Premerger Notification; Reporting and Waiting Period Requirements
| Citation | 84 FR 30595 |
| Record Number | 2019-13225 |
| Published date | 27 June 2019 |
| Section | Rules and Regulations |
| Court | Federal Trade Commission |
Federal Register, Volume 84 Issue 124 (Thursday, June 27, 2019)
[Federal Register Volume 84, Number 124 (Thursday, June 27, 2019)]
[Rules and Regulations]
[Pages 30595-30620]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-13225]
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FEDERAL TRADE COMMISSION
16 CFR Part 803
Premerger Notification; Reporting and Waiting Period Requirements
AGENCY: Federal Trade Commission.
ACTION: Final rule.
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SUMMARY: The Federal Trade Commission (``Commission'' or ``FTC'') is
amending the Hart-Scott-Rodino (``HSR'') Premerger Notification Rules
(``Rules'') that require the parties to certain mergers and
acquisitions to file reports with the FTC and the Assistant Attorney
General in charge of the Antitrust Division of the Department of
Justice (``the Assistant Attorney General'' or ``DOJ'') (together the
``Antitrust Agencies'' or ``Agencies'') and to wait a specified period
of time before consummating such transactions. The Commission is
amending the Antitrust Improvements Act Notification and Report Form
(``HSR
[[Page 30596]]
Form'') and Instructions to require use of 10-digit codes based upon
the North American Product Classification System in place of the 10-
digit codes based upon the North American Industry Classification
System.
DATES: The amendments are effective September 25, 2019.
FOR FURTHER INFORMATION CONTACT: Robert Jones, Assistant Director,
Premerger Notification Office, Bureau of Competition, Room 5301,
Federal Trade Commission, 400 7th Street SW, Washington, DC 20024.
Telephone (202) 326-3100, Email: [email protected].
SUPPLEMENTARY INFORMATION:
Introduction
Section 7A of the Clayton Act (the ``Act'') requires the parties to
certain mergers or acquisitions to file with the Commission and DOJ and
wait a specified period before consummating the proposed transaction to
allow the Agencies to conduct their initial review of a proposed
transaction's competitive impact. The reporting requirement and the
waiting period that it triggers are intended to enable the Antitrust
Agencies to determine whether a proposed merger or acquisition may
violate the antitrust laws if consummated and, when appropriate, to
seek a preliminary injunction in federal court to prevent consummation.
Section 7A(d)(1) of the Act, 15 U.S.C. 18a(d)(1), directs the
Commission, with the concurrence of the Assistant Attorney General, in
accordance with the Administrative Procedure Act, 5 U.S.C. 553, to
require that premerger notification be in such form and contain such
information and documentary material as may be necessary and
appropriate to determine whether the proposed transaction may, if
consummated, violate the antitrust laws. Section 7A(d)(2) of the Act,
15 U.S.C. 18a(d)(2), grants the Commission, with the concurrence of the
Assistant Attorney General, in accordance with 5 U.S.C. 553, the
authority to define the terms used in the Act and prescribe such other
rules as may be necessary and appropriate to carry out the purposes of
section 7A of the Act.
Pursuant to that authority, the Commission, with the concurrence of
the Assistant Attorney General, developed the Rules, codified in 16 CFR
parts 801, 802 and 803, and the HSR Form and its associated
Instructions, codified in the appendices to part 803, to govern the
form of premerger notification to be provided by merging parties.
The Commission is amending the HSR Form and Instructions to require
use of 10-digit codes based upon the North American Product
Classification System (``NAPCS'') in place of the 10-digit codes based
upon the North American Industry Classification System (``NAICS'').
Background
Item 5 of the HSR Form requires filing persons to submit
information regarding dollar revenues and lines of commerce with
respect to operations conducted within the United States during a
company's most recently completed year using NAICS and NAICS-based
codes. All filing persons submit non-manufacturing revenue at the 6-
digit NAICS industry code level. While the official NAICS
classification system only provided for six-digit codes, the United
States Census Bureau (``Census'') developed a 10-digit NAICS-based
product classification code for manufactured and mineral products.
Filing persons must also report manufacturing revenues (NAICS sectors
31-33) by these 10-digit codes in Item 5 of the HSR Form. These 10-
digit codes were updated in conjunction with the data collection for
the 2002, 2007, and 2012 Economic Censuses.
