Premerger Notification; Reporting and Waiting Period Requirements, 42471-42502 [2011-17822]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 76, Number 138 (Tuesday, July 19, 2011)]
[Rules and Regulations]
[Pages 42471-42502]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-17822]


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FEDERAL TRADE COMMISSION

16 CFR Parts 801, 802 and 803

RIN 3084-AA91


Premerger Notification; Reporting and Waiting Period Requirements

AGENCY: Federal Trade Commission.

ACTION: Final rule.

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SUMMARY: The Federal Trade Commission (``Commission'' or ``FTC'') is 
amending the Hart-Scott-Rodino (``HSR'') Premerger Notification Rules 
(the ``Rules''), the Premerger Notification and Report Form (the 
``Form'') and associated Instructions in order to streamline the Form 
and capture new information that will help the FTC and the Antitrust 
Division, Department of Justice (together the ``Agencies'') conduct 
their initial review of a proposed transaction's competitive impact. 
The FTC is making substantive and ministerial revisions, deletions and 
additions to streamline the Form and make it easier to prepare while 
focusing the Form on those categories of information the Agencies 
consider necessary for their initial review. The FTC is also amending 
certain Rules and parts of the Form and Instructions, as well as adding 
Items 4(d), 6(c)(ii) and 7(d), in order to capture additional 
information that would significantly assist the Agencies in their 
initial review. Finally, minor changes are being made to address minor 
omissions from the FTC's 2005 rulemaking involving unincorporated 
entities and to remove the reference to the 2001 transition period.

DATES: These final rules are effective August 18, 2011.

FOR FURTHER INFORMATION CONTACT: Robert L. Jones, Deputy Assistant 
Director, Premerger Notification Office, Bureau of Competition, Room H-
303, Federal Trade Commission, Washington, DC 20580, (202) 326-3100, 
rjones@ftc.gov.

SUPPLEMENTARY INFORMATION:

Statement of Basis and Purpose

    Section 7A of the Clayton Act (the ``Act'') requires the parties to 
certain mergers or acquisitions to file with the Agencies and to wait a 
specified period of time before consummating such transactions. The 
reporting requirement and the waiting period that it triggers are 
intended to enable the Agencies to determine whether a proposed merger 
or acquisition may violate the antitrust laws if consummated and, when 
appropriate, to seek a preliminary injunction in federal court to 
prevent consummation, pursuant to Section 7 of the Act.
    On August 13, 2010, the Commission made a Notice of Proposed 
Rulemaking and Request for Public Comment available on its Web site, 
and it was published in the Federal Register on September 17, 2010.\1\ 
The comment period closed on October 18, 2010. The Proposed Rules 
recommended improvements and updates to the HSR Form and associated 
Instructions as well as amendments in 16 CFR parts 801, 802 and 803 of 
the Rules.
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    \1\ 75 FR 57110 (September 17, 2010).
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    The Commission received eleven public comments addressing the 
Proposed Rules. The comments are published on the FTC Web site at 
https://www.ftc.gov/os/comments/hsr/index.htm.
    The following submitted public comments on the Proposed Rules:

1. Caterpillar, Inc. (Howrey LLP, Paul C. Cuomo) (10/18/2010)
2. The Private Equity Growth Capital Council (10/18/2010)
3. Willkie Farr & Gallagher LLP (Theodore C. Whitehouse) (10/18/2010)
4. Cooley LLP (Francis M. Fryscak and M. Howard Morse) (10/18/2010)
5. Skadden, Arps, Slate, Meagher & Flom LLP (Neal R. Stoll, Steven C. 
Sunshine and Matthew P. Hendrickson) (10/18/2010)
6. Howrey LLP (Jacqueline I. Grise, Michael W. Jahnke, Paul C. Cuomo, 
Chris P. Cooper and Victor Cohen) (10/18/2010)
7. International Chamber of Commerce Commission on Competition (10/18/
2010)
8. Securities Industry and Financial Markets Association (Sean C. Davy) 
(10/18/2010)
9. BUSINESSEUROPE, Grocery Manufacturers Association, National 
Association of Manufacturers, The Pharmaceutical Research and 
Manufacturers of America, U.S. Chamber of Commerce (10/18/2010)
10. Wachtell, Lipton, Rosen & Katz on behalf of Alcoa Inc., Bank of 
America Corporation, BB&T Corporation, ConocoPhillips, Harmon 
International Industries, Incorporated, IAC/Interactive Corporation, 
JPMorgan Chase & Co., Nustar Energy L.P., NYSE Euronext, PPG 
Industries, Inc., Qwest Communications International, Inc., Sigma-
Aldrich Corporation, The Valspar Corporation, United Rentals, Inc., 
Valero Energy Corporation, Wells Fargo & Company (10/18/2010)

[[Page 42472]]

11. Sections of Antitrust Law and International Law, American Bar 
Association (10/15/10)

    The Commission proposed ministerial changes in Items 1 through 3 in 
order to make the Form easier to use, as well as the revision or 
deletion of many items, such as Items 2(e), 3(b), 3(c), 4(a), 4(b), 
5(a), 5(b)(i), 5(b)(ii), 5(d), 6(a), and 6(b), which currently ask for 
information that the Agencies no longer consider necessary for their 
initial review. There were no adverse comments received on these 
amendments, therefore, the Commission adopts the changes as proposed. 
The Commission also proposed amending certain Rules and parts of the 
Form and Instructions, such as Items 2(d), 5(c) and 8 in order to 
capture additional information (such as current year revenues by 10 
digit NAICS product code) that would significantly assist the Agencies 
in their review. There were also no adverse comments received on these 
revisions and they are adopted as proposed. In addition, there were no 
adverse comments received on the proposed minor changes to Sec. Sec.  
801.1,\2\ 801.15, 801.30, 802.4, 802.21, 802.52, 803.2 and 803.5, and 
these changes are also adopted as proposed.
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    \2\ These minor changes to Sec.  801.1 do not relate to the 
definition of associate.
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    The Commission did, however, receive substantive objections or 
criticisms regarding three proposed changes that commenters found to be 
overly burdensome additions: Item 4(d), which requires the submission 
of certain documents separate from those required by Item 4(c); changes 
to Item 5 requiring the reporting of North American Industry 
Classification System (``NAICS'') product code information for products 
manufactured outside of the U.S. and sold into the U.S.; and changes to 
Items 6(c) and 7 to require the submission of information on the 
holdings of associates that overlap with the entity(s) or assets that 
are being acquired. These comments and the Commission's response to 
them are discussed more fully below.

