HSR '10 SS FIN_mtd

Supporting Statement for
Hart-Scott-Rodino (Premerger Notification) Rules and Report Form
16 C.F.R. Parts 801-803
(OMB Control No. 3084-0005)
The Federal Trade Commission (“FTC” or “Commission”) is seeking renewed clearance
for the current PRA clearance for information collection requirements contained its Antitrust
Improvements Act Rules (“HSR Rules”) and corresponding Notification and Report Form for
Certain Mergers and Acquisitions (“Notification and Report Form”), 16 C.F.R.. Parts 801-803.
That clearance expires on May 31, 2010.
1. and 2.

Necessity for and Use of the Information Collection

Section 7A of the Clayton Act (“Act”), 15 U.S.C. § 18a, as amended by the Hart-ScottRodino Antitrust Improvements Act of 1976, Pub. L. 94-435, 90 Stat. 1390, requires parties of a
certain size contemplating large acquisitions to file notification with the Federal Trade
Commission and the Assistant Attorney General in charge of the Antitrust Division of the
Department of Justice (“Assistant Attorney General”) and wait a specified time period before
consummating the transaction. Section 7A(d) of the Act states that the Commission, with the
concurrence of the Assistant Attorney General:
shall require that the notification required under subsection (a) [of the Act] be in such
form and contain such documentary material and information relevant to a proposed
acquisition as is necessary and appropriate to enable the Federal Trade Commission and
the Assistant Attorney General to determine whether such acquisitions may, if
consummated, violate the antitrust laws; and . . . prescribe such other rules as may be
necessary and appropriate to carry out the purposes of . . . [the Act].
Pursuant to its rulemaking authority, the Commission promulgated § 803.1(a) of the HSR
Rules, among other rules, designating the Antitrust Improvements Act Notification and Report
Form together with all documentary attachments, as the notification required by the Act. The
information and documentary material required by the Notification and Report Form provide the
Commission and the Antitrust Division with the opportunity to review mergers and acquisitions
and take appropriate enforcement action before consummation.
The premerger notification program has been in effect since September 5, 1978, when the
implementing rules became final. The HSR Rules are divided into three parts, which appear at
16 C.F.R. Parts 801, 802, and 803. Part 801 defines a number of the terms used in the Act and
the HSR Rules, and explains which acquisitions are subject to the reporting and waiting period
requirements. Part 802 contains a number of exemptions from these requirements. Part 803
explains the procedures for complying with the Act. The Notification and Report Form, which is
completed by persons required to file notification, is an appendix to Part 803 of the HSR Rules.
Changes of a substantive nature have been made in the premerger notification rules or the
Notification and Report Form on several occasions.

3.

Use of Information Technology

Consistent with the Government Paperwork Elimination Act, Pub. L. No. 105-277, Title
XVII, 112 Stat. 2681-749, the Notification and Report Form is available electronically and
payment may be made by electronic funds transfer. Furthermore, electronic submission of the
Notification and Report Form was introduced in 2006.1
4.

Efforts to Identify Duplication

Most of the information required by the Notification and Report Form is not available
from other government agencies or public sources. Prior to passage of the Act, efforts were
made to obtain information that is necessary for a preliminary antitrust analysis from other
sources but these sources proved to be inadequate for law enforcement purposes. The
information that was available was not the type of information needed nor was it available on a
timely basis. It was the lack of alternative sources or information and the need to receive
information quickly that motivated Congress to enact Section 7A.
5.

Efforts to Minimize Small Organization Burden

The premerger notification program does not affect small businesses or other small
entities. The requirements of the Act do not apply to acquisitions valued at $63.4 million2 or
less. In addition, a firm must have sales or assets of at least $12.7 million to be subject to the
requirements of the Act. A firm with assets of less than $12.7 million would also be subject to
the requirements of the Act, but only if it intends to acquire assets valued at more than $253.7
million or if it is an acquisition target that has been valued at more than $253.7 million.
6.

