FTC Notices Proposed Changes To HSR Form
On August 13, 2010, the Federal Trade Commission issued several proposed changes to the Notification and Report Form companies must complete when notifying transactions subject to the Hart-Scott-Rodino Act.
In addition to simplifying certain hyper-technical reporting requirements, the FTC's proposed revisions would create three new or expanded disclosure obligations. Specifically, the proposed rules would: (1) require all parties to provide additional business documents related to the transaction; (2) expand and modify the parties' revenue reporting obligations; and (3) require disclosure of additional information regarding "associated" entities.
- Production of Additional Documents. The proposed rules would expand the list of documents that parties must submit in connection with an HSR notification to include: (i) offering memoranda or similar materials (that are routinely provided now under current HSR practice, however, the proposed changes would require them to be provided even if not prepared by or for officers and directors); (ii) certain materials created by investment bankers, consultants, or other third party advisors, including some due diligence and valuation materials; and (iii) documents that evaluate or analyze the synergies and/or efficiencies that would result from the transaction, unless the documents contain no stated assumptions.
- Revised Revenue Reporting Obligations. The FTC proposed eliminating the requirement that parties provide historic revenue information (i.e., "base year" revenues). But parties would be required to provide more detailed information relating to their current operations (revenues at the 10-digit NAICS level) and would for the first time be required to report revenues generated from the sale of foreign-manufactured goods in or into the U.S.
- Disclosure of "Associated" Entities. The proposed rules would require notifying parties to disclose any additional entities that are under common management with the acquiring entity, but not necessarily common control. Examples of companies that would commonly trigger this requirement include investment funds, private equity firms, and other entities structured as a limited partnership. The proposed rules also impose substantial new information reporting requirements regarding such associated entities, including 6-digit NAICS code revenue data and geographic information. The new proposed reporting requirements could result in additional overlaps being identified.
The FTC will accept comments regarding these proposed changes until October 18, 2010. It is important to note that if adopted, these proposed changes will potentially affect documents being created now as the proposed rules contain a two-year look back period for responsive materials.
Click here for a copy of the FTC's press release.
Click here for a copy of the complete notice.
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