(en) FTC Will Disclosed Announced Mergers, Accept Email on Me

Ewald (ewald@ctaz.com)
Sat, 12 Apr 1997 13:31:41 -0700


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------- Forwarded Message Follows ------- Date: Fri, 11 Apr 1997 16:26:03 -0400 (EDT) Reply-to: love@tap.org From: James Love <love@tap.org> To: Multiple recipients of list <info-policy-notes> Subject: FTC Will Disclosed Announced Mergers, Accept Email on Merge= rs

----------------------------------------------------------------- Info-Policy-Notes - A newsletter available from listproc@tap.org ----------------------------------------------------------------- INFORMATION POLICY NOTES April 11, 1997

FTC to enhance public role in merger review process

James Love (love@tap.org, 202.387.8030)

Today the FTC issued a "Notice of Policy of Disclosing Investigations." The Notice reversed longstanding FTC policy of refusing to disclose any mergers reviewed under Hart-Scott-Rodino Act. This practice had created an unnecessary level of secrecy for agency merger reviews, making it more difficult for citizens to participate in the merger review process. Today's decisions permits the FTC to disclose basic information regarding the existence of a merger view process, and mechanisms for communicating with the FTC about the merger review, when the merging companies have disclosed information about the merger to the press, or in a publicly available filing, such as in an SEC disclosure document.

This will pave the way for the agency to disseminate more information about the merger review process to the general public. For example, under today's decision, the FTC could publish on its Web page the names of every publicly disclosed merger review, with agency contact information for each publicly disclosed merger. This would enhance the public opportunity to learn which mergers are pending, and how one could communicate with the FTC to inform its deliberations.

In a related development, the FTC has established two new email address for contacting the FTC. To contact the FTC on a matter concerning antitrust (including a merger review) send email to: antitrust@ftc.gov (no period). To contact the FTC on a matter involving consumer protection, send email to consumerline@ftc.gov (no period).

Both steps were taken in response to a request sent to the FTC on March 5, 1997, by CPT and more than 100 pubilc interest groups, businesses, professors and citizens who asked the FTC to use the Internet to enhance the public's participation in the merger review process. (See: http://www.essential.org/antitrust/march51997.html). The FTC first accepted electronic mail in the Staples/Office Depot merger. Today the FTC reported that it had received about 2,500 comments on the Staples merger by electronic mail. The FTC and several states are now seeking to block this merger.

Four members of the FTC voted for the change in policy. Commissioner Mary L. Azcuenaga agreed in part, and dissented in part. The FTC's notice and Commissioners Azcuenaga's dissent are attached.

Jamie

[Billing Code 6750-01]

FEDERAL TRADE COMMISSION

Notice of Policy of Disclosing Investigations of Announced Mergers

AGENCY: Federal Trade Commission.

ACTION: Notice of revised policy.

SUMMARY: The Federal Trade Commission is revising its policy concerning disclosure of investigations. The Commission's policy is to conduct its investigations on a nonpublic basis. In the past, the Commission has established some narrow exceptions to that policy. The Commission is now establishing an additional exception for circumstances in which a party to a merger or other transaction has publicly disclosed the existence of a transaction or proposed transaction in a press release or in a public filing with a governmental body. In those limited circumstances, the Commission authorizes public disclosure of whether the agency is investigating the transaction or proposal under Sections 7 and 11 of the Clayton Act. Inquiries seeking disclosure under this authority should be addressed to the Commission's Office of Public Affairs.

This change of policy will more closely conform the Commission's practice in such matters with that of the Antitrust Division of the Department of Justice. The change of policy does not alter the Commission's confidentiality policies or practices with respect to documents and information submitted to or developed by the agency in connection with such investigations, or with respect to information concerning the course of such investigations. The change of policy also does not affect the Commission's confidentiality policies or practices regarding any other types of investigations.

EFFECTIVE DATE: [Insert date of publication in the FEDERAL REGISTER].

FOR FURTHER INFORMATION CONTACT: Victoria A. Streitfeld, Office of Public Affairs, 202-326-2718, or Stephen Calkins, General Counsel, 202-326-2481.

SUPPLEMENTARY INFORMATION: The Commission's policy is to hold confidential the existence and targets of law enforcement investigations, until either the Commission issues or authorizes a complaint or the matter is closed. See 42 FR 64135, Dec. 22, 1977. The Commission believes generally that public disclosure of pending investigations and identification of targets before the Commission has had an opportunity to weigh the evidence may unjustifiably harm the companies investigated and interfere with the conduct and successful resolution of such matters. The laws applicable to the Commission do not, however, require confidential treatment of the existence of investigations, and the Commission's policy has long included narrow exceptions for disclosure of "industrywide investigations" (where particular targets are not identified), and of particular investigations that involve significant risk of economic harm or risk to public health or safety.

