I

103D CONGRESS

1ST SESSION H. R. 470

To amend the Federal Aviation Act of 1958 to provide for review of certain

acquisitions of voting securities of air carriers, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 6, 1993

Mr. OBERSTAR introduced the following bill; which was referred to the

Committee on Public Works and Transportation

A BILL

To amend the Federal Aviation Act of 1958 to provide for

review of certain acquisitions of voting securities of air

carriers, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. AMENDMENTS TO THE FEDERAL AVIATION ACT

4 OF 1958.

5 (a) REVIEW PROCESS.—Title IV of the Federal Avia6 tion Act of 1958 (49 U.S.C. App. 1371–1389) is amended

7 by adding at the end thereof the following new section:
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1 ‘‘SEC. 420. REVIEW OF CERTAIN ACQUISITIONS OF VOTING

2 SECURITIES OF AIR CARRIERS.

3 ‘‘(a) GENERAL RULE.—No person shall acquire, di4 rectly or indirectly, any voting securities of a major air

5 carrier or person who controls a major air carrier unless

6 the acquiring person files notification pursuant to the

7 rules under subsection (d), the waiting period described

8 in subsection (b)(1) has expired, and the Secretary has

9 not disapproved such acquisition under subsection (c)—

10 ‘‘(1) if such acquisition is of 15 percent or more

11 of the voting securities of the acquired person; or

12 ‘‘(2) if, before such acquisition, the acquiring

13 person holds less than 15 percent of the voting secu14 rities of the acquired person and, as a result of such

15 acquisition, the acquiring person would hold 15 per16 cent or more of the voting securities of the acquired

17 person.

18 ‘‘(b) WAITING PERIOD.—

19 ‘‘(1) GENERAL RULE.—The waiting period re20 quired under subsection (a) shall—

21 ‘‘(A) begin on the date of receipt by the

22 Secretary of the completed notification required

23 under this section from the acquiring person;

24 and
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1 ‘‘(B) end on the 30th day after the date of

2 such receipt or such later date as may be set

3 under subsection (e)(2).

4 ‘‘(2) TERMINATION.—The Secretary may, in in5 dividual cases, terminate the waiting period specified

6 in paragraph (1) and allow any person to proceed

7 with any acquisition subject to this section and

8 promptly shall cause to be published in the Federal

9 Register a notice that the Secretary does not intend

10 to take any action within such period with respect

11 to such acquisition.

12 ‘‘(c) DISAPPROVAL.—The Secretary shall disapprove

13 an acquisition of voting securities subject to this section

14 if the Secretary finds—

15 ‘‘(1) that the acquistion is likely to weaken the

16 acquired person financially to such an extent—

17 ‘‘(A) that a deterioration in the ability of

18 the air carrier to comply with its established

19 safety procedures would occur;

20 ‘‘(B) that the air carrier would be unable

21 to take the steps necessary to continue to oper22 ate with the highest degree of safety;

23 ‘‘(C) that the air carrier would be required

24 to dispose of a substantial portion of its avia-
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1 tion-related assets in order to meet its financial

2 obligations; or

3 ‘‘(D) that a substantial deterioration in the

4 air carrier’s ability to compete in providing air

5 transportation would result;

6 ‘‘(2) that the probable intent of the acquiring

7 person is to make a major reduction in the size of

8 the air carrier by disposing of aviation-related as9 sets; except in any case in which—

10 ‘‘(A) such disposition would be necessary,

11 in the absence of the acquisition, to avoid the

12 financial failure of the air carrier,

13 ‘‘(B) the assets to be disposed of could not

14 be used profitably by the air carrier, or

15 ‘‘(C) such disposition would be in the pub16 lic interest;

17 ‘‘(3) that the acquisition would result in a per18 son who is not a citizen of the United States having

19 power to exercise control over the air carrier;

20 ‘‘(4) that the acquisition would result in a

21 major reduction in wages, benefits, or number of

22 employees of the air carrier which is not agreed to

23 by the employees and is required primarily as a re24 sult of added costs arising out of the acquisition; or
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1 ‘‘(5) that the acquiring person is not providing,

2 in a timely manner, the documentary material and

3 information required by the Secretary to make a de4 cision regarding the acquisition under this section.