Part 801--Coverage Rules

801.1(d)(2) Associate

    An acquiring person is required to provide information in its 
notification with respect to all entities included within it at the 
time of filing. In some instances, particularly with families of 
investment funds, entities that are commonly managed with the acquiring 
person are not included because these ``associated'' entities are not 
controlled, as defined in Sec.  801.1(b) of the Rules, by the acquiring 
Ultimate Parent Entity (``UPE''). As a result, the Agencies do not 
receive the information they need to get a complete picture of 
potential antitrust ramifications of an acquisition. This scenario 
arises frequently in the energy industry with Master Limited 
Partnerships, where competitive overlaps among limited partnerships 
(``LPs'') with the same general partner may go undetected.
    To capture information on overlaps between entities commonly 
managed with the acquirer and the target, the Commission proposed three 
changes: introducing and defining the term associate, creating Item 
6(c)(ii), and revising Item 7 to require the submission of information 
on minority and controlling interests of associates that overlap with 
the entity(s) or assets that are being acquired.
    The Commission received six comments regarding the proposed 
definition of associate and its application to proposed Items 6(c)(ii) 
and 7. The comments generally focused on two concerns: the definition 
of associate as too vague and overly broad, and the burden of compiling 
the information required by Items 6(c)(ii) and 7 regarding the holdings 
of associates that overlap with the target, particularly minority 
holdings. Both will be discussed below.

Section 801.1(d)(2): Definition of Associate

    The Commission proposed the term ``associate'' in new Sec.  
801.1(d)(2) to define entities under common management with the 
acquiring person, but not controlled by the acquiring person. The 
proposed definition reads:

    Associate. For purposes of Items 6(c) and 7 on the Form, an 
associate of an acquiring person shall be an entity that is not an 
affiliate of such person but: (A) Has the right, directly or 
indirectly, to manage, direct or oversee the affairs and/or the 
investments of an acquiring entity (a ``managing entity''); or (B) 
has its affairs and/or investments, directly or indirectly, managed, 
directed or overseen by the acquiring person; or (C) directly or 
indirectly, controls, is controlled by, or is under common control 
with a managing entity; or (D) directly or indirectly, manages, 
directs or oversees, is managed by, directed by or overseen by, or 
is under common management with a managing entity.

    Comments 2, 6, 9 and 11 stated that the definition of associate as 
proposed was not only overly broad, but was also unduly complex and 
confusing. Comment 2 stated that the phrase ``the right, directly or 
indirectly, to manage, direct or oversee'' affairs of the acquiring 
entity was so expansive as to provide little guidance regarding the 
relationships to be covered. Comment 6 noted that the definition as 
proposed was not limited to entities subject to common investment 
management, but also included entities that were subject to a common 
ability to ``direct and oversee the affairs'' of other entities. 
Comment 9 also addressed the potentially broad scope of the term 
``oversee.'' Comment 11 recommended that the Commission consider 
limiting associates to master limited partnerships and private equity 
funds.
    Comments 7 and 9 stated that the control rules provided well 
understood and easily applied guidance as to the scope of HSR filings. 
Comment 7 stated that requiring filers to determine which entity might 
be an associate would increase the complexity, burden and expense of 
HSR filings. Both recommended that the Commission reconsider requiring 
information on associates.
    To address these concerns, the Commission has refined the 
definition of associate. The Commission's purpose in requiring 
information on associates is to be able to analyze the holdings of 
entities that are under common investment or operational management 
with the person filing notification. The term is not intended to 
include entities that are under other forms of common management or 
direction. To clarify this, the definition of associate has been 
revised to eliminate the terms ``direct'', ``oversee'' and ``affairs'' 
from the rule. Any examples that contain these terms have also been 
revised. Additional examples have also been added to clarify the 
definition.
    The Commission is unwilling to limit the definition to master 
limited partnerships and private equity funds, as suggested by Comment 
11. New types of entities that are not master limited partnerships or 
private equity funds may emerge in the future, and the Commission does 
not want to limit the information it would receive about these entities 
as a result. The Commission believes that the changes to the definition 
of associate clarify its intent and reduce the burden of identifying 
associates.
    The new definition of associate reads as follows:

    Associate. For purposes of Items 6 and 7 of the Form, an 
associate of an acquiring person shall be an entity that is not an 
affiliate of such person but: (A) has the right, directly or 
indirectly, to manage the operations or investment decisions of an 
acquiring entity (a ``managing entity''); or (B) has its operations 
or investment decisions, directly or indirectly, managed by the 
acquiring person; or (C) directly or indirectly controls, is 
controlled by, or is under common control with a managing entity; or 
(D) directly or indirectly manages, is managed by, or is under 
common operational

[[Page 42473]]

or investment management with a managing entity.

Items 6(c) and 7

    The Commission proposed adding Item 6(c)(ii) to require an 
acquiring person to report, based on its knowledge or belief, all of 
its associates' holdings of voting securities and non-corporate 
interests of 5 percent or more but less than 50 percent in the acquired 
entity(s) and in entities having 6-digit NAICS industry code overlaps 
with the acquired entity(s) or assets.
    The Commission also proposed amending the instructions to Item 7 as 
follows:

    Item 7(a) to require reporting any 6-digit NAICS industry code 
in which the acquiring person, or any associate of the acquiring 
person, derives revenues and in which the acquired entity(s) or 
assets also derive revenues;
    Item 7(b)(i) to require reporting the name of any entity(s) 
controlled by the acquiring person that derived revenues in the 
overlapping 6-digit NAICS code in the most recent fiscal year and 
Item 7(b)(ii) to require reporting the name of any entity(s) 
controlled by an associate of the acquiring person that derived 
revenues in the overlapping 6-digit NAICS code in the most recent 
fiscal year; and
    Item 7(c) to require reporting the geographic information for 
any entity(s) controlled by the acquiring person that derived 
revenues in the overlapping NAICS code in the most recent fiscal 
year.
    Item 7(d) to require reporting the geographic information for 
any entity(s) controlled by an associate of the acquiring person 
that derived revenues in the overlapping NAICS code in the most 
recent fiscal year.

