The Federal Trade Commission yesterday approved a set of "proposed flnal" rules under which companies soon must begin notifying the government a month in advance of proposed mergers and acquisitions over a certain size.
The rules implement a major section of the Hart-Scott-Rodino Antitrust Improvements Act and are designed to give the government antitrust enforcement agencies enough information and enough time to decide wheather to challenge proposed transactions before they are consummated. The legislation was signed into law on Sept. 30, 1976.
The rules and report form still must receive formal approval from the assistant attorney general for antitrust, John Shenefield a review of up to 45 days by the General Accounting Office, and "final" adoption by the FTC. Then, 30 or more days after publication in the Federal Register, they will become final. Shenefield has given informal approval.
Daniel C. Schwartz, deputy director of the FTC Bureau of Competition, said companies most likely will have to start reporting proposed acquisitions under the program about June.
The law requires 30 days' advance notice of proposed mergers or acquisitions involving a company with $100 million or more in sales or assets and a company with $100 to million of more in sales and assets when the transaction would represent 15 percent, or $15 million, of the voting stock or assets of the acquired company. Fifteen days' notice is required for cash tender offers.
If the FTC or the justice Department's Antitrust Division asks the companies for additional information, the 30 days' waiting period before consummation of the transaction may be extended 20 days (10 for cash tender offers). The extended time period begins running when the government gets receipt of the new information being sought.
Until now the FTC has required companies with assets or annual sales of $250 million or more to report mergers and acquisitions within 10 days of any agreement or understanding in principle being reached by the parties to the merger.
In adopting the rules yesterday, the FTC made several changes in an earlier version of the rules. One limits the number of joint ventures that need to be reported to the government. Instead of requiring the reporting of the formation of joint ventures over a certain size, the FTC said it would not require participants to report joint ventures unless the entity formed is a corporation.
The FTC was directed by the legislation to work out the rules with the Justice Department. The Commission has been under increasing attack for the delay in issuing the rules. Rejecting FTC contentions that the regulations were delayed because of their complexity, Rep. Ron Mazzoli (D-Ky.) last week asked the House Judiciary Committee to hold hearings about the delay which he claimed let big mergers "go unchecked" for 15 months.
Yesterday, FTC Chairman Michael Pertschuk said the "long and tortuous process" had produced workable rules that would give the agency sufficient information with which to assess proposed mergers.