Antitrust Law Daily Wrap Up, TOP STORY—Proposed Amendments to Premerger Notification Rules Would Set Procedures for Withdrawal of Filings, (Feb 4, 2013)

By E. Darius Sturmer, J.D.

The FTC has proposed amendments to its premerger notification rules. The changes, announced February 1, would establish procedures for the withdrawal of a Hart Scott Rodino (HSR) premerger notification filing in certain circumstances, and are aimed at helping the FTC and Department of Justice “make efficient use of scarce agency resources.”

The proposed rules formalize the long-standing position of the FTC’s Premerger Notification Office regarding the withdrawal of an HSR filing, as well as the withdrawal and refiling of an HSR filing without paying an additional fee. The “withdraw and refile” procedure, entirely under the control of HSR filers, allows additional time to review a transaction during the initial waiting period, thus potentially avoiding a costly second request. This procedure has been used informally for 30 years and the Commission believes that making it part of the HSR rules will make it more effective and useful for filing parties.

The proposed rules also establish a procedure for the automatic withdrawal of an HSR filing when filings are made with the U.S. Securities and Exchange Commission (SEC) announcing that a transaction has been terminated.

“The proposed rule has been narrowly crafted to create consistency in the treatment of a transaction based upon the parties’ official statements to the SEC regarding a transaction’s viability,” said Richard Feinstein, Director of the Bureau of Competition. “As a result, we will be better able to allocate our resources and, in the rare instances that this procedure is invoked, the public interest will be served.”

Under the HSR Act, the FTC and the Department of Justice review most of the proposed transactions that affect commerce in the United States and are over a certain size to ensure that they do not substantially lessen competition. The law requires that companies file premerger reports with the agencies and wait a specified period before completing such transactions.

The FTC is seeking public comments on the proposed amendments. Comments must be received on or before April 15, 2013. They can be filed online or sent to: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex H), 600 Pennsylvania Avenue, N.W., Washington, DC 20580.

A concurring statement by Commissioner Joshua D. Wright backed the proposed changes based on his belief that the agency would benefit from the public’s input into the proposed rulemaking. However, Wright expressed concern that the proposed rules may impose costs in excess of any potential benefits. If adopted, he argued, “they could increase the costs of corporate takeovers and thus distort the market for corporate control.” The proposed rules “could also create incentives for firms to structure their transactions less efficiently and discourage the use of tender offers.” Finally, he contended, the proposed new rules would disproportionately burden U.S. public companies, as they would not apply to tender offers for many non-public and foreign companies.

MainStory: TopStory Antitrust FederalTradeCommissionNews