The Commission is now establishing a further exception, permitting disclosure of whether the agency is investigating a proposed or consummated merger or other transaction under Sections 7 and 11 of the Clayton Act, 15 U.S.C. 18, 21, where a party to the transaction has issued a press release or made a public filing with a governmental body that discloses the existence of the transaction. The Commission considers the concerns underlying the general policy of nondisclosure to have little application in these instances. Furthermore, while the Hart-Scott-Rodino ("HSR") Act prohibits the Commission from making public (except in specified circumstances) "information or documentary material filed with the . . . Commission pursuant to" that Act, 15 U.S.C. 18a(h), nothing in the HSR Act prevents the Commission from publicly disclosing information that has already been made available to the public by a party, even if that information is also included in an HSR filing. Accordingly, where a party has issued a press release or made a public filing with a governmental body that discloses the existence of a transaction or proposed transaction, the Commission authorizes public disclosure of whether the agency is investigating the matter. This approach conforms closely with that of the Antitrust Division of the Department of Justice, with which the Commission shares enforcement of the Clayton Act.

Regardless of whether a transaction or proposed transaction is reported by the media, however, the agency will disclose an investigation under this authority only after the Office of Public Affairs (or another designated office) has confirmed that a party has in fact disclosed the existence of the transaction or proposal in the manner stated. Inquiries seeking disclosure under this authority should be addressed to the Office of Public Affairs.

The Commission is not changing its treatment of any other information relating to mergers or similar transactions. Thus, the authority granted here to disclose the existence of certain investigations does not include authority to disclose any details about those investigations. In particular, because the Commission considers the HSR Act to restrict disclosure of whether a party to a proposed transaction has filed a notification under that Act, the agency will not, except as permitted by that law, reveal whether a filing under HSR has been made. The Commission will continue to keep confidential, as appropriate under its existing laws and policies, documents and information submitted pursuant to the HSR Act or relating to an investigation under that Act. The policy revision also does not affect the confidentiality treatment of other types of investigation under the Commission's antitrust or consumer protection authority.

By direction of the Commission.

Donald S. Clark

Secretary

----------------------------------------------------

Statement of Commissioner Mary L. Azcuenaga

Concurring in Part and Dissenting in Part

On Decision to Authorize Public Disclosure of

Certain Merger Investigations

The policy the Commission announces today in most, perhaps all, respects comports with common sense and is long overdue. The policy enables the Commission to confirm certain otherwise nonpublic information after it has been confirmed (reliably, as defined in the policy) by third parties. The policy also enables the Commission to confirm certain nonpublic informatio= n that has not been confirmed by third parties. Under the new policy, the Commission will confirm the fact that it is investigating a transaction after the transaction itself has been made public and regardless of whethe= r the fact of the investigation has been made public by third parties.

The Commission long has followed a policy of declining to confirm the existence of its investigations until it issues or authorizes filing of a complaint, or until the matter is closed.(1) This policy is based on the premise that public disclosure of pending investigations and identificatio= n of targets can interfere with the conduct and successful resolution of suc= h matters.(2) The Commission concluded in the 1977 Policy Statement that "disclosure of the identities of businesses under investigation would caus= e those businesses severe economic injury even before the Commission determines whether there is reason to believe the law has been violated."

I have been informed that the business community will have no objection to having the Commission confirm the fact that it is investigating a transaction even if the parties have not confirmed the fact of the investigation. I do not know the basis for this information. Assuming the information is correct, I support the new policy in its entirety because t= he policy presumably would not result in the harm the Commission identified i= n 1977.(3) Nevertheless, I would have preferred to seek comment on this aspe= ct of the new policy before adopting it. Good reasons support the Commission'= s long standing policy not to confirm or deny the existence of a nonpublic investigation, and the Commission has been able to live with that policy f= or many years. It seems appropriate and not unduly burdensome for the Commission to seek public comment on this aspect of the proposal for thirt= y days before adopting it. To the extent that the Commission has chosen not = to seek public comment, I dissent.

1. In 1977, the Commission reaffirmed its then-current policy of maintaini= ng the confidentiality of most nonpublic investigations. See FTC Policy Statement, 42 Fed. Reg. 64,135 (Dec. 22, 1977)("1977 Policy Statement"). This Policy Statement sets forth exceptions for industrywide investigation= s and investigations involving "significant risk of economic harm or risk to public health or safety." In addition, certain investigations may become public by operation of law or the Commission's Rules, for example, on fili= ng of a petition to quash compulsory process, 16 C.F.R. =A7 4.9(b)(4), on fil= ing of an application for clearance, 16 C.F.R. =A7 4.9(10)(ii), or on publicat= ion in the Federal Register of a notice of early termination under the Clayton Act, 15 U.S.C. =A7 18a(b)(2).

2. Id. See also Exemption 7A to the mandatory public disclosure requiremen= ts of the Freedom of Information Act, 5 U.S.C. =A7 552(b)(7)(A); and Exemptio= n 7A to the open meeting requirements of the Government in the Sunshine Act, 5 U.S.C. =A7 552b(c)(7)(A).

3. See note 1.

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INFORMATION POLICY NOTES is a newsletter sponsored by the Consumer Project on Technology (CPT), a project of Ralph Nader's Center for Study of Responsive Law. The LISTPROC services are provide by Essential Information. Archives of Info-Policy-Notes are available from http://www.essential.org/listproc/info-policy-notes/ (no period). CPT's Web page is http://www.cptech.org (no period). CPT can both be reached off the net at P.O. Box 19367, Washington, DC 20036, Voice: 202/387-8030; Fax: 202/234-5176. Subscription requests to listproc@tap.org with the message: subscribe info-policy-notes Jane Doe

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