In 2017, Census updated the 6-digit NAICS codes, but discontinued
its use and update of the 10-digit NAICS-based codes. Census, instead,
adopted 10-digit codes based upon the North American Product
Classification System to report products, including manufactured
products. The NAPCS is a comprehensive, market- or demand-based,
hierarchical classification system for products (goods and
services).\1\ Census used these 10-digit NAPCS codes, along with the 6-
digit NAICS codes in the 2017 Economic Census, which it commenced in
May 2018. In addition, Census has published concordance tables that
link 2012 NAICS product codes to 2017 NAPCS collection codes.\2\ Now
that the deadline for response to the 2017 Economic Census has passed
and Census has published its concordance tables, the Commission has
determined that it is appropriate to adopt the use of 10-digit NAPCS
codes for reporting manufacturing revenues in the HSR Form.
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\1\ See United States Census Bureau, Economic Census,
Concordance of 2012 Product Codes to 2017 NAPCS-Based Codes, https://www.census.gov/programs-surveys/economic-census/guidance/understanding-napcs.html; United States Census Bureau, North
American Product Classification System, https://www.census.gov/eos/www/napcs/index.html.
\2\ United States Census Bureau, 2017 NAPCS-Based Collection
Code to 2012 Product Code: https://www2.census.gov/programs-surveys/economic-census/technical-documentation/napcs/2017_napcs-based_collection_code_to_2012_product_code.xlsx; United States
Census Bureau, 2012 Product Code to 2017 NAPCS-Based Collection
Code: https://www2.census.gov/programs-surveys/economic-census/technical-documentation/napcs/2012_product_code_to_2017_napcs_based_collection_code.xlsx.
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Incorporating the 10-digit NAPCS codes into the HSR Form and the
Instructions will ensure that filing persons provide revenues in a
format that can be compared to the most recent and complete economic
data published by Census. The amended HSR Form and Instructions will
continue to require the use of 6-digit NAICS industry codes for non-
manufacturing revenues. For manufacturing revenues, filing persons will
be required to report revenue in both the 6-digit NAICS industry code,
as well as the 10-digit NAPCS product code. The reporting of overlaps
in Item 6 and Item 7 has been based upon 6-digit NAICS codes and will
not change.
Revisions to the HSR Form and Instructions
The Commission is amending the HSR Form and Instructions to require
the reporting of manufacturing revenue by both the applicable 6-digit
NAICS code and 10-digit NAPCS code. The changes are as follows:
A. HSR Form Item 5
The Commission has deleted the following language: ``5(a) DOLLAR
REVENUES BY NON-MANUFACTURING INDUSTRY CODE AND BY MANUFACTURED PRODUCT
CODE'' and replaced it with ``5(a) DOLLAR REVENUES BY NAICS INDUSTRY
CODE AND BY NAPCS-BASED PRODUCT CODE.'' The Commission has also deleted
the following language: ``6-DIGIT INDUSTRY CODE AND/OR 10-DIGIT PRODUCT
CODE'' and replaced it with ``6-DIGIT NAICS INDUSTRY CODE AND/OR 10-
DIGIT NAPCS-BASED PRODUCT CODE.''
Previously, manufactured product revenue (NAICS Sectors 31-33) only
needed to be reported at the 10-digit NAICS-based code level, since the
relevant 6-digit NAICS code constituted the first 6 digits of the 10-
digit code. However, because the 10-digit NAPCS-based codes do not
include the 6-digit NAICS code, manufactured product revenue must now
be reported by both NAICS and NAPCS codes. For example, assume that a
filing person determined that its Item 5 revenues should be reported as
follows using NAICS codes:
3111111131 Canned dog food--$50 million
3111111411 Dry and semi-moist dog food--$45 million
[[Page 30597]]
3111114411 Canned cat food--$35 million
3111114511 Dry and semi-moist cat food--$25 million
That filing person would now report the following in Item 5 using
NAICS and NAPCS codes:
311111 Dog and Cat Food Manufacturing--$155 million
2009750000 Canned dog food $50--million
2009775000 Dry and semi-moist dog food--$45 million
2009800000 Canned cat food--$35 million
2009825000 Dry and semi-moist cat food--$25 million
The reporting requirements for revenue derived from non-
manufacturing operations remain the same.
B. HSR Form Revised Date
The HSR Form's ``Revised Date'' on the bottom of each page has been
updated from ``(rev. 01/02/17)'' to ``(rev. 06/07/19)'' to reflect the
ministerial revisions described in this document.
C. Revisions to the Instructions to the Form
The Commission is amending the Instructions to the Form as follows.
[ssquf] Page II of the Instructions adds references to the use of
the North American Product Classification System and updates references
to the North American Industry Classification System to reflect the
release of 2017 codes.