    The comments focused on Item 6(c)(ii), citing Item 7 only in 
reference to Item 6(c)(ii), and addressed the burden of gathering the 
information required by Item 6(c)(ii).\3\ Comment 5 stated that the 
request in Item 6(c)(ii) to provide information on minority holdings of 
associates that overlap with the acquired assets or entity(s) exceeded 
reasonable expectations about the type of information that an acquiring 
person can obtain when it does not have possession or control of the 
requested data and does not maintain the data in the ordinary course of 
its business. In the same vein, Comment 6 contended that the specific 
requirements of Item 6(c)(ii) imposed a disproportionate burden on 
filing parties regardless of the benefit to the Agencies. Comment 11 
stated that the breadth of Item 6(c)(ii) could create a significant 
additional burden on a filing party, while providing the Agencies with 
little additional useful information. It claimed that, as written, this 
item required a filing party to report minority holdings of minority 
holdings, and suggested limiting Item 6(c)(ii) to holdings of 
associates of interests in the target company rather than including 
holdings of other entities that overlap with the target.
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    \3\ Comment 5 stated that the problems with collecting 
information for associates that are identified for Item 6(c)(ii) are 
equally applicable to Item 7.
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    The purpose of Item 6(c)(ii) is not to obtain information on 
``minority holdings of minority holdings'' as Comment 11 suggested, but 
to receive information on competitively relevant minority holdings of 
entities that are under common investment or operational management 
with the acquiring person. For the Agencies, there is clear utility to 
having the HSR filing contain information regarding the acquiring 
person's associates' minority holdings in competitors of the target. As 
such, limiting the response for Item 6(c)(ii) only to holdings of 
associates in the acquired entity(s), as suggested by Comment 11, is 
too narrow. Take, for instance, a transaction in which Pharma Fund A is 
acquiring 100 percent of the voting securities of Acquired Pharma Corp. 
Pharma Fund A does not have holdings in any competitors of Acquired 
Pharma Corp, but four associates of Pharma Fund A (Pharma Funds B-E) 
each hold 15 percent of Pharma Competitor. The Agencies would certainly 
benefit from knowing that the funds under common management hold an 
aggregate controlling interest in a competitor. The Agencies, however, 
may have no other realistic means of learning about the holdings of 
Pharma Funds B-E, particularly if Pharma Competitor is not publicly 
traded, making it very difficult to find this information through 
public sources. Item 6(c)(ii) as proposed requires the disclosure of 
the holdings of Pharma Funds B-E.
    Item 6(c)(ii) would also provide very useful information to the 
Agencies in transactions involving the intricate structures that often 
characterize Master Limited Partnerships. For example, consider a 
transaction in which Pipeline MLP A is acquiring 100 percent of 
Acquired Pipeline Corp., and Pipeline MLP A's general partner is 
Pipeline GP, which is also the general partner of Pipeline MLP B and 
Pipeline MLP C, neither of which holds a minority interest in Acquired 
Pipeline Corp. or a controlling interest in a competitor of Acquired 
Pipeline Corp. Thus, Pipeline MLP B and Pipeline MLP C would not be 
identified in either Item 6(c)(ii) or Item 7 under Comment 11's 
proposal. Pipeline MLP B and Pipeline MLP C each indirectly hold a 45 
percent interest in Competing Pipeline Co., a direct competitor of 
Acquired Pipeline Corp., through a number of intermediate entities. The 
Agencies clearly would be interested in these minority holdings in this 
fairly typical scenario in the oil and gas industry, but might have 
trouble identifying the relationship as a result of the number of 
layers between the top level entity and the competitor at the bottom of 
the structure. Item 6(c)(ii) requires the disclosure of the holdings of 
Pipeline MLP B and Pipeline MLP C. As these examples illustrate, Item 
6(c)(ii) provides the Agencies with a much clearer picture of the 
competitive impact in transactions involving families of private equity 
funds or master limited partnerships.
    The Commission acknowledges that some filing parties may face an 
increase in burden the first time they respond to Item 6(c)(ii) but 
believes that thereafter, the burden should be largely limited to 
keeping responsive information current. Further, it believes the burden 
of responding to Item 6(c)(ii) does not outweigh the benefit to the 
Agencies. An acquiring person must look beyond the concept of control 
to determine whether it has entities that are under common investment 
or operational management with the acquiring person. The general 
partner makes investment or operational decisions for its managed 
limited partnerships and should therefore have access to information on 
the holdings of the other managed limited partnerships for the purposes 
of responding to Item 6(c)(ii).
    Further, the Commission notes that Item 6(c)(ii) provides 
mechanisms for limiting the potential burden. For instance, if an 
acquiring person cannot provide information on the minority holdings of 
its associates in response to Item 6(c)(ii) at the NAICS-code level, it 
could opt to respond on the basis of industry. That is, instead of 
providing a list of its associates' minority holdings based on an 
overlapping NAICS code with the target, the acquiring person could 
provide a list of its associates' minority holdings that fall into the 
same industry as the target, such as pharmaceuticals, mining, 
healthcare, etc.
    Item 6(c)(ii) also allows the acquiring person to respond to Item 
6(c)(ii) by listing all the minority holdings of its associates. This 
is intended to provide an option for an acquiring person that, despite 
its best efforts, cannot obtain more granular information about the 
minority holdings of its associates. The Commission notes that if an 
acquiring person responds by listing all holdings in Item 6(c)(ii), 
whether overlapping or not, the review of the filing could be

[[Page 42474]]

delayed and the parties may be more likely to receive follow up 
requests from staff to obtain the information. It is thus in the best 
interests of the acquiring person to limit the list of minority 
holdings in Item 6(c)(ii) to those that overlap with the acquired 
entity(s) or assets, even if only by industry, to allow the Agencies to 
conclude quickly whether the acquisition may be competitively 
problematic because of these holdings.
    The Commission has made one additional change to Item 6(c) to 
attempt to mitigate further the burden on persons who must respond to 
this item. The person filing notification may rely on its regularly 
prepared financials that list investments and the regularly prepared 
financials of its associates that list investments to respond to Items 
6(c)(i) and (ii), provided the financials are no more than three months 
old.\4\ Many investment funds routinely prepare such documents on a 
quarterly basis, and this change allows acquiring persons to rely on 
documents prepared in the ordinary course to gather the information 
necessary to respond to Items 6(c)(i) and (ii). If the acquiring person 
and its associates make quarterly filings concerning their investments 
in publicly traded companies with the Securities and Exchange 
Commission (``SEC''), those lists can be relied on to gather the 
information necessary to respond to Items 6(c)(i) and (ii) with respect 
to publicly traded companies, as long as they are no more than three 
months old. Of course, acquiring persons must still report in Items 
6(c)(i) and (ii) their holdings of non-publicly traded companies.
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    \4\ This approach does not apply to the response required with 
regard to associates in Item 7. Item 7 deals with controlled 
entities and the information required by Item 7 should therefore be 
easier to obtain.
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    In summary, the Commission believes that the benefits of Item 6(c) 
and Item 7, as revised, to the Agencies with regard to information on 
associates outweigh the additional burden on certain acquiring persons 
of providing the information. Consequently, the Commission promulgates 
Items 6(c)(i) and 6(c)(ii), with the aforementioned allowance for 
relying on financial statements and SEC documents, and Item 7, as 
proposed. The caveats in the language in the instructions to Items 
6(c)(i) and 6(c)(ii) that the information be provided based on the 
knowledge or belief of the acquiring person should ease concerns on 
certification of the Form. If the information is completely 
unobtainable the acquiring person can rely on a statement of reasons 
for noncompliance.\5\
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    \5\ 16 CFR 803.3.
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Item 4

Item 4(d): Additional Documents

    In proposing Item 4(d), the Commission noted that certain 
categories of documents are quite useful for the Agencies' initial 
substantive analysis of transactions but were not always provided 
because parties have differing interpretations as to whether they were 
called for under current Item 4(c). The Commission proposed new Item 
4(d) to enumerate these discrete categories of documents and require 
their submission with the Form.
    In expressing concerns regarding proposed Item 4(d), all of the 
comments raised the overarching issue of the relationship of proposed 
Item 4(d) to Item 4(c). Item 4(d) is indeed closely related to Item 
4(c), as is evident in the language of Item 4(d) which closely 
parallels the language of Item 4(c). But Item 4(d) seeks different 
documents from those covered by the language of Item 4(c) as will be 
more fully discussed below.

