05-24684. Premerger Notification; Reporting and Waiting Period Requirements

AGENCY:

Federal Trade Commission.

ACTION:

Final rule.

SUMMARY:

This final rule amends 16 CFR part 801 and part 803, Appendix, the Antitrust Improvements Act Notification and Report Form for Certain Mergers and Acquisitions (the “Form”). The Form must be completed and submitted by persons required to report mergers and acquisitions pursuant to Section 7A of the Clayton Act, as added by Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The revised Form requires that 2002 revenue data, identified by the 2002 North American Industry Classification System (“NAICS”), be provided in response to certain items on the Form.

DATES:

Effective December 30, 2005. To facilitate the changeover from using 1997 to 2002 NAICS information, filers may use either 1997 or 2002 information for 30 days following the Effective Date, provided that all filing parties to a transaction use the same year and use the same codes in Item 7. This will allow an orderly transition while minimizing the burden on filing parties.

FOR FURTHER INFORMATION CONTACT:

Comments or questions may be directed to Robert L. Jones, Deputy Assistant Director, Premerger Notification Office, Bureau of Competition, Room 302, Federal Trade Commission, Washington, DC 20580. Telephone: [phone]. E-mail: [e-mail]. For information about the NAICS system, including the 2002 update, see the U.S. Census Bureau's Web site at http://www.census.gov/​epcd/​www/​naics.html.

SUPPLEMENTARY INFORMATION:

Background

Section 7A of the Clayton Act, 15 U.S.C. 18a, as added by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, Pub. L. 94-435, 90 Stat. 1390, and amended by Pub. L. 106-553, 114 Stat. 2762 (“HSR Act”), requires all persons contemplating certain mergers or acquisitions to file notification with the Commission and the Assistant Attorney General for the Antitrust Division of the Department of Justice (“Assistant Attorney General”). The HSR Act further provides that such persons must wait a designated period of time before consummating such transactions. Congress empowered the Commission, with the concurrence of the Assistant Attorney General, to require “that the notification * * * be in such form and contain such documentary material and information * * * as is necessary and appropriate” to enable the agencies “to determine whether such acquisitions may, if consummated, violate the antitrust laws.” Congress similarly granted rulemaking authority to, inter alia, “prescribe such other rules as may be necessary and appropriate to carry out the purposes of this section.” 15 U.S.C.18a(d). Pursuant to this section, the Commission, with the concurrence of the Assistant Attorney General, promulgated rules governing the filing process (“Rules”) ^[1] and the Antitrust Improvements Act Notification and Report Form for Certain Mergers and Acquisitions and accompanying Instructions on July 31, 1978, with an effective date of September 5, 1978, 43 FR 33450 (July 31, 1978). The agencies have since amended or revised the Rules and Form on multiple occasions.

Completion of the Form provides the Commission and the Assistant Attorney General with information and documentary material necessary to conduct an initial review of mergers, acquisitions, and other similar transactions. The Form is not designed to elicit all potentially relevant information relating to a transaction; rather, the information requested assists the Commission and the Assistant Attorney General in determining whether to open an investigation or, alternatively, whether to grant a request for early termination of the waiting period or to allow the waiting period to expire if no such request has been made.

The Form and Instructions currently require that filing persons report revenue data contained in the “North American Industry Classification System, 1997” and the “1997 Numerical List of Manufactured and Mineral Products.” This requirement was established in a 2001 rulemaking ^[2] that changed the required reporting format from the Standard Industrial Classification (“SIC”) to the North American Industry Classification System (“NAICS”). The Executive Office of the President, Office of Management and Budget (“OMB”) recently published its North American Industry Classification System—United States, 2002 (“2002 NAICS Manual”) and the Census Bureau has published its 2002 Numerical List of Manufactured and Mineral Products. To allow use of this updated information, the Form and Instructions are hereby amended to replace references to the 1997 base year with a 2002 base year and to replace the references to the 1997 Numerical List of Manufactured and Mineral Products (EC97M31R-NL) with the 2002 Numerical List of Manufactured and Mineral Products (EC02M31R-NL).

Statement of Basis and Purpose for the Commission's Revision of the Form and the Instructions

The Commission, with the concurrence of the Assistant Attorney General, is adopting and implementing these amendments to the Form and the Instructions relating to Item 5 and Item 7, as well as to Section 801.1(j) of the Rules, to require submission of 2002 NAICS information. The Commission has traditionally relied upon the most current economic data to analyze the potential anticompetitive effects of proposed transactions.^[3] The information in the 2002 NAICS Manual and 2002 Numerical List of Manufactured and Mineral Products is the most current information available. We reiterate that filing parties may use either the 1997 or 2002 year for 30 days following the effective date December 30, 2005, provided that all filing parties to a transaction use the same year and use the same codes for Item 7.

