Announced Action for June 29, 1999

The Premerger Notification Office (PNO) of the Federal Trade Commission, with the concurrence of the Antitrust Division of the Department of Justice have amended Formal Interpretation 15 of the Hart-Scott-Rodino Act, regarding the reportability of certain transactions involving the formation of Limited Liability Companies (LLCs).

The Formal Interpretation was first published on October 13, 1998 and, following modification in response to public comments, became effective March 1, 1999. Shortly after the Interpretation became effective, it became apparent that the Interpretation as it applies to transactions involving existing LLCs did not give clear guidance. The Amendments, published today in the Federal Register, are designed to remedy that situation by giving more complete guidance for transactions involving existing LLCs, consistent with the treatment of LLC formations adopted in the original Interpretation.

The Amended Formal Interpretation now makes more explicit that:

• The acquisition of an additional business by an existing LLC in a transaction in which the percent membership interest of at least one member changes will be treated as a new formation of the LLC. The reportability of such transactions is determined using the analysis of formations in the Interpretation;
• An acquisition of an additional business by an existing LLC in a transaction in which the membership interests of the members do not change is not analyzed as a new formation. Rather, such acquisitions are treated as acquisitions by the LLC or, if it is controlled, by its ultimate parent entity or entities;
• Acquisitions of assets not constituting a business, whether or not they involve a change in the percent membership interest of any member, are never treated as new formations, but as acquisitions of the assets by the LLC or, if it is controlled, by its ultimate parent entity or entities.

The Amended Formal Interpretation will become effective on July 1, 1999.

Copies of the Federal Register Notice are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.