Item 4(d)(i): Offering Memoranda

    Proposed Item 4(d)(i) required filing parties to provide all 
offering memoranda (or documents that served that function) that 
reference the acquired entity(s) or assets produced up to two years 
before the date of filing.
    With the exception of Comments 5 and 8, the comments suggested that 
proposed Item 4(d)(i) uses, in the words of Comment 3, ``ambiguous and 
overbroad language.'' For instance, the requirement that materials 
responsive to Item 4(d)(i) ``reference'' the acquired entity(s) or 
assets and documents that ``serve the function of''an offering 
memorandum were imprecise and as drafted could lead to the production 
of a large of amount of documents in response to Item 4(d)(i). Comments 
1, 2, 6, 7, 10, and 11 expressed concern that the Item 4(d)(i) 
requirement was not limited to the evaluation or analysis of the 
acquisition, as is the language of Item 4(c). Comments 1, 2, 3, 6, 10 
and 11 suggested that a limitation such as the one in Item 4(c) 
involving only materials prepared by or for any officer(s) or 
director(s) (or, in the case of unincorporated entities, individuals 
exercising similar functions) would be helpful in guiding responses to 
Item 4(d)(i). Comments 1, 2, 3, 4, 6, 7 and 11 expressed the related 
concern that searching beyond the team of people aware of the 
transaction would compromise the confidentiality of the transaction. 
Finally, Comments 1, 2, 9 and 11 stated that the 2-year time frame in 
Item 4(d)(i) was too long to provide a useful limitation on this item.
    In proposing Item 4(d)(i), the Commission intended to capture 
offering memoranda. These are formal documents created in-house or by a 
third party that lay out the details of a company, or a part of a 
company, that is for sale. The Commission intends to reach in Item 
4(d)(i) what comment 10 termed ``transaction-specific marketing 
presentation[s]'' because they are invaluable to staff in their initial 
analysis. In order to make the parameters of this item more clear, the 
Commission uses the term ``Confidential Information Memoranda'' instead 
of the broader term ``offering memoranda.'' Many filing parties already 
submit Confidential Information Memoranda because these documents often 
contain a section on the industry or competitive landscape and thus 
fall within the requirements of Item 4(c). But, in cases where they do 
not, the in-depth overview of the business, even without competition-
related content, is still immensely helpful to staff in understanding 
the companies and products involved in a transaction.
    Confidential Information Memoranda are useful even though, 
arguably, there may be no ``acquisition'' at the time they are 
prepared. Item 4(c) requires the submission of all studies, surveys, 
analyses and reports prepared by or for any officer(s) or director(s) 
(or, in the case of unincorporated entities, individuals exercising 
similar functions) for the purpose of evaluating or analyzing the 
transaction with respect to market shares, competition, competitors, 
markets, potential for sales growth or expansion into product or 
geographic markets. Leaving out of the language of Item 4(d)(i) the 
Item 4(c) requirement that responsive materials evaluate or analyze 
``the acquisition'' addresses the fact that some parties have relied on 
the transaction-specific language of Item 4(c) when not submitting 
Confidential Information Memoranda.
    The comments expressed concern that without the requirement that 
responsive materials evaluate or analyze the transaction, the scope of 
what was required by Item 4(d)(i) was too broad. In response to this 
concern, the Commission can provide a more precise parameter than 
``some reference to the acquired entity(s) or assets.'' The Commission 
intends to capture materials that provide an in-depth overview or 
analysis of the entities or assets that are for sale, not just those 
materials that contain a passing

[[Page 42475]]

reference to them. To make this intent clear, the language in Item 
4(d)(i) has been changed to adopt in part the language proposed by 
Comment 4, namely to capture those Confidential Information Memoranda 
that ``specifically relate to the sale of the acquired entity(s) or 
assets.''
    Comment 4 also suggested narrowing proposed Item 4(d)(i) to ``those 
separate presentations [that] would have been responsive to Item 4(c) 
if they had been prepared for the filed-for transaction.'' The problem 
with this language is that it requires competition-related content. As 
discussed above, the underlying rationale behind Item 4(d)(i) is that 
Confidential Information Memoranda are always helpful, and so Item 
4(d)(i) requires their submission regardless of the presence of 
competition-related content.
    Comments 1, 2, 3, 4, 5, 10 and 11 expressed concern that proposed 
Item 4(d)(i) was not limited to officers and directors. The Commission 
does not intend to reach those Confidential Information Memoranda, as 
stated in Comment 1, received by ``any employee within the company 
regardless of their location or involvement in a particular 
transaction.'' Instead, the Commission intends to reach those 
Confidential Information Memoranda prepared in the specific 
contemplation of a sale. In reality, an officer or director would 
likely be informed of the internal or external drafting of such a 
memorandum. The easiest way to clarify the Commission's intent is by 
adopting the suggestion in the comments that a limitation involving 
officer(s) or director(s) be added to Item 4(d)(i). As such, the 
Commission is promulgating Item 4(d)(i) with a requirement that 
responsive documents must have been prepared by or for any officer(s) 
or director(s) or, in the case of unincorporated entities, individuals 
exercising similar functions. Further, the Commission limits this 
requirement to any officer(s) or director(s) or, in the case of 
unincorporated entities, individuals exercising similar functions, of 
the Ultimate Parent Entity of the Acquiring or Acquired Person and/or 
any officer(s) or director(s) or, in the case of unincorporated 
entities, individuals exercising similar functions, of the Acquiring or 
Acquired Entity(s). These changes also address the concerns raised by 
many of the comments that gathering documents responsive to Item 
4(d)(i) could compromise the confidentiality of the transaction.
    Comment 10 suggested that this item be limited to ``offering 
memoranda prepared for the purpose of evaluating or analyzing the 
transaction and which were shared with prospective buyers.'' Sellers 
will sometimes create a Confidential Information Memorandum and, for 
one reason or another, it does not end up being shared with the 
eventual buyer. This, if the Commission limited Item 4(d)(i)'s 
requirement to submit Confidential Information Memoranda to only those 
given to the buyer, in some cases, no Confidential Information 
Memorandum would be submitted even though one was created. This is 
counter to the rationale behind Item 4(d)(i). Under Item 4(d)(i), if 
the eventual buyer did not receive a copy of the Confidential 
Information Memorandum, but one was prepared, that Confidential 
Information Memorandum must be submitted with the Acquired Person's 
filing.
    Comments 1, 2, 3, 6, 7, 9, 10, and 11, expressed concern about the 
exact definition of ``documents serving the same function as an 
offering memorandum.'' As a starting point, if there was a Confidential 
Information Memorandum prepared, filing parties do not need under Item 
4(d)(i) to supply documents that served the purpose of a Confidential 
Information Memorandum. The Commission intends to capture only those 
situations in which no Confidential Information Memorandum was 
prepared, but the seller has a pre-existing presentation containing an 
overview of the company that was given to any officer(s) or director(s) 
of the buyer as an introduction to the company. In this case, the 
presentation effectively serves the purpose of a Confidential 
Information Memorandum in an instance in which no Confidential 
Information Memorandum was prepared. Filing parties often submit such 
documents when no Confidential Information Memorandum was prepared, and 
the Commission does not seek any other category of materials in 
response to this item. For instance, the Commission does not intend 
this item to require ordinary course documents and/or financial data 
shared in the course of due diligence, except to the extent that such 
materials are shared with the buyer specifically to serve the purpose 
of a Confidential Information Memorandum when no Confidential 
Information Memorandum was prepared. Unlike the case of Confidential 
Information Memoranda, a document that served the purpose of a 
Confidential Information Memorandum will only be responsive to Item 
4(d)(i) if it was given to the buyer (and a Confidential Information 
Memorandum was not). The instructions to Item 4(d)(i) outline these 
specifics.
    Many filing parties already submit materials responsive to Item 
4(d)(i) based on longstanding informal interpretations that 
Confidential Information Memoranda should be submitted as Item 4(c) 
documents. However, parties have sometimes excluded these documents on 
the grounds that they were not prepared for the purpose of evaluating 
or analyzing the acquisition or did not contain competition-related 
content. Item 4(d)(i) is intended to make clear that Confidential 
Information Memoranda must be submitted in response to Item 4(d)(i). 
The Commission intends Items 4(c) and 4(d) to complement one another. 
For instance, if a filing party includes a document responsive to Item 
4(d)(i) with its HSR filing, it need not submit that document 
separately in response to Item 4(c).
    The comments raised concerns about the length of the proposed two 
year time period applicable to proposed Item 4(d)(i). Although such a 
timeframe is consistent with the specified ``relevant time period'' of 
two years as applicable to second requests in the 2006 merger process 
reforms,\6\ the Commission believes that, as applied to the documents 
required by Item 4(d)(i), a period of one year is more appropriate. 
Confidential Information Memoranda are typically drafted within this 
shorter timeframe and arguably are more useful to staff if they are 
more recent. The instructions to Item 4(d)(i) have been changed to 
reflect the one year time period.\7\
---------------------------------------------------------------------------

