle to merge or to acquire assets or stock.

The Commission has recently amended its existing program to eliminate these requirements for any company (1) that files notification under Section 7A of the Clayton Act or (2) that is exempt from filing requirements under Section 7A or the rules implementing that section (43 Federal Register 28046, June 28, 1978). That amendment becomes effective on the effective date of the new premerger notification rules, which were published on July 31 (43 Federal Register 33450) and become effective on September 5, 1978 (see 43 Federal Register 34443). Promulgation of the new rules raises the question posed by your letter: must companies which are covered by and will be reporting under the new rules also file Special Reports under the existing program where an agreement or understanding in principle to merge or acquire is reached more than ten days prior to September 5, 1978?

Your letter of August 15 correctly summarizes the staff's position. While the existing program technically requires the filing of a Special Report in this situation, that filing would in our view unnecessarily duplicate the requirements of the new program. Reporting under the existing program is thus no longer required of any person who files under the new program. The only transactions which must still be reported under the Commission's 1974 program are (1) those which will be fully consummated before September 5, 1978 (because they will not be subject to the requirements of Section 7A), and (2) those which will be consummated on or after September 5,1978, are subject to the reporting requirements of Section 7A and the new premerger notification rules, and are not reported under the new program. In other words, on and after September 5, 1978, the existing premerger notification requirements will continue to apply only to those persons who are parties to transactions covered by the Hart-Scott-Rodino program but who, for whatever reason, decline to comply with the requirements of the new program.

Thank you for your inquiry.

Sincerely yours,


Malcolm R. Pfunder
Associate Director for Premerger Notification