Part 801—Coverage Rules

Section 801.1 Definitions

Paragraph (j), the definition of Engaged in Manufacturing, is amended to refer to the 2002 edition of the North American Industry Classification System, rather than the 1997 edition.

Part 803—Transmittal Rules

Appendix to Section 803 Instructions Applicable to Notification and Report Form

Generally, references to “1997 base year” will be replaced with “2002 base year” throughout the Form and Instructions. Filing persons should refer to the “2002 NAICS Manual” and the “2002 Numerical List of Manufactured and Mineral Products,” published by the Census Bureau to locate product class codes and product codes.^[4]

In response to Item 5 of the Form, filing parties are required to provide revenue data for the most current year and the base year. Specifically, Item 5 is amended as follows: Item 5(a) requires that the filing person provide 2002 base year revenue data for each 6-digit NAICS industry code(s) in which it derived revenues. Item 5(b)(i) requires that a filing person engaged in manufacturing provide 2002 base year revenue for each 10-digit NAICS-based product code(s) in which it derived revenue. Item 5(b)(ii) requires that the filing person identify each manufactured product it has added or deleted since 2002 by 10-digit NAICS-based product code(s).

In response to Item 7 of the Form, for specified industries, filers are required to provide 6-digit NAICS industry codes and descriptions and to list geographic markets for any industry in which the filer and any other party to the transaction derived revenues. Many of these referenced NAICS codes have been changed in the 2002 update. The Instructions to Item 7, specifically Items 7(c)(ii), (iii), (iv), and (v), are amended to identify the updated 2002 codes.

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 proposed 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. See 5 U.S.C. 605.

Because of the size of the transactions necessary to invoke a Hart-Scott-Rodino filing, the premerger notification rules rarely, if ever, affect small businesses. Indeed, the 2000 amendments to the Act were intended to reduce the burden of the premerger notification program by exempting all transactions valued at $50 million or less.^[5] Further, none of the proposed rule amendments changes the coverage of the premerger notification rules in any way that would affect small business. Accordingly, the Commission certifies that these proposed 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. 3501-3518, 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, record keeping, or disclosure requirements contained in regulations. The 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 May 31, 2007.

The Commission's proposed revisions to the Form and Rules do not “substantive[ly] or material[ly] modify” the existing terms of the currently approved collection of information (OMB Control Number 3084-0005) to necessitate OMB's further review and approval. See 44 U.S.C. 3507(h)(3); 5 CFR 1320.5(g). The individual rule modifications are described more fully below.

Administrative Procedure Act

These rule changes are procedural and do not alter the existing legal obligations of filing parties to submit the most currently available industry classification information. Accordingly, the amendments are not subject to the notice and comment requirements of the Administrative Procedure Act. See 5 U.S.C. 553(b)(A).

List of Subjects in 16 CFR Parts 801 and 803

• Antitrust

For the reasons stated in the preamble, the Federal Trade Commission amends 16 CFR parts 801 and 803 as set forth below:

PART 801—COVERAGE RULES

1. The authority citation for part 801 continues to read as follows:

Authority: 15 U.S.C. 18a(d).

2. Amend § 801.1 by revising paragraph (j) to read as follows:

§ 801.1

Definitions.

* * * * *

(j) Engaged in manufacturing. A person is engaged in manufacturing if it produces and derives annual sales or revenues in excess of $1 million from products within industries in Sectors 31-33 as coded by the North American Industry Classification System (2002 Edition) published by the Executive Office of the President, Office of Management and Budget.

* * * * *

PART 803—TRANSMITTAL RULES

3. The authority citation for part 803 continues to read as follows:

Authority: 15 U.S.C. 18a(d).

4. Revise pages I, V, and VI of the Instructions, and pages 7 and 8 of the Notification and Report Form For Certain Mergers and Acquisitions, in the Appendix to part 803 to read as follows:

By direction of the Commission.

Donald S. Clark,

Secretary.

Footnotes

1.  16 CFR parts 801, 802 and 803.

2.  Interim Rule: 66 FR 23561 (May 9, 2001). Final Rule: 66 FR 35541 (July 6, 2001).

3.  Periodically, the Commission has adjusted the base year when the U.S. Census Bureau published a new “Economic Census.” See 45 FR 14205 (March 5, 1980); 51 FR 10368 (March 26, 1986); 55 FR 31371 (August 2, 1990); 60 FR 40704 (August 9, 1995), and 66 FR 23561 (May 9, 2001).

4.  Executive Office of the President, Office of Management and Budget, North American Industry Classification System—United States, 2002 (2002). U.S. Census Bureau, Numerical List of Manufactured and Mineral Products (EC02M31R-NL) (April, 2004).

5.  That figure is now $53.1 million, adjusted for the change in the Gross National Product, and will be adjusted annually.