    \6\ See REFORMS TO THE MERGER REVIEW PROCESS (p.19) announced by 
then Chairman Deborah Platt Majoras on February 16, 2006. https://www.ftc.gov/os/2006/02/mergerreviewprocess.pdf and https://www.justice.gov/atr/public/press_releases/2006/220302.htm.
    \7\ The one year time limit applicable to materials responsive 
to Items 4(d)(i) and 4(d)(ii) does not apply to materials responsive 
to Item 4(c); Item 4(c) has no specific timeframe.
---------------------------------------------------------------------------

    In summary, the Commission is promulgating Item 4(d)(i) using the 
term ``Confidential Information Memoranda'' instead of ``Offering 
Memoranda'' and with the clarification that this item requires only 
those Confidential Information Memoranda that ``specifically relate to 
the sale of the acquired entity(s) or assets'' and that were prepared 
by or for any officer(s) or director(s) or, in the case of 
unincorporated entities, individuals exercising similar functions, of 
the Ultimate Parent Entity of the Acquiring or Acquired Person and/or 
any officer(s) or director(s) or, in the case of unincorporated 
entities, individuals exercising similar functions, of the Acquiring or 
Acquired Entity(s) within one year of filing. In addition, the 
Commission requires the submission of

[[Page 42476]]

documents that served the function of a Confidential Information 
Memorandum only when given to the buyer in situations in which no such 
Confidential Information Memorandum exists.

Item 4(d)(ii): Materials Prepared by Investment Bankers, Consultants or 
Other Third Party Advisors

    Proposed Item 4(d)(ii) required filing parties to provide all 
studies, surveys, analyses and reports prepared by investment bankers, 
consultants or other third party advisors if they were prepared for any 
officer(s) or director(s) (or, in the case of unincorporated entities, 
individuals exercising similar functions) for the purpose of evaluating 
or analyzing market shares, competition, competitors, markets, 
potential for sales growth or expansion into product or geographic 
markets, and that also reference the acquired entity(s) or assets 
produced up to two years before the date of filing.
    In response to proposed Item 4(d)(ii), the comments expressed 
concern that this item as drafted was too broad and would capture many 
documents immaterial to staff's initial analysis. Each comment stated 
that Item 4(d)(ii) as drafted would pull in ordinary course documents 
because it was not limited to materials that evaluated or analyzed the 
acquisition. Comments 2, 3, 5, 6, 7, 9, 10, and 11 raised the issue 
that searching beyond the team of people aware of the transaction would 
lead to confidentiality concerns. Finally, Comments 1, 5, 7, 8, 9, and 
11 contended that the 2 year time frame in Item 4(d)(ii) was too long 
to provide a useful limitation on this item.
    Item 4(d)(ii) is intended to reach materials prepared by investment 
bankers, consultants or other third party advisors (``third party 
advisors'') that contain competition-related content pertaining to the 
transaction. The most typical example of this kind of document is, as 
defined by Comment 8, ``pitch books,'' which are ``developed by 
investment banking firms for the purpose of seeking an engagement.'' 
These materials are sometimes also known informally as ``bankers' 
books.'' In the Commission's experience, these are typically 
presentations that contain an overview of several potential courses of 
action available to a company (e.g., whether to buy another business or 
sell a particular business) and that also contain several pages 
analyzing the specific industry at issue.
    Item 4(d)(ii) also seeks documents prepared by third party advisors 
who have been hired by a particular company to develop and analyze a 
variety of strategic options, one of which is a merger that requires an 
eventual HSR filing. These materials are different from bankers' books 
in that the third party advisor has been hired and is already working 
with the company in detail, but they contain information that is just 
as valuable to staff. Whether developed by a third party for the 
purpose of seeking an engagement or after having been engaged, these 
materials often provide staff with a useful overview of the relevant 
industry and/or competitive landscape. Sometimes such materials fall 
within the requirements of Item 4(c). In some cases, however, they may 
not, as there is arguably no ``acquisition'' at the time they are 
prepared.
    The most strenuous objection we received to proposed Item 4(d)(ii) 
was that leaving out the Item 4(c) requirement that responsive 
materials evaluate or analyze the acquisition made the language of 
proposed Item 4(d)(ii) too broad. As noted above, leaving this language 
out of Item 4(d)(ii) addresses the fact that some parties have relied 
on this language when not submitting this category of documents. As 
documents responsive to Item 4(d)(ii) must meet all the other 
requirements of Item 4(c), one approach would be to rely on the 
language proposed by Comment 4 in reference to Item 4(d)(i) to require 
only those materials that ``would have been responsive to Item 4(c) had 
they been prepared for the acquisition.'' While this language narrows 
the scope of this item and better reflects the Commission's intent, it 
leaves Item 4(d)(ii) without the limiting language on the entity(s) or 
assets for sale and officer(s) and director(s) the Commission has 
adopted in Item 4(d)(i).
    To further clarify the intent of Item 4(d)(ii), the Commission 
limits materials responsive to Item 4(d)(ii) to those prepared by third 
party advisors during an engagement or for the purpose of seeking an 
engagement and, as has been done in Item 4(d)(i), that specifically 
relate to the sale of the acquired entity(s) or assets. In addition, 
the Commission similarly limits the officer(s) and director(s) 
encompassed in Item 4(d)(ii) to any officer(s) or director(s) or, in 
the case of unincorporated entities, individuals exercising similar 
functions, of the Ultimate Parent Entity of the Acquiring or Acquired 
Person and/or any officer(s) or director(s) or, in the case of 
unincorporated entities, individuals exercising similar functions, of 
the Acquiring or Acquired Entity(s). These clarifications, included in 
the instructions to Item 4(d)(ii), also address the confidentiality 
concerns raised by many of the comments.
    Item 4(d)(ii) seeks materials developed by third party advisors 
during an engagement or for the purpose of seeking an engagement 
prepared by or for certain officers and directors (as discussed above) 
that contain competition-related content specifically related to the 
sale of the acquired entity(s) or assets, and the instructions specify 
this. Item 4(d)(ii) is not intended to capture many of the broad 
categories of materials envisioned by the comments; the language of 
Item 4(d)(ii) is drafted in recognition of the fact that there are 
numerous kinds of consultants who create responsive materials during an 
engagement or for the purpose of seeking an engagement. We note that 
Item 4(d)(ii) does not require, as enumerated in Comment 11, the 
submission of corporate subscriptions to market studies, information or 
periodicals; industry reference materials and databases; routine market 
research; information received by financial investors; unsolicited 
financial and market analyses from investment bankers and consultants; 
and reports prepared in the course of patent, securities, antitrust or 
other forms of litigation. Some unsolicited materials developed by 
investment banking firms or other third parties for the purpose of 
seeking an engagement may appear in the files of officers or directors 
covered by Item 4(d)(ii). Item 4(d)(ii) requires the submission of such 
unsolicited materials only if they specifically relate to the sale of 
the acquired entity(s) or assets and contain competition related 
content as specified in the instructions.\8\
---------------------------------------------------------------------------

