Question
(redacted)
July 14, 1983
Re:Hart-Scott-Rodino Amendment
Proposed Exemption
Wayne Kaplan, Esq.
Premerger Notification Office
Room 301
Federal Trade Commission
seventh & Pennsylvania Avenues, N.W.
Washington, D.C. 20580
Dear Mr. Kaplan:
The purpose of this letter is to confirm our telephone
conversation of July 13, 1983, concerning the proposed
transaction described below, and the applicability of the
exemptions from the Hart-Scott-Rodino Amendment to the
proposed transaction.
FACTUAL BACKGROUND
Our client (hereinafter referred to as the acquiring
company) is a holding company which controls, through
ownership of stock, two motor carriers holding authority
from, and subject to the jurisdiction of, the Interstate
commerce Commission (ICC). The acquiring company proposes
to purchase all of the issued and outstanding stock of
another corporation (hereinafter referred to as the acquired
company) which controls, through stock ownership, a motor
carrier and tow freight forwarders, all of which hold autho-
rity from, and are subject to the jurisdiction of, the ICC.
The acquiring company, the acquired company and the
shareholders of the acquired company have entered into an
agreement for the purchase by the acquiring company of all
the issued and outstanding shares of capital stock of the
acquired company, the agreement contains provisions which
make consummation of the transaction contingent upon the
exemption, or if required, the prior approval of the trans-
action by the ICC and any other necessary regulatory agencies.
APPLICABLE LAW
The parties have acknowledged that the proposed trans-
action is subject tot he jurisdiction of the ICC pursuant
to 49 U.S.C. 11341, et seq., and is the type of transaction
which is subject to ICC approval under 49 U.S.C. 11343 and
11344. However, the Bus Regulatory Reform Act of 1982, (the
Bus Act) P.L. No. 97-261, which was passed by Congress on
August 20, 1982, and signed into law by President Reagan on
September 20, 1982, gave the ICC the powers to exempt cer-
tain transactions form ICC approval. The aforesaid exempt-
tion powers have been incorporated into the Interstate Com-
merce Act at 49 U.S.C. 11343(e).
Under 49 U.S.C. 11343 (a), as amended by the Bus Act,
an entity participating in a transaction approved or exempted
by the ICC is exempt from the antitrust laws.
As you know, the Hart-Scott-Rodino Amendment, 15 U.S.C.
18(a) establishes requirement for notification to the Fed-
eral Trade Commission (FTC) and the Assistant Attorney
General in charge of the Antitrust Division of the Department
of Justice (hereinafter referred to as the Attorney General)
and for a waiting period, applicable to certain acquisitions
of voting securities or assets. The requirements for the
applicability of these provisions are set forth in 49 U.S.C.
18(a) which, for the purposes of this letter, we shall
assume are applicable to the transaction described herein.
Under 15 U.S.C. 18a(c), certain transactions are
exempt from the requirements of the Hart-Scott-Rodino Amend-
ment. Subsection (5) thereof exempts transactions which are
specifically exempted from the antitrust laws by Federal
statue. Subsection (6) thereof exempts transactions which
are exempt from the antitrust laws by Federal statute if
approved by a Federal agency. The latter provision requires
that copies of all information and documentary material filed
with the Federal agency be contemporaneously filed with the
FTC and the Attorney General.
Copies of the statuary provision cited above are
attached hereto for ease of reference.
DISCUSSION
The parties to the proposed transactions have filed with
the ICC a petition for exemption pursuant to 49 U.S.C
11343(e). The petition contains all of the information re-
quired by the regulations enacted by the ICC pursuant to the
aforesaid provision, and requests that the ICC find that
the proposed transaction is exempt from the merger, consoli-
ation, and acquisition of control provisions for the rea-
son that the requirement of 49 U.S.C. 11343(e)(1)(A) and
(b) are satisfied. This would require a finding by the ICC
that the application of such provisions is not necessary to
carry out the national transportation policy (49 U.S.C.
10101), and either that the transaction is of limited
scope, or that the application of such provisions is not
needed to protect shippers from the abuse of market power.
It is anticipated that the petition will be granted
and that the ICC will determine that the proposed transaction
is exempt from the approval requires of 49 U.S.C.
11343 and 11344. If the petition is granted and the ICC
determines that the transaction is exempt, the exemption
from the antitrust laws contained in 49 U.S.C. 11343 (a)
will apply, even though the transaction has been exempted
rather than approved by the ICC.
Alternatively, if such position is denied, resulting in
an ICC determination that the transaction is not exempt, the
parties will be required to proceed to seek the approval of
the proposed transaction by the ICC pursuant to 49 U.S.C.
11343 and 11344. In the event that such approval is
obtained, the antitrust exemption of 49 U.S.C. 11343 (a)
would still be applicable, but in this case the exemption
would be based upon the fact that the transaction had been
approved by the ICC.
In either event, the transaction would be exempt from
the notification and waiting period requirement of 15 U.S.C.
18a(a) pursuant to the exemptions under 15 U.S.C. 18a(c)(5)
or (6). If, as is anticipated, the ICC determined that the
transaction is exempt from the requirement of ICC approval
pursuant to 49 U.S.C. 11343 (e), the transaction would be
exempt from the requirements of the Hart-Scott-Rodino Amend-
ment pursuant to 18a(c)(5).
If, on the other hand, the ICC determines that the
transaction is not exempt, and it becomes necessary to obtain
the approval of the transaction by the ICC, the applicable
exemption from the Hart-Scott-Rodino Amendment would be
49 U.S..C. 18a(c)(6).
In either event, it would not be necessary to comply
with the notification and waiting period requirements of
the Hart-Scott-Rodino Amendment, since the transaction
would be exempt. If, however, the transaction must be
approved by the ICC in order to trigger the applicability
of the exemption from the antitrust laws. 15 U.S.C.
18a(c)(6) would require the copies of the application for
approval and all related documents filed with the ICC be
contemporaneously file with the FTC and the Attorney General.
CONCLUSION
Based upon the foregoing, our understanding of you
position with respect to the applicability of the provisions
of 15 U.S.C. 18a it this transaction may be summarized as
follows:
1. The parties have petitioned the ICC for a deter-
mination that the transaction is exempt from approval by
the ICC. If the ICC issues an order exemption the trans-
action from ICC regulations, the antitrust exemption would
become operative without the ICC having approved the
transaction and no documents need be filed with the FTC or
the Attorney General pursuant to 15 U.S.C. 18a.
2. In the event that the petition for exemption is
denied, so that the applicability of the antitrust exemption
would be dependent upon approval of the transaction by the
ICC, upon the filing of such applications for approval with
the ICC, it would be necessary to contemporaneously file
such application for approval and related materials with
FTC and the Attorney General, pursuant to 15 U.S.C. 18a(c)(6).
3. Assuming that the ICC either exempts the transaction
pursuant to 49 U.S.C. 11343(e), or approves the transaction
pursuant to 49 U.S.C.11343 and 11344, the antitrust exemp-
tion set forth in 49 U.S.C.11341(a) will be applicable, and
it will not be necessary to comply with the notification and
waiting period requirements of the Hart-Scott-Rodino Amend-
ment contained at 15 U.S.C. 18a.
We understand that if the conclusion set forth herein
are not a correct statement of the applicable law in any
respect, that you will contact us promptly. If we do not
hear from you, we shall advise our client to proceed to act
on the basis of the conclusions stated herein.
Thank you for your cooperation and prompt attention to
this matter.
Sincerely yours,
(Redacted)
(redacted)
[duplicate letter]
[statuary provision cited - not transcribed]