34592 Federal Register / Vol. 63, No. 122 /Thursday, June 25, 1998 /Rules and Regulations

Inspector, who may add comments and then

send it to the Manager, International Branch,

ANM–116.

Note 2: Information concerning the

existence of approved alternative methods of

compliance with this AD, if any, may be

obtained from the International Branch,

ANM–116.

(c) Special flight permits may be issued in

accordance with sections 21.197 and 21.199

of the Federal Aviation Regulations (14 CFR

21.197 and 21.199) to operate the airplane to

a location where the requirements of this AD

can be accomplished.

(d) The installation shall be done in

accordance with British Aerospace Regional

Aircraft Service Bulletin J41–11–020, dated

November 10, 1997. This incorporation by

reference was approved by the Director of the

Federal Register in accordance with 5 U.S.C.

552(a) and 1 CFR part 51. Copies may be

obtained from AI(R) American Support, Inc.,

13850 Mclearen Road, Herndon, Virginia

20171. Copies may be inspected at the FAA,

Transport Airplane Directorate, 1601 Lind

Avenue, SW., Renton, Washington; or at the

Office of the Federal Register, 800 North

Capitol Street, NW., suite 700, Washington,

DC.

Note 3: The subject of this AD is addressed

in British airworthiness directive 015–11–97.

(e) This amendment becomes effective on

July 30, 1998.

Issued in Renton, Washington, on June 17,

1998.

Darrell M. Pederson,

Acting Manager, Transport Airplane

Directorate, Aircraft Certification Service.

[FR Doc. 98–16703 Filed 6–24–98; 8:45 am]

BILLING CODE 4910–13–U

FEDERAL TRADE COMMISSION

16 CFR Part 802

Premerger Notification; Reporting and

Waiting Period Requirements

AGENCY: Federal Trade Commission.

ACTION: Final rule with request for

comments.

SUMMARY: This final rule amends the

premerger notification rules that require

the parties to certain mergers or

acquisitions to file reports with the

Federal Trade Commission and the

Assistant Attorney General in charge of

the Antitrust Division of the Department

of Justice, and to wait a specified period

of time before consummating such

transactions. The reporting and waiting

period requirements are intended to

enable these enforcement agencies to

determine whether a proposed merger

or acquisition may violate the antitrust

laws if consummated and, when

appropriate, to seek a preliminary

injunction in federal court to prevent

consummation. During the nineteen

years the rules have been in effect, the

Federal Trade Commission, with the

concurrence of the Assistant Attorney

General for Antitrust, has amended the

premerger notification rules several

times to improve the program’s

effectiveness and to lessen the burden of

complying with the rules. This final rule

amends Rule 802.70, which exempts

from the reporting requirements

acquisitions of stock or assets required

to be divested by an order of the Federal

Trade Commission or of any Federal

court in an action brought by the

Commission or the Department of

Justice. As amended the Rule