    \8\ Item 4(d)(ii) does not require the inclusion of unsolicited 
materials received from third party advisors as a separate category.
---------------------------------------------------------------------------

    Many filing parties already submit materials responsive to Item 
4(d)(ii) based on longstanding informal interpretations that materials 
developed by third party advisors during an engagement or for the 
purpose of seeking an engagement should be submitted as Item 4(c) 
documents. However, parties have sometimes excluded these documents on 
the grounds that they were not prepared for the purpose of evaluating 
or analyzing the acquisition. Item 4(d)(ii) is intended to make clear 
that materials developed by third party advisors during an engagement 
or for the purpose of seeking an engagement must be submitted in 
response to Item 4(d)(ii). The Commission intends Items 4(c) and 4(d) 
to complement one another. For instance, if a filing party includes a 
document responsive to Item 4(d)(ii)

[[Page 42477]]

with its HSR filing, it need not submit that document separately in 
response to Item 4(c).
    The comments raised concerns about the length of the proposed two-
year time period applicable to proposed Item 4(d)(ii). Consistent with 
the modification to Item 4(d)(i), the time period for this item has 
been changed to one year.\9\
---------------------------------------------------------------------------

    \9\ The one-year time limit applicable to materials responsive 
to Items 4(d)(i) and 4(d)(ii) does not apply to materials responsive 
to Item 4(c); Item 4(c) has no specific timeframe.
---------------------------------------------------------------------------

    In summary, the Commission is promulgating Item 4(d)(ii) with the 
clarification that this item seeks materials developed by third party 
advisors during an engagement or for the purpose of seeking an 
engagement that ``specifically relate to the sale of the acquired 
entity(s) or assets'' and that were prepared by or for any officer(s) 
or director(s) or, in the case of unincorporated entities, individuals 
exercising similar functions, of the Ultimate Parent Entity of the 
Acquiring or Acquired Person and/or any officer(s) or director(s) or, 
in the case of unincorporated entities, individuals exercising similar 
functions, of the Acquiring or Acquired Entity(s) within one year of 
filing.

Item 4(d)(iii): Materials Evaluating or Analyzing Synergies and/or 
Efficiencies

    Proposed Item 4(d)(iii) required filing parties to provide all 
studies, surveys, analysis and reports evaluating or analyzing 
synergies and/or efficiencies if they were prepared by or for any 
officer(s) or director(s) (or, in the case of unincorporated entities, 
individuals exercising similar functions) for the purpose of evaluating 
or analyzing the acquisition.
    Although proposed Item 4(d)(iii) did not receive as many comments 
as the other parts of proposed Item 4(d), Comments 2 and 6 questioned 
staff's need to review these documents in every transaction, suggesting 
that staff could seek these documents from the parties at a later time 
if relevant in a specific transaction. Comments 1, 6, and 11 stated 
that even if filers did not submit synergies documents at the time of 
filing, they should not be precluded from being able to make arguments 
concerning applicable synergies at a later time.
    Item 4(d)(iii) requires the submission of documents that evaluate 
or analyze the synergies related to a particular acquisition. Although 
many filing parties do submit documents discussing synergies in 
response to Item 4(c), the PNO has long provided the informal advice 
that this category of documents, without separate competition-related 
content, is not caught by the language in Item 4(c). At the same time, 
these kinds of documents are very useful to staff in many transactions. 
Thus, Item 4(d)(iii) requires that these documents be submitted. The 
Commission believes that the benefits to the Agencies from receiving 
this discrete set of documents outweighs the burden to parties of 
producing them. Filing parties can assert synergies arguments at any 
time, but there is the possibility that documents submitted with an HSR 
filing in response to Item 4(d)(iii) may carry greater weight with the 
Agencies than materials claiming synergies created and submitted at a 
later time during an investigation.

