95-26191. Notice and Request for Comment on Federal-State Cooperation in Merger Enforcement  

  • [Federal Register Volume 60, Number 204 (Monday, October 23, 1995)]
    [Notices]
    [Pages 54376-54377]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 95-26191]
    
    
    
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    FEDERAL TRADE COMMISSION
    
    
    Notice and Request for Comment on Federal-State Cooperation in 
    Merger Enforcement
    
    AGENCY: Federal Trade Commission.
    
    ACTION: Notice, with request for public comment, of modification to 
    program for Federal-State cooperation in merger enforcement, and of 
    Commission policy respecting sharing of additional information with the 
    states in merger investigations.
    
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    SUMMARY: The Commission is announcing a policy respecting information-
    sharing in merger investigations, under which states will be able to 
    obtain information pursuant to both a 1992 program for Federal-state 
    cooperation in merger enforcement and the Commission's general rule 
    governing access requests from state law enforcement agencies. The 
    Commission is also revising the waiver that merging parties submit in 
    order to trigger information-sharing under the 1992 program. The 
    Commission is seeking public comment on these changes, which are 
    intended to facilitate Federal-state cooperation in merger enforcement.
    
    DATES: The policy is effective on October 23, 1995. Comments will be 
    received until November 22, 1995.
    
    ADDRESSES: Comments should be addressed to the Secretary, Federal Trade 
    Commission, 6th & Pennsylvania Avenue NW., Washington, DC 20580. 
    Comments will be entered on the public record of the Commission and 
    will be available for public inspection in Room 130 during the hours of 
    9 a.m. until 5 p.m.
    
    FOR FURTHER INFORMATION CONTACT:
    Marc Winerman, Office of the General Counsel, (202) 326-2451.
    
    SUPPLEMENTARY INFORMATION:
    
    Background on Former Policy
    
        In 1992, the Commission adopted a program for Federal-state 
    cooperation in merger enforcement, applicable to transactions reported 
    under Section 7A of the Clayton Act, 15 U.S.C. Sec. 18a. See 57 FR 
    21795. Under that program, the Commission provides participating states 
    with certain information when the requisite conditions, including 
    consent from the merging parties, are met.\1\ In particular, Commission 
    staff provides participating states with copies of second requests; 
    with third party subpoenas from which the recipients' identities were 
    redacted (so long as redaction is sufficient to protect the 
    confidentiality of subpoena recipients); and with limited assistance in 
    analyzing the merger. (The states also receive copies of the HSR 
    filings, but those materials are provided to the states by the 
    submitters rather than the Commission). See 57 FR 21796.
    
        \1\ The 1992 program operates in conjunction with the National 
    Association of Attorneys General Voluntary Pre-Merger Disclosure 
    Compact (``Compact''). The program is triggered when the merging 
    parties: (1) Cooperate with state participants in the Compact by 
    providing their HSR filings and other specified information to a 
    designated ``liaison state''; and (2) provide letters waiving 
    confidentiality protections under Federal law to the Assistant 
    Director for Premerger Notification in the FTC's Bureau of 
    Competition. (Without such waivers, the Commission cannot disclose 
    HSR filings to states. See 15 U.S.C. Sec. 18a(h); Lieberman v. FTC, 
    771 F.2d 32 (2d Cir. 1985); Mattox v. FTC, 752 F.2d 116 (5th Cir. 
    1985)). When these conditions are met, the Commission will share 
    information with Compact participants who certify that information 
    obtained under the program will be maintained in confidence and used 
    only for official law enforcement purposes.
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    New Policy on Information Sharing
    
        Under the Commission's new policy, states may receive information 
    previously unavailable in merger investigations, including: (1) 
    Information obtained from third parties 
    
    [[Page 54377]]
    (although the identity of the submitter will continue to be protected 
    unless the submitter consents to disclosure); \2\ (2) information 
    obtained from merging parties who have not consented to disclosure, to 
    the extent that such information is not protected by the HSR Act; \3\ 
    and (3) staff analytic memoranda, once the Commission has determined 
    whether or not to challenge the merger, to assist the states in 
    developing their own analyses of the merger.
    
        \2\ The provision for consent is intended to encourage 
    cooperation from third parties in merger investigations, which are 
    often time-sensitive. Absent consent, third party submissions may be 
    disclosed only if redactions can be made sufficient to protect the 
    submitter's identity. When it is impractical for Commission staff to 
    redact all third party materials obtained from submitters who have 
    not consented to disclosure of their identities, the staff will 
    attempt to prepare redacted versions of particularly significant 
    materials.
        \3\ This category includes, for example, submissions from the 
    merging parties pertaining to a transaction that is not reported 
    under the HSR Act.
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        In order to invoke this new policy, states may request information 
    respecting merger investigations under Commission Rule 4.11(c), 16 CFR 
    Sec. 4.11(c). Under that rule, the Commission's General Counsel has 
    been delegated authority to grant state access requests if the request 
    certifies that responsive materials will be maintained in confidence 
    and used only for official law enforcement purposes, and describes the 
    nature of the law enforcement activity and the anticipated relevance of 
    the materials to that activity.\4\ The General Counsel will consider 
    Rule 4.11(c) requests on a case-by-case basis, and grant access to the 
    extent that disclosure is permitted by law and not inconsistent with 
    the Commission's enforcement mission.\5\
    
