The Hart-Scott-Rodino Act: Recognizing Covered Transactions
Recently, the Federal Trade Commission (FTC) has filed a complaint against four Third Point LLC entities in federal court in violation of Hart-Scott-Rodino Act. The complaint affirms that Third Point has made open market acquisitions of stock in Yahoo! Inc. last August 2011 without filing the required HSR notifications due to their improper reliance on the “investment-only” exemption.
Under the HSR Act, parties proposing to acquire voting securities, assets and non-corporate interests in excess of the HSR thresholds are required to file formal notification with the FTC and the Antitrust Division of the Department of Justice (DOJ) and observe a waiting period before executing the transaction. It also has been made clear that the exemption applies only to passive investors for holdings up to 10% and have “no intention of participating in the formulation, determination, or direction of the basic business decisions of the issuer.”
Though the HSR Act provides for a fine of up to $16,000 for each day of violation, it was concluded that no monetary penalty should be imposed on Third Point because it was their first violation of the HSR Act and have quickly filed the necessary forms and thus, was out of compliance for a relatively short span of time.
The recent FTC action will likely serve as a reminder for investment firms to review HSR reportability requirements and maintain an effective compliance program to easily recognize HSR covered transactions and therefore, avoid violations and civil penalties.
In this two-hour LIVE Webcast, a panel of distinguished professionals and thought leaders assembled by The Knowledge Group will help you understand the important aspects of this significant topic. They will provide an in-depth discussion of the Hart-Scott-Rodino Act: Recognizing Covered Transactions. Speakers will also offer best practices in ensuring compliance with antitrust laws.
Key issues that will be covered in this course are:
- The Hart-Scott-Rodino Act - An Overview
- HSR "Investment-Only" Exemption
- HSR Threshold and Filing Requirements
- Key Issues and Common Violations
- Legal Challenges and Remedies
- Recent Court Decisions
- Recent Statutory Developments
- Possible Civil Penalties
- Best Compliance Practices
Paul S. Jin, Partner
Wilson Sonsini Goodrich & Rosati
Hart-Scott-Rodino Act - An Overview
- HSR Threshold and Filing Requirements
- Key Definitions and Covered Transactions
- Person, UPE, and Control
- HSR Triggers
- Common Exemptions
Gregory L. Kinzelman, Counsel
Hunton & Williams LLP
- HSR "Investment-Only" Exemption
John R. Ingrassia, Senior Counsel
Proskauer Rose LLP
Best Compliance Practices
- iv. Spotting potential filings
- v. Key issues and common violations
- vi. Providing regular reminders
- vii. Calendar important dates
- 1 year for filing expiration
- 5 years for notification threshold exemption
- Form and Filing Logistics
- viii. 4(c) document collections
- ix. Item 5 revenue reporting
- x. Valuation issues – how to calculate
- xi. Size-of-person
- xii. Corrective filings
James A. Fishkin, Partner
The Importance of Document Creation and Strategic Considerations During the HSR Waiting Period
- The Importance of Document Creation
- Parties required to produce internal documents analyzing competitive aspects of the transaction (4(c)/4(d) documents)
- 4(c)/4(d) documents are critical part of government’s initial review
- Words matter: choose them carefully
- Communications about the potential transaction or the state of competition
- Statements by company executives are often important evidence
- FTC seldom closes investigation with “hot” documents
- Good document-creation practices
- Strategic Considerations
- Initial Waiting Period
- Agencies will consult with and interview industries participants
- Factors that increase the likelihood of an investigation
- HSR “Pull-and-Refile” effectively extends initial waiting period from 30 to 60 days
- Best practices for utilizing “pull-and-refile” strategy
- Initial Waiting Period
Who Should Attend:
- Antitrust Lawyers and Attorneys
- Attorneys General
- Litigation Officers
- Civil Litigators
- Chief Compliance Officers
- Financial Executives and Directors
- Financial Reporting Personnel
- Corporate Executives
- In-house Counsel
- Private and Public Companies
- Other related/interested Professionals and Organizations
James A. Fishkin combines both government and private sector experience within his practice, which focuses on mergers and acquisitions covering a wide range of industries, including supermarket chains and other retailers, consumer and food product manufacturers, internet-based firms, chemical and industrial gas firms, and healthcare firms. He has been a key participant in several of the most significant litigated antitrust cases in the last two decades that have set important precedents, including representing Whole Foods Market, Inc. in FTC v. Whole Foods Market, Inc. and the Federal Trade Commission in FTC v. Staples, Inc. and FTC v. H.J. Heinz Co.
Mr. Fishkin has also played key roles in securing unconditional clearances for many high-profile mergers, including CVS/Target pharmacies, OfficeMax/Office Depot, and Monster/HotJobs, and approval for other high-profile mergers after obtaining successful settlements, including the merger of Albertsons/Safeway. He also served as the court-appointed Divestiture Trustee on behalf of the Department of Justice in the Grupo Bimbo/Sara Lee bread merger.
James A. Fishkin combines both government and private sector experience within his practice, which focuses on mergers and acquisitions covering …
John Ingrassia is a senior counsel in Proskauer’s Washington, D.C. office and advises clients on a wide range of antitrust matters in various industries, including chemicals, pharmaceutical, medical devices, telecommunications, financial services, health care, and others. His practice includes a significant focus on the analysis of Hart-Scott-Rodino pre-merger notification requirements, the coordination and submission of Hart-Scott-Rodino filings, and the analysis and resolution of antitrust issues related to mergers, acquisitions, and joint ventures. John has extensive experience with all aspects of the Hart-Scott-Rodino Act, and is regularly invited to participate in Federal Trade Commission and bar association discussions regarding HSR-related issues.
John also advises clients regarding international antitrust issues arising in proposed acquisitions and joint ventures, including reportability under the EC Merger Regulation and numerous other foreign competition filing regimes. He is a graduate of Pace University, and earned his JD from Hofstra University School of Law.
John Ingrassia is a senior counsel in Proskauer’s Washington, D.C. office and advises clients on a wide range of antitrust …
Greg Kinzelman's practice focuses on merger and acquisition antitrust issues, including Hart-Scott-Rodino Act compliance, Second Requests, and similar merger control statutes of other jurisdictions. Greg has extensive experience with Hart-Scott-Rodino Act compliance for complex transactions, including detailed knowledge of Federal Trade Commission and Department of Justice regulations and procedures. Greg's clients include companies in a wide range of businesses, including manufacturing, agricultural, transportation, computer, defense, energy, and health care. Greg served as Trial Attorney for the Federal Trade Commission, Bureau of Competition, prior to joining Hunton & Williams.
Greg Kinzelman's practice focuses on merger and acquisition antitrust issues, including Hart-Scott-Rodino Act compliance, Second Requests, and similar merger control …
Paul Jin is a partner in the firm’s antitrust practice. He advises clients on all antitrust aspects of merger matters, including negotiating terms of merger agreements, determining the applicability of merger clearance filing requirements in both U.S. and foreign jurisdictions, and advocating on behalf of clients before the Federal Trade Commission and the Department of Justice in connection with informal merger inquiries, Second Requests, third-party subpoenas, and conduct investigations. He has assisted with hundreds of Hart-Scott-Rodino notification forms for mergers, minority and asset acquisitions, and corrective filings, and is considered a leading HSR practitioner. Paul’s practice also includes antitrust counseling on issues such as diligence and pre-closing conduct procedures, internal compliance programs, and collaboration guidelines.
Paul served as a law clerk on the U.S. Senate Committee on the Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights.
Paul Jin is a partner in the firm’s antitrust practice. He advises clients on all antitrust aspects of merger matters, …
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