Instructions to Item 4(d)

    Incorporating many of the comments as described above, the 
instructions to Item 4(d) will read as follows:

Item 4(d)

    For each category below, indicate (if not contained in the 
document itself) the date of preparation, and the name of the 
company or organization that prepared each such document.
    Item 4(d)(i): Provide all Confidential Information Memoranda 
prepared by or for any officer(s) or director(s) (or, in the case of 
unincorporated entities, individuals exercising similar functions) 
of the Ultimate Parent Entity of the Acquiring or Acquired Person or 
of the Acquiring or Acquired Entity(s) that specifically relate to 
the sale of the acquired entity(s) or assets. If no such 
Confidential Information Memorandum exists, submit any document(s) 
given to any officer(s) or director(s) of the buyer meant to serve 
the function of a Confidential Information Memorandum. This does not 
include ordinary course documents and/or financial data shared in 
the course of due diligence, except to the extent that such 
materials served the purpose of a Confidential Information 
Memorandum when no such Confidential Information Memorandum exists. 
Documents responsive to this item are limited to those produced up 
to one year before the date of filing.
    Item 4(d)(ii): Provide all studies, surveys, analyses and 
reports prepared by investment bankers, consultants or other third 
party advisors (``third party advisors'') for any officer(s) or 
director(s) (or, in the case of unincorporated entities, individuals 
exercising similar functions) of the Ultimate Parent Entity of the 
Acquiring or Acquired Person or of the Acquiring or Acquired 
Entity(s) for the purpose of evaluating or analyzing market shares, 
competition, competitors, markets, potential for sales growth or 
expansion into product or geographic markets that specifically 
relate to the sale of the acquired entity(s) or assets. This item 
requires only materials developed by third party advisors during an 
engagement or for the purpose of seeking an engagement. Documents 
responsive to this item are limited to those produced up to one year 
before the date of filing.
    Item 4(d)(iii): Provide all studies, surveys, analyses and 
reports evaluating or analyzing synergies and/or efficiencies 
prepared by or for any officer(s) or director(s) (or, in the case of 
unincorporated entities, individuals exercising similar functions) 
for the purpose of evaluating or analyzing the acquisition. 
Financial models without stated assumptions need not be provided in 
response to this item.

Item 5

Item 5(a) and Foreign Manufactured Products

    The Commission proposed changes to Item 5 of the Form to make it 
easier for filing parties to complete, and to obtain information more 
useful to the Agencies. In this vein, the Commission proposed modifying 
the Form to require filing persons to identify the 10-digit NAICS 
product codes and revenues for each product they manufacture outside 
the U.S. and sell in the U.S. at the wholesale or retail level, or that 
they sell directly to customers in the U.S. This would give the 
Agencies a more accurate understanding of products in the U.S. Filing 
parties would include 10-digit NAICS product codes and revenues for 
such foreign manufactured products only for the most recent year in 
proposed Item 5(a). As proposed, sales made directly to customers in 
the U.S. would be reported in a manufacturing code while sales made 
into the U.S. through a wholesale operation within the same person 
would be reported in both manufacturing (transfer price) and wholesale 
or retail (sales price) codes, to be consistent with current practice 
when companies have both domestic manufacturing and wholesale or retail 
operations.
    Comment 1 objected to the proposed reporting of revenues for 
products manufactured outside the U.S. on the grounds that compiling 
NAICS code information would be a substantial burden for foreign 
manufacturers who do not currently use NAICS. Comment 2 objected on the 
same grounds, and also stated that the double listing of foreign 
manufacturing and importing revenues was confusing. Comment 6 stated 
that the Commission specifically declined to require foreign 
manufactured product data by U.S. census code in the 1978 final rules, 
and that the burden of providing such data is not significantly smaller 
today. Comment 7 also stated that finding NAICS information would be 
burdensome for foreign filers and that only U.S. operations should be 
reported. Comment 9 also raised this concern and cited to International 
Competition

[[Page 42478]]

Network principles that unnecessary costs on transactions should be 
avoided.
    After considering these comments, the Commission is not persuaded 
that NAICS reporting would be significantly more difficult for foreign 
manufacturers than it is for domestic manufacturers. One of the reasons 
the Commission decided to propose the elimination of base year 
reporting was that HSR practitioners have told the PNO that filers 
generally do not rely on previous NAICS data compiled for submission to 
the Bureau of Census, as the Commission previously understood, but 
rather that the parties determine the appropriate NAICS codes and 
underlying revenues as they are preparing their filings. That being the 
case, foreign manufacturers should be able to identify appropriate 
NAICS codes as readily as domestic manufacturers can; in fact, foreign 
entities with U.S. wholesale or retail operations already use the NAICS 
system to report revenues from those operations. Finally, the 
Commission believes that whatever additional burden may be initially 
experienced by foreign manufacturers because of their unfamiliarity 
with NAICS manufacturing codes is outweighed by the usefulness of the 
information to the Agencies.
    Comments 6 and 11 also objected to the double-counting effect that 
would result from the proposed requirement that foreign manufacturers 
report revenues under both manufacturing codes (at transfer price) and 
wholesaling codes (sales revenues) if their products are manufactured 
outside the U.S. and sold in the U.S. Indeed, Comment 11 stated that 
this is a long-standing problem with Item 5 in its current form as it 
relates to domestic manufacturers who sell their product from a 
separate establishment and must then report manufacturing and 
wholesaling revenues.
    The Commission agrees that double-counting can distort revenues 
reported in Item 5 and therefore will amend the instruction for Item 
5(a) to require that any manufacturer, whether foreign or domestic, 
report revenues from the sale of its manufactured products only under 
10-digit NAICS manufacturing product codes. Sales of products that are 
not manufactured by the parties but only sold by them would, of course, 
continue to be reported under 6-digit wholesaling or retailing codes. 
Comment 6 advocated eliminating the double-counting problem by 
requiring the listing of revenues from manufactured products by 6-digit 
wholesaling code only, but this solution would not provide the Agencies 
with sufficient information about the products being manufactured and 
sold.

Item 5 De Minimis Exception

    The proposed changes to Item 5 also included a proposal to 
eliminate the million dollar minimum that currently applies to 
reporting revenues for non-manufacturing operations in the most recent 
year. As discussed in the Proposed Rule, the minimum was based on the 
way filing persons reported non-manufacturing data to the Census 
Bureau, but given that there appears to be little or no reliance on the 
part of filers on previously assembled census data for HSR reporting, 
there seemed to be little reason to retain it. In addition, the minimum 
was sometimes misconstrued as a minimum for the reporting of overlaps 
in Item 7, which it is not. Comments 6 and 11 objected to the proposed 
elimination of the million dollar minimum, stating that the minimum 
reduces the burden of characterizing minor operations by NAICS code and 
allocating revenues to those codes; further, the comments suggested 
that instead of eliminating the minimum, an instruction could be added 
to clarify that an Item 7 overlap can still exist for operations that 
generate less than $1 million in revenues in the most recent year.
    The Commission accepts that the million dollar minimum is helpful 
to filers and agrees that amending the instruction to Item 7 to state 
that the item is applicable to an overlap of operations generating any 
amount of revenue is a reasonable approach. Therefore, the million 
dollar minimum will remain for Item 5, and the Item 7 instruction has 
been amended, as below:

    If, to the knowledge or belief of the person filing 
notification, the acquiring person, or any associate (see Sec.  
801.1(d)(2)) of the acquiring person, derived any amount of dollar 
revenues in the most recent year from operations in industries 
within any 6-digit NAICS industry code in which any acquired entity 
that is a party to the acquisition also derived any amount of dollar 
revenues in the most recent year, or in which a joint venture 
corporation or unincorporated entity will derive dollar revenues 
(note that if the acquired entity is a joint venture the only 
overlaps will be between the assets to be held by the joint venture 
and any assets of the acquiring person or its associates not 
contributed to the joint venture), then for each such 6-digit NAICS 
industry code: * * *

Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601-612, requires that the 
agency conduct an initial and final regulatory analysis of the 
anticipated economic impact of the amendments on small businesses, 
except where the Commission certifies that the regulatory action will 
not have a significant economic impact on a substantial number of small 
entities. 5 U.S.C. 605. Because of the size of the transactions 
necessary to trigger a Hart-Scott-Rodino filing, the premerger 
notification rules rarely, if ever, affect small businesses. Indeed, 
these amendments are intended to reduce the burden of the premerger 
notification program. Further, none of the rule amendments expands the 
coverage of the premerger notification rules in a way that would affect 
small business. Accordingly, the Commission certifies that these rules 
will not have a significant economic impact on a substantial number of 
small entities. This document serves as the required notice of this 
certification to the Small Business Administration.

Paperwork Reduction Act

    The Paperwork Reduction Act, 44 U.S.C. 3501-3521, requires agencies 
to submit ``collections of information'' to the Office of Management 
and Budget (``OMB'') and obtain clearance before instituting them. Such 
collections of information include reporting, recordkeeping, or 
disclosure requirements contained in regulations. The existing 
information collection requirements in the HSR Rules and Form have been 
reviewed and approved by OMB under OMB Control No. 3084-0005. The 
current clearance expires on June 30, 2013. On September 23, 2010, the 
Commission submitted a clearance request to OMB regarding the then 
proposed amendments to the reporting requirements in the Rules and 
Form. On November 8, 2010, OMB filed a comment, requesting that the FTC 
consider public comments on the proposed amendments and to respond to 
them and make any necessary adjustments in its ensuing submission to 
OMB for the final amendments. Consistent with the analysis shown here, 
the Commission is submitting a supplemental response to OMB as a 
follow-up to its prior clearance request.

Increase or Decrease in Filings Due to Ministerial Changes in Filing 
Requirements

    The final amendments are primarily changes to the information 
reported on the Notification and Report Form and do not affect the 
reportability of a transaction. Most of the ministerial changes to the 
Rules are clarifications (e.g., the change to Sec.  802.4) or new 
procedures (e.g., the change to Sec.  801.30), which also would have no 
effect on reporting obligations. One amendment could theoretically 
produce an increase

[[Page 42479]]

in filings. The definition of ``entity'' in Sec.  801.1(a)(2) is being 
modified to include unincorporated entities engaged in commerce that 
are controlled by a government. The definition currently includes only 
corporations engaged in commerce. Another amendment could theoretically 
produce a decrease in filings. The amendment to the aggregation rules 
in Sec.  801.15 would eliminate the unintended effect of requiring 
aggregation when exactly 50 percent of multiple subsidiaries have been 
acquired and additional voting securities of the same person are newly 
being acquired. The Commission believes that any increase or decrease 
in filings as a result of the final ministerial amendments would be 
negligible.

Reduced Time Collecting Data for and Preparing the Form

    Premerger Notification Office staff canvassed eight practitioners 
from the private bar to estimate the projected change in burden due to 
the then proposed, now final, amendments to the Form. All those 
consulted are considered HSR experts and have extensive experience with 
preparing HSR filings for the types of transactions that are most 
likely to be affected by the amendments.
    Many of the final amendments would significantly reduce burden for 
all filers. Others would increase burden, particularly for acquiring 
persons that are private equity funds and master limited partnerships. 
The consensus of those canvassed was that, on average, burden for 
collecting and reporting would decrease by approximately five percent. 
Thus, 37 hours (rounded to the nearest hour) will be allocated to non-
index filings.\10\ [(Current estimate, 39 hours \11\) x (1 - .05) = 
37.05 hours.]
---------------------------------------------------------------------------

    \10\ Id. Clayton Act sections 7A(c)(6) and (c)(8) exempt from 
the requirements of the premerger notification program certain 
transactions that are subject to the approval of other agencies, but 
only if copies of the information submitted to these other agencies 
are also submitted to the FTC and the Assistant Attorney General. 
Thus, parties must submit copies of these ``index'' filings, but 
completing the task requires significantly less time than non-exempt 
transactions that require ``non-index'' filings.
    \11\ Id.
---------------------------------------------------------------------------

Net Effect

    The Form changes only affect non-index filings which, for FY 2011, 
the FTC projects will total 1,428. The amendments to the HSR Rules and 
Notification and Report Form should reduce the time required to prepare 
responses for non-index filings, with an estimated net reduction of 2 
hours per filing (39 hours to 37 hours). Cumulatively, however, owing 
to a projected increase from 841 such filings to 1,428 (independent of 
the amendments' effects), total burden will increase from the currently 
cleared estimate of 33,298 hours \12\ to 53,756 hours.\13\
---------------------------------------------------------------------------

    \12\ The preceding estimate, detailed further at 75 FR 27558, 
27559-27560 (May 17, 2010), was calculated as follows: [(841 non-
index filings x 39 hours) + (22 transactions requiring more precise 
valuation x 40 hours) + (20 index filings x 2 hours)]-[841 non-index 
filings x \1/2\ of these filings incorporating Item 4(a) and Item 
4(b) documents by reference to an Internet link x 1 hour savings) = 
33,298 hours. The reduction within this prior calculation for time 
saved when incorporating Item 4(a) and Item 4(b) documents by 
reference to an Internet link would be mooted by the final 
amendments. The amendments would further reduce time to complete the 
Form, and are factored into the estimated five percent reduction 
stated above.
    \13\ This is determined as follows: [(1428 non-index filings x 
37 hours) + (22 transactions requiring more precise valuation x 40 
hours) + (20 index filings x 2 hours)].
---------------------------------------------------------------------------

    Applying the revised estimated hours, 53,756, to the previous 
assumed hourly wage of $460 for executive and attorney 
compensation,\14\ yields $24,728,000 (rounded to the nearest thousand) 
in labor costs.\15\ The amendments presumably will impose minimal or no 
additional capital or other non-labor costs, as businesses subject to 
the HSR Rules generally have or obtain necessary equipment for other 
business purposes. Staff believes that the above requirements 
necessitate ongoing, regular training so that covered entities stay 
current and have a clear understanding of federal mandates, but that 
this would be a small portion of and subsumed within the ordinary 
training that employees receive apart from that associated with the 
information collected under the HSR Rules and the corresponding 
Notification and Report Form.
------------------------------------------------------