Procedures For Submitting Post-Consummation Filings
Updated: October 28, 2004
Several times a year, parties call the Premerger Notification Office to report that they have consummated a reportable acquisition without filing notification and observing the appropriate waiting period. This notice provides informal advice to persons who have consummated transactions, sometimes inadvertently, without filing and in violation of the Hart-Scott-Rodino Act (the “Act” or “HSR”).
When persons discover that they have consummated a reportable acquisition without filing and waiting, they should immediately notify the Premerger Notification Office and file their notification as soon as possible. For the most part, the information required on the Notification and Report Form (“form”), should be provided in substantially the same manner as if the filing had been made in a timely manner. For example, financial and revenue information for Items 4 and 5 should reflect the period of time just prior to when the filing should have been submitted even though the transaction may have been consummated several years prior to the actual filing; and Item 6(c) of the form should include the acquiring person’s holdings of the target, if any, immediately preceding the acquisition that is being reported. The response to Item 4(c), however, should include all documents as of the date of filing. Similarly, the same number of filings should be made as would have been required if the filings had been made in a timely manner. The affidavit and Item 3(a) description should indicate that the transaction was actually consummated, and the filing fee should be the fee required at the time the form is actually filed.
Parties who are in violation of the Act may be liable for a civil penalty of up to $16,000 for each day of each violation and may be subject to other equitable relief. (1) Therefore, in addition to submitting a completed form, the parties must also provide a detailed, written explanation signed by a company official explaining all of the facts to be considered by the agencies, including: 1) why the violation occurred (including whether the party conducted any analysis of the transaction under HSR, whether the party was aware of its HSR obligations, whether the party had previously filed HSR notifications and whether the party had previously failed to file a reportable transaction), 2) when and how the violation was discovered, 3) whether the parties realized any benefit or advantage (such as tax, contractual, financial or regulatory) that would not have been realized had they filed and observed the appropriate HSR waiting period, and 4) what steps have been taken to ensure compliance with all aspects of HSR requirements in the future. (2)
In determining whether and how much civil penalties are warranted, the Agencies will consider all of the facts, including among other factors, the parties’ explanations, whether the violation was the result of understandable and simple negligence, whether a filing was made promptly after discovering the failure to file, whether the parties realized any benefit or advantage from their failure to file, and whether the parties have implemented adequate measures to prevent any future violations. The Agencies reserve the right to take action against any violation of the Act.
In the case of consensual transactions, each party to the transaction should prepare an explanatory letter. In acquisitions of voting securities from third parties, a letter may be required only from the acquiring person. (3)
The letter should be addressed to Marian R. Bruno, Deputy Director, Bureau of Competition, Room 303, Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580. A copy of the letter also should accompany the filing.
Post consummation filings should be submitted to the attention of Janice Johnson. If you have questions about these instructions, or would like to report a failure to file, please contact Ms. Johnson at 202-326-3101.
Endnotes:
1. The $16,000 penalty was established by Commission Rule 1.98, 16 C.F.R. § 1.98, pursuant to the Debt Collection Act of 1996. Previously, the maximum penalty under § 7A(g)(1) of the Act was $11,000 per day. Multiple filing obligations can result in multiple continuing daily penalties.
2. The parties should submit their explanation with the filing, if at all possible, but should not delay their filing if additional time is needed to file a complete explanation.
3. A letter also may be necessary from the acquired party in an 801.30 transaction if the person could reasonably be expected to have known of its filing obligation at the time that a filing was required.