        \4\ Under the Rule, if the General Counsel and the Bureau of 
    Competition disagree about the proper disposition of a request for 
    records in a merger investigation, the General Counsel must refer 
    the request to the Commission.
        \5\ Additionally, if either the General Counsel or the Director 
    of the Bureau of Competition recommend disclosure of internal 
    memoranda before the Commission determines whether to challenge a 
    merger, the General Counsel will forward the matter to the 
    Commission for resolution.
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    Modification of Waiver Form
    
        Rule 4.11(c) procedures are available whether or not the 1992 
    program is available (i.e., without regard to whether the merging 
    parties have provided HSR filings to the liaison state and submitted 
    waivers required under the program). In circumstances where both Rule 
    4.11(c) and the 1992 program are available, sharing would be 
    facilitated by a modification to the form waiver used in the program. 
    The Commission is therefore revising the form so that it waives HSR 
    protections insofar as those protections ``in any way'' limit 
    communications between the Commission and NAAG Compact members. This 
    clarifies that the waiver extends to Rule 4.11(c) disclosures as well 
    as to communications under the program, and thus makes clear that the 
    Commission need not redact HSR information from internal memoranda 
    shared under Rule 4.11(c). The revised waiver form appears as an 
    appendix.
        These policies were effective as of June 16, 1995. The Commission 
    will, however, consider public comments and, after reviewing such 
    comments, may take such further action as appropriate.
    
    Appendix--Model Waiver for Submitters
    
    To: Assistant Director for Premerger Notification, Bureau of 
    Competition, Federal Trade Commission, Washington, DC 20580
    
        With respect to [the proposed acquisition of X Corp. by Y 
    Corp.], the undersigned attorney or corporate officer, acting on 
    behalf of [indicate entity], hereby waivers confidentiality 
    protections under the Hart-Scott-Rodino Act, 15 U.S.C. Sec. 18a(h), 
    insofar as these protections in any way limit confidential 
    communications between the Federal Trade Commission and members of 
    the NAAG Voluntary Pre-merger Compact.
    
    Signed:----------------------------------------------------------------
    
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    (Authority: 15 U.S.C. Sec. 46).
    
        By direction of the Commission, Commissioner Starek dissenting.
    Donald S. Clark,
    Secretary.
    
    Dissenting Statement of Commissioner Roscoe B. Starek, III
    
    Federal-State Cooperation in Merger Enforcement
    
        Following extensive deliberation and evaluation of public 
    comments, in 1992 the Commission entered into its Program for 
    Federal-State Cooperation in Merger Enforcement (``the 1992 
    program''). The information that the Commission makes available 
    pursuant to the 1992 program reflects a prudent balancing of the 
    Commission's interest in conducting efficient and expeditious Hart-
    Scott-Rodino (``HSR'') merger investigations with its interest in 
    promoting federal-state cooperation in merger law enforcement. The 
    Commission at that time considered the materials to be made 
    available to the states--copies of HSR second requests, redacted 
    versions of third-party subpoenas, and assistance in analyzing the 
    transaction--sufficient to furnish substantial aid to requesting 
    states while avoiding the risk that merging firms and third parties 
    might simply cease to cooperate with FTC investigations.
        Today, however, the Commission announces a new policy that will 
    supplant the 1992 program, even though no change of law or fact has 
    diminished the Commission's interest in keeping its merger 
    investigations efficient and expeditious. As a consequence of this 
    policy change, we can surely expect state attorneys general to seek 
    access to HSR investigation materials under the broader disclosure 
    provisions of Commission Rule 4.11(c), obviating the 1992 Program 
    (except, perhaps, as a preliminary step to a Rule 4.11(c) access 
    request). Given that merging firms and third parties might well balk 
    at submitting information to the Commission that we could turn over 
    to the states despite the submitters' objections, there is reason to 
    doubt that the new policy will improve the speed or efficiency with 
    which this agency conducts merger investigations. Moreover, some 
    firms might even forgo efficient--or at worst legally 
    unobjectionable--transactions because of apprehension that the 
    Commission will release sensitive information to the states.
        One can hardly quibble with the general proposition that the 
    Commission should cooperate with state attorneys general to advance 
    the public interest in avoiding wasteful duplication of effort in 
    antitrust enforcement. The Commission's new policy, however, seems 
    only to advance cooperation as an end in itself, without any 
    apparent link to the achievement of a more tangible public benefit. 
    In my view, the new policy is fated to result only in increasing the 
    costs of HSR merger enforcement--costs that will fall both on the 
    Commission and on the parties subject to enforcement.
    
    [FR Doc. 95-26191 Filed 10-20-95; 8:45 am]
    BILLING CODE 6750-01-M
    
    

Document Information

Effective Date:
10/23/1995
Published:
10/23/1995
Department:
Federal Trade Commission
Entry Type:
Notice
Action:
Notice, with request for public comment, of modification to program for Federal-State cooperation in merger enforcement, and of Commission policy respecting sharing of additional information with the states in merger investigations.
Document Number:
95-26191
Dates:
The policy is effective on October 23, 1995. Comments will be received until November 22, 1995.
Pages:
54376-54377 (2 pages)
PDF File:
95-26191.pdf