[ssquf] Page II of the Instructions also deletes the paragraph that
instructed filing parties to continue to use 2012 NAICS codes while
Census completed its transition to NAPCS.
[ssquf] The section for Item 5 on Page VII instructs filers that
derive revenue from manufacturing operations to use 10-digit NAPCS
codes, rather than 10-digit NAICS codes, to report this revenue.
[ssquf] The section for Item 5 on Page VII also instructs filing
parties that derive revenue from manufacturing operations to report the
sum of those revenues in the appropriate 6-digit NAICS code.
[ssquf] The section for Item 5 on Page VII requires filing parties
to check the overlap box for NAICS and NAPCS code overlaps. Filers
deriving revenue from manufacturing operations that will report an
overlap in Item 7 should check the overlap box for the corresponding 6-
digit NAICS code in Item 5, even if there are no 10-digit NAPCS code
overlaps.
[ssquf] The section for Item 5 on Page VII is further changed to
emphasize that acquired persons are to only include total dollar
revenues for all entities included within the acquired entity.
Administrative Procedure Act
The Commission finds good cause to adopt these changes without
prior public comment. Under the Administrative Procedure Act (``APA''),
notice and comment are not required ``when the agency for good cause
finds (and incorporates the finding and a brief statement of reasons
therefore in the rules issued) that notice and public procedure thereon
are impracticable, unnecessary, or contrary to the public interest.'' 5
U.S.C. 553(b)(3)(B).
In this case, the Commission finds that public comment on these
changes is unnecessary. The Commission is amending the HSR Rules to
adopt updates developed by the Census for the reporting of manufactured
product revenue. These updates do not involve any substantive changes
in the HSR Rules' requirements for entities subject to the Rules.
Rather, they merely change the numerical codes used to report
manufactured product revenue.
In addition, these amendments fall within the category of rules
covering agency procedure and practice that are exempt from the notice-
and-comment requirements of the APA. See 5 U.S.C. 553(b)(3)(A). These
changes merely alter the manner in which entities report manufactured
product revenue to the Agencies.
For these reasons, the Commission finds that there is good cause
for adopting this final rule as effective on September 25, 2019 without
prior public comment.
Regulatory Flexibility Act
The Regulatory Flexibility Act, 5 U.S.C. 601-612, requires that the
agency conduct an initial and final regulatory analysis of the
anticipated economic impact of the proposed amendments on small
businesses, except where the agency head certifies that the regulatory
action will not have a significant economic impact on a substantial
number of small entities. 5 U.S.C. 605. Because of the size of the
transactions necessary to invoke an HSR filing, the premerger
notification rules rarely, if ever, affect small businesses. Indeed,
amendments to the Act in 2001 were intended to reduce the burden of the
premerger notification program further by exempting all transactions
valued at less than $50 million (as adjusted annually).\3\ Likewise,
none of the rule amendments expand the coverage of the premerger
notification rules in a way that would affect small business. In
addition, the Regulatory Flexibility Act requirements apply only to
rules or amendments that are subject to the notice-and-comment
requirements of the APA. See 5 U.S.C. 603, 604. Because these
amendments are exempt from those APA requirements, as noted earlier,
they are also exempt from the Regulatory Flexibility Act requirements.
In any event, to the extent, if any, that the Regulatory Flexibility
Act applies, the Commission certifies that these rules will not have a
significant economic impact on a substantial number of small entities.
This document serves as notice of this certification to the Small
Business Administration.
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\3\ By comparison, the dollar thresholds established for total
annual receipts of a small business under the applicable small
business size standards fall well under $50 million. See 13 CFR
121.201.
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Paperwork Reduction Act
The Commission has existing Paperwork Reduction Act clearance for
the HSR Rules (OMB Control Number 3084-0005). The Commission has
concluded that these technical amendments do not change the substance
or frequency of the pre-existing information collection requirements
and, therefore, do not require further OMB clearance.
List of Subjects in 16 CFR Part 803
Antitrust.
By direction of the Commission.
April Tabor,
Acting Secretary.
For the reasons stated above, the Federal Trade Commission amends
16 CFR part 803 as set forth below:
PART 803--TRANSMITTAL RULES
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1. The authority citation for part 803 continues to read as follows:
Authority: 15 U.S.C. 18a(d).
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2. Revise appendix A to part 803 to read as follows:
Appendix A to Part 803--Notification and Report Form for Certain
Mergers and Acquisitions
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Appendix B to Part 803--Instructions to the Notification and Report
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[FR Doc. 2019-13225 Filed 6-26-19; 8:45 am]
BILLING CODE 6750-01-P
