In an action aimed at reducing the paperwork burden the government places on small businesses, the Federal Trade Commission yesterday proposed to exempt smaller mergers from strick notification regulations.
Under present regulations, known as the pre-merger notification rules, most companies planning certain mergers file notices with the Federal Trade Commission and the Department of Justice, and give those agencies about a month to decide whether or not they want to investigate the merger for possible violations of antitrust laws.
But since the pre-merger notification laws went into effect about a year ago, an FTC staff analysis of more than 650 filings showed that "significant" number were "small and obviously of no enforcement interest."
Consequently, the staff concluded, the agency should rise the minimum limits on the size of companies that must submit notification when planning mergers. The staff proposal would exempt about one-fifth of the present filees from the rules.
"There were a fair number of situations in which it seemed to us that the ease with which we decided not to investigate and the fact that the transactions involved such small companies that we knew we could probably change the rules," said FTC Bureau of Competition staff attorney Malcolm Funder.
Funder said the Justice Department has agreed with the concept of the proposal, but it considering the possibility that the cutoffs could be even higher than proposed by the FTC.
The FTC proposal would exempt transactions that involve the acquisition of at least 15 percent of a firm's assets when those assets are valued at $15 million or less, (Under present rules, that figure is $10 million.)
The proposals would also exempt transactions involving the acquisition of 50 percent or more of the voting securities of a firm, providing the firm that issued the securities has both sales and assets of less than $25 million and the voting securities being acquired are valued at $15 million or less. (The $25 million figure is up from the present $10 million.)
The change in rules also would, FTC staffers point out, reduce the paperwork burden at the commission and at the Justice Department.