During the Initial Waiting Period

• Pages: 239-276

239

CHAPTER VI

DURING THE INITIAL WAITING PERIOD

During the initial fifteen- or thirty-day waiting period, the agencies

review the Hart-Scott-Rodino (HSR) filings and determine whether a

more extensive investigation of the transaction is warranted. For the vast

majority of transactions filed under the HSR Antitrust Improvements Act

(HSR Act), no investigation other than an initial review of the filings and

publicly available information is conducted. If, however, a review of the

HSR filings indicates that a transaction may raise competitive issues, the

agencies will determine through a clearance procedure which of them

will investigate the transaction, and the investigation will commence.

The initial goal of the reviewing agency is to conduct a preliminary

investigation to determine whether there is sufficient indication of a

potential adverse competitive effect to require issuance of a Request for

Additional Information and Documentary Materials (second request).

This chapter discusses the process by which the agencies initially

review the filings, receive clearance, and open an investigation. It

describes the nature and scope of the reviewing agency’s initial review

and discusses the steps that counsel can take during this initial review

period to expedite the agency’s investigation and to minimize the risk

that the parties will receive a second request. Even when it is clear from

the outset that a transaction will receive a second request, there are steps

that can be taken early to focus the agency’s investigation, limit the

scope of any second request issued so as to reduce costs, and optimize

the likelihood that the transaction will not be challenged. Tactical options

available at this early stage that may affect the outcome of a full

investigation will be explored. Finally, the process by which each agency

issues a second request is described.

A. Review of the Filing for Compliance

Initial review of the HSR filing is handled somewhat differently at

the two agencies. The Premerger Notification Office (PNO) of the

Federal Trade Commission (FTC or Commission) has administrative

responsibility for the premerger program and reviews the filings for

technical compliance with the HSR Act and Rules. In addition, the FTC

collects the HSR filing fees from acquiring persons at the time of filing.

The PNO is in constant liaison with the Premerger Notification Unit of

the U.S. Department of Justice (DOJ or Antitrust Division) regarding the

240 The Merger Review Process

receipt and status of particular HSR filings. The two offices are linked by

a computer tracking system. For non-Section 801.30 transactions, where

both parties must file to begin the running of the HSR waiting period, an

attorney or compliance specialist in the PNO will generally review both

parties’ filings simultaneously, waiting until the second filing is received.

For a Section 801.30 (tender offer or acquisition from third party)

transaction, the PNO staff will review the acquiring person’s filing upon

receipt (since the waiting period begins to run immediately), and the

acquired person’s filing when received.

When a filing is received by the FTC, it is date stamped and assigned

an identification number. The first four digits of the identification

number are the fiscal year in which the filing is made; the last four digits

reflect the number of transactions logged up to that time during the fiscal

year. The filing is then logged into the PNO’s computer tracking system

and assigned to an attorney or compliance specialist for a review of the

completeness of the filing, the preparation of a transaction summary, and

the preparation of an initial recommendation. The parties may determine

the identity of the reviewer by calling the Premerger Office general

number, (202) 326-3100.

If the initial review reveals any deficiencies, the PNO staff has two

options. For less serious deficiencies, the filing party is usually requested

to cure the problem with a response submitted to both agencies by

electronic mail, regular mail or fax, and the waiting period is not

interrupted. More serious deficiencies result in the filing being

“bounced,” which means that it is treated as not having been filed and the

waiting period as not having begun. In this situation, the deficiency must

be cured and the filing resubmitted; only then will the waiting period

commence.675 Whether a particular deficiency is treated as more or less

serious is determined by PNO staff; however, a party may seek a review

of the staff’s decision by the Assistant Director of the PNO.

Generally, parties will be notified as soon as possible of deficiencies

in their filings. However, there have been occasions when filings have

675. 16 C.F.R. § 803.10(c)(2). If the errors are on the Form, two corrected

copies of the deficient pages must be sent to the PNO and three to the

DOJ. If the error was the result of not supplying a required document or

specific pages thereof, one copy of the document must be sent to the PNO

and to the DOJ. In both cases, the corrections must be accompanied by a

new certification. However, a copy of the corrected or missing documents

and certification may be faxed to both agencies if the original follows

promptly.

During the Initial Waiting Period 241

been deemed deficient very late in the waiting period, as, for example,

when a 4(c) document providing important information was submitted

late. It is likely that the agencies will take the same view regarding

documents responsive to the recently adopted Item 4(d) of the revised

HSR form. On several occasions, notifications have been determined to

be deficient when FTC or Antitrust Division staff discovered during

review of the second request response that one of the reporting persons

had failed to submit all documents required by Item 4(c). In such cases,

the waiting period is deemed not to have begun, and the original fifteen-

or thirty-day waiting period is reinstated after the deficiencies are

corrected. Therefore, the importance of performing a thorough search for

and submitting all 4(c) and 4(d) responsive documents cannot be

overstated. The agencies take very seriously the failure to file all 4(c)

documents with the original HSR filing and may require the initial thirty-

day waiting period to be restarted if substantive 4(c) and 4(d) documents

are discovered after that period has run.

Other common deficiencies in HSR filings include:

xfailure to include the appropriate number of Notification Forms,

accompanying affidavits and documentary attachments;676

xfailure to have the Form properly certified;677

ximproper identification of the acquiring or acquired person and

resulting failure to include information from that person;678

xincomplete disclosure or explanation of all relevant aspects of a

reportable transaction;

676. The instructions to the Notification and Report Form, 16 C.F.R. pt. 803

app., specify that three copies of the Form (with one set of documentary

attachments) must be filed with the Antitrust Division. Two copies of the

Form (with one notarized original affidavit and certification) and one set

of attachments are filed with the FTC. Id. § 803.5. Affidavits are not

required from acquired persons in transactions to which § 801.30 applies.

Id. § 803.5(a)(1).

677. Id. § 803.6.

678. Section 803.2(a) specifies who must file the Notification and Report

Form. See 16 C.F.R.§ 803.4 for situations in which a foreign person

refuses to file notification. Acquiring and acquired persons are defined in

16 C.F.R. § 801.2.