[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:----------------------------------------------------------------
Position:--------------------------------------------------------------
Telephone:-------------------------------------------------------------
(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