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.
Where is the line drawn between acquisitions of securities made “solely for the purpose of investment” on one hand, and influencing control, thereby requiring regulatory approval, on the other hand? That is the central cautionary question that was reinforced by the July 12, 2016, Department of Justice (“DOJ”) settlement with ValueAct Capital. The well-known activist investment firm agreed to pay $11 million to settle a suit alleging that it violated the premerger reporting and waiting period requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”). ValueAct purchased more than $2.5 billion of shares in two oil companies, Baker Hughes Inc. and Halliburton Co., after they announced they would merge. The DOJ alleged that ValueAct used its ownership position to influence the proposed merger and other aspects of Baker Hughes and Halliburton, and thus could not rely on the exemption.