Consequences to Program if Collection Done Less Frequently

The Act requires parties of a certain size who are contemplating proposed acquisitions of
a specified minimum amount to file a notification report with the Commission and the Antitrust
Division before consummating the transaction. Collection of information on a less frequent
basis would be contrary to the Act since the enforcement agencies must review proposed
acquisitions before they are consummated. Moreover, individual firms, not the enforcement
agencies, control the frequency of filing.
7.

Circumstances Requiring Collection Inconsistent with Guidelines

The collection of information in the HSR Rules and the Notification and Report Form is
1

71 Fed. Reg. 35,995 (June 23, 2006).

2

The 2000 amendments to Section 7A require the Commission to revise the Act’s jurisdictional and filing fee
thresholds annually, based on the change in gross national product, in accordance with Section 8(a)(5) for each
fiscal year beginning after September 30, 2004. See 15 U.S.C. 18a(a). The current adjusted thresholds appear
at 75 Fed. Reg. 3468 (January 21, 2010). These thresholds became effective on February 22, 2010.

2

consistent with all applicable guidelines contained in 5 C.F.R. § 1320.5(d)(2).
8.

Public Comments/Consultation outside the Agency

The HSR Rules and the Notification and Report Form are a product of informal
consultations with the affected public to develop a fuller understanding of the issues and
methods of addressing them. In the instant context, in accordance with 5 C.F.R. 1320.8(d), the
FTC sought public comment in order to extend the existing the PRA clearance for the HSR
Rules and the Notification and Report Form. See 75 Fed. Reg. 8991 (Feb. 26, 2010). No
comments were received. Consistent with 5 C.F.R. 1320.12, the FTC is seeking comment again
contemporaneous with this submission.
9.

Payments of Gifts to Respondents

Not applicable
10. and 11.

Assurances of Confidentiality/Matters of a Sensitive Nature

The enforcement agencies are prohibited by Section 7A(h) of the Act from disclosing to
the public information and documentary materials filed under the premerger notification
program “except as may be relevant to an administrative or judicial action or proceeding.” The
Commission has implemented procedures to assure the confidentiality of the submitted
information.
The Notification and Report Form does not request any information of a sensitive,
personal nature that is commonly considered private.
12.

Estimated Annual Hours Burden: 33,298 hours

The following burden estimates are primarily based on FTC data concerning the number
of HSR filings and staff's informal consultations with leading HSR counsel.
In the FTC’s 2007 PRA submission to OMB regarding the HSR Rules and the
Notification and Report Form, FTC staff estimated that there were 32 “index filings” under
Clayton Act Sections 7A(c)(6) and 7A(c)(8) that required 2 hours per filing, and 3,966 non-index
filings that required, on average, approximately 39 hours per filing. Moreover, staff estimated
that approximately 91 non-index transactions would require an additional 40 hours of burden due
to the need for a more precise valuation of transactions that are near a filing fee threshold.
In fiscal year 2009 there were 1,411 non-index filings and 24 index filings. Based on an
average decrease of 40.4% in fiscal year 2007 - fiscal year 2009 in the number of non-index
filings, staff projects a total of 841 non-index filings for fiscal year 2010. Likewise, based on an
average decrease of 18.4% in index filings over the same time period, staff projects a total of 20
index filings for fiscal year 2010. Retaining the FTC's prior assumptions, staff estimates that
non-index filings require approximately 39 burden hours per filing and index filings require an
3

