As of November 28, 2016, the Federal Trade Commission (FTC) has expanded the filing obligations under the Hart-Scott-Rodino (HSR) Act by requiring filers to submit certain documents analyzing a deal or affected markets even where the evaluation or analysis is limited to geographies or operations outside of the United States. This is a significant shift in the Agency’s interpretation of Items 4(c) and 4(d) of the HSR Notification and Report Form.
Under the HSR Act, parties to certain non-exempt transactions must notify and submit supporting materials to the FTC and the Department of Justice (DOJ) and then typically wait a minimum of thirty days before closing the deal. Among the most important materials for the Agencies’ initial review are those responsive to Items 4(c) and 4(d). Item 4(c) requires filers to submit documents prepared by or for officers or directors that were used to evaluate or analyze the acquisition with respect to market shares, competition, competitors, markets, potential for sales growth, or expansion into product or geographic markets. Item 4(d) requires certain documents prepared by or for officers or directors that relate to the acquisition, including confidential information memoranda, documents prepared by third party advisors, and documents evaluating or analyzing synergies.
The FTC’s Premerger Notification Office (“PNO”) has provided a tip sheet to help filers determine what to include in response to Items 4(c) and 4(d). Earlier this week, the PNO said it would soon change the tip sheet, which for years has advised filers that if a document is otherwise responsive to Item 4(c) or Item 4(d), but discusses only foreign markets, it does not have to be submitted with the filing. Recognizing that markets are increasingly more global, the PNO’s revised position is that “excluding documents that discuss only foreign markets can impair the agencies’ initial competitive analysis. In particular, documents that discuss foreign markets or competitors located only in other countries without any specific reference to a U.S. market could be relevant to our review.” In other words, the PNO has revised its informal guidance and will soon update the tip sheet to require the submission of any documents responsive to Items 4(c) or 4(d), even if those documents discuss only foreign markets. Despite the fact that the tip sheet has not yet been changed, as of November 28, 2016, filers must include documents responsive to Items 4(c) or 4(d) even if the document’s evaluation or analysis is limited to geographies or operations outside of the United States.
*Please note that the PNO’s existing guidance that filers need not produce documents that relate solely to an exempt portion of a transaction remains in place.