Whether the Acquiring Person may have to report Related Purchases (i.e., whether the $10 million de minimis threshold is met) does not depend on the Target’s revenue generated from the services it offers, but on the amount spent by the Acquiring Person for the input product/service.
The Acquiring Person in your question may approach the Related Purchases section in a series of steps:
- First, the Acquiring Person determines whether it has any product, service, or asset (including data) that it incorporates as an input into any product or service and that it has purchased, licensed, or otherwise obtained in the most recent year (1) from the Target or (2) from any other business that, to the Acquiring Person’s knowledge or belief, competes with the Target to provide a substantially similar product, service, or asset.
- If none, the analysis is complete. Otherwise, continue to assess whether the de minimis threshold is met.
- For any product, service, or asset identified in step 1, the Acquiring Person next determines whether it spent at least $10 million in the most recent year on that product, service, or asset. Note: The amount spent by the Acquiring Person should reflect purchases from the Target and from suppliers other than the Target, as well as internal transfers, if applicable.
- If no, the analysis is complete and nothing needs to be reported.
- For products, services, or assets meeting the de minimis threshold in step 2, list and briefly describe them in the Form. In the Product, Service, or Asset Details section, provide the purchased amounts (in dollars) from (1) the Target and (2) any other business that, to the Acquiring Person’s knowledge or belief, competes with the Target to provide a substantially similar product, service, or asset.
- The purchased amounts reported in this section may or may not exceed $10 million.
- The Acquiring Person must also report information regarding its supplier(s) and purchase/licensing agreement(s) (as described in the Instructions).
Please remember that the Acquiring and Acquired Persons should not exchange information for the purposes of their responses to the Competition Descriptions section of the Form.
Question
This is a question about what constitutes a relevant “Supply Relationship” under the new HSR form requirements. Assume that, in a reportable transaction, the parties have some NAICS code overlaps and their filings will include the required information with respect to those overlaps. The Target also derives approximately $3 million in annual revenue from the sale of certain services under a non-overlapping NAICS code, and the Acquiring Person purchases similar services from suppliers other than the Target. The Acquiring Person does not know how much revenue those other suppliers derive from the sale of the services in question.
We believe that, since the Target derives less than $10 million in annual revenue from the sale of these services (and thus the transaction could not reasonably give rise to foreclosure or other non-horizontal concerns), the Acquiring Person may omit “Related Purchases” details with respect to these services. Please confirm our understanding is correct. Thank you.