average of 2 hours per filing. Moreover, staff estimates that for fiscal year 2010 approximately
22 non-index transactions will require an additional 40 hours of burden due to the need for more
precise valuation of transactions that are near a filing fee threshold. Thus, the total estimated
hours burden before adjustments is 33,719 hours [(841 non-index filings x 39 hours) + (20 index
filings x 2 hours) + (22 acquiring person non-index filings requiring more precise valuation x 40
hours)].
As in the past, however, staff further estimates that half of those submitting non-index
filings will incorporate Item 4(a) and Item 4(b) documents by reference to an Internet link, and
that doing so will reduce individual burden by one hour. Accordingly, the cumulative reduction
to the above total would be 421 hours (841 non-index filings x ½ 421, multiplied by 1 hour),
resulting in net estimated burden for fiscal year 2010 of 33,298 hours.
This estimate is conservative. In estimating PRA burden, staff considered “the total time,
effort, or financial resources expended by persons to generate, maintain, retain, disclose or
provide information to or for a Federal agency.” 5 CFR 1320.3(b)(1). This includes
“developing, acquiring, installing, and utilizing technology and systems for the purpose of
disclosing and providing information.” 5 CFR 1320.3(b)(1)(iv). Although not expressly stated
in the OMB definitions regulation implementing the PRA, the definition of burden arguably
includes upgrading and maintaining computer and other systems used to comply with a rule's
requirements. Conversely, to the extent that these systems are customarily used in the ordinary
course of business independent of the Rule, their associated upkeep would fall outside the realm
of PRA “burden.” See 5 CFR 1320.3(b)(2).
Industry has been subject to the basic provisions of the HSR Rules since 1978. Thus,
businesses have had several years (and some have had decades) to integrate compliance systems
into their business procedures. Accordingly, most companies now maintain records and provide
updated order information of the kind required by the HSR Rules in their ordinary course of
business. Nevertheless, staff conservatively assumes that the time devoted to compliance with
the Rule by existing and new companies remains unchanged from its preceding estimate.
Estimated labor costs: $15,317,080
Using the burden hours estimated above and applying an estimated average of $460/hour
for executive and attorney wages, staff estimates that the total labor cost associated with the
HSR Rules and the Notification and Report Form is approximately $15,317,080 (33,298 hours x
$460/hour).
13.

Estimated Capital/Other Non-Labor Costs Burden

The applicable requirements impose minimal start-up costs, as businesses subject to the
HSR Rules generally have or obtain necessary equipment for other business purposes. Staff
believes that the above requirements necessitate ongoing, regular training so that covered entities
stay current and have a clear understanding of federal mandates, but that this would be a small
portion of and subsumed within the ordinary training that employees receive apart from that
4

associated with the information collected under the HSR Rules and the corresponding
Notification and Report Form.
14.

Estimated Cost to Federal Government

The total cost to the Commission for the premerger notification program for fiscal year
2009 was approximately $3.1 million. This includes the cost of administering the overall
program, a responsibility with which the Commission is charged under the Act. The costs cover
professional and clerical salaries and expenses for the performance of an initial antitrust review of
the filings submitted to the Commission.
In fiscal year 2009, the Antitrust Division of the U.S. Department of Justice expended
$297,913 in salary and overhead costs in support of the initial processing of premerger
notifications by its Premerger Office. The Department of Justice does not allocate costs of initial
substantive review to the program.
Thus, the total cost to the federal government is approximately $3,397,913.
15.

Program Changes or Adjustments

Owing to the downward trend in filings between fiscal year 2007 (coinciding with the
most recent prior clearance request and approved estimates) and fiscal year 2009, burden hours
estimates, based on projected filings, are proportionately reduced. Thus, the prior cumulative
burden estimate of 156,395 hours (based on 3,966 non-index filings, 91 non-index filings
requiring more precise valuation, and 32 index filings) is reduced to 33,298 hours (based on fiscal
year 2010 projected totals of 841 non-index filings, 22 non-index filings requiring more precise
valuation, and 20 index filings).
16.

Statistical Use of Information

Collection of information under the Act is for law enforcement purposes. There are no
plans to publish information collected as a result of the premerger notification program.
17.

Requesting Permission Not to Display Expiration Date for OMB Approval

Not applicable; the OMB control number and expiration date appears in the upper righthand corner of page 1 of the Notification and Report Form.
18.

Exceptions to Certification

Not applicable.

5