5 ‘‘(d) FORM OF NOTIFICATION AND OTHER RULES.—

6 ‘‘(1) IN GENERAL.—The Secretary, by regula7 tion—

8 ‘‘(A) shall require that the notification

9 under subsection (a) be in such form and con10 tain such information and documentary mate11 rial relevant to a proposed acquisition as is nec12 essary to enable the Secretary to determine

13 whether such acquisition should be disapproved

14 under this section, and

15 ‘‘(B) may prescribe such other rules as

16 may be necessary and appropriate to carry out

17 the purposes of this section, including rules re18 lating to the submission by the air carrier of in19 formation or documentary material described in

20 subparagraph (A).

21 ‘‘(2) DEADLINE FOR ISSUANCE OF REGULA22 TIONS.—Not later than 10 days after the date of the

23 enactment of this section, the Secretary shall issue

24 regulations necessary to carry out the objectives of

25 this section.
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1 ‘‘(e) EXTENSION OF WAITING PERIOD.—

2 ‘‘(1) SUBMISSION OF ADDITIONAL INFORMA3 TION.—The Secretary may, before the expiration of

4 the 30-day waiting period specified in subsection

5 (b)(1), require the submission of additional informa6 tion or documentary material relevant to the pro7 posed acquisition, from a person required to file no8 tification with respect to such acquisition under sub9 section (a), from the air carrier, or from any officer,

10 director, partner, agent, or employee of such person.

11 ‘‘(2) DURATION.—The Secretary, in his discre12 tion, may extend the 30-day waiting period specified

13 in subsection (b)(1) for an additional period of not

14 more than 20 days after the later of—

15 ‘‘(A) the date on which the Secretary re16 ceives from the acquiring person or any officer,

17 director, partner, agent, or employee of such

18 person all of the information and documentary

19 material required to be submitted pursuant to

20 a request under paragraph (1); or

21 ‘‘(B) the date by which the air carrier or

22 any officer, director, partner, agent, or em23 ployee of the air carrier is directed to submit

24 information or documentary material pursuant

25 to a request under paragraph (1).
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1 ‘‘(f) PROTECTION OF INFORMATION.—Any informa2 tion or documentary material filed with the Secretary

3 pursuant to this section shall be exempt from disclosure

4 under section 552 of title 5, United States Code, and no

5 such information or documentary material may be made

6 public, except as may be relevant to any administrative

7 or judicial action or proceeding. Nothing in this section

8 is intended to prevent disclosure to either House of Con9 gress or to any duly authorized committee or subcommit10 tee of Congress.

11 ‘‘(g) COMPUTATION OF VOTING SECURITIES.—For

12 purposes of this section, the amount or percentage of vot13 ing securities of a person which are acquired or held by

14 another person shall be determined by aggregating the

15 amount or percentage of such voting securities held or ac16 quired by such other person and each affiliate thereof.

17 ‘‘(h) DEFINITIONS.—As used in this section—

18 ‘‘(1) MAJOR AIR CARRIER.—The term ‘major

19 air carrier’ means an air carrier with annual reve20 nues of more than $750,000,000.

21 ‘‘(2) VOTING SECURITIES.—The term ‘voting

22 securities’ means any securities which at present or

23 upon conversion entitle the owner or holder thereof

24 to vote for the election of directors of the issuer or,
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1 with respect to unincorporated issuers, persons exer2 cising similar functions.’’.

3 (b) CONFORMING AMENDMENT.—The portion of the

4 table of contents contained in the first section of the Fed5 eral Aviation Act of 1958 relating to title IV of such Act

6 is amended by adding at the end thereof the following new

7 item:

‘‘Sec. 420.Review of certain acquisitions of voting securities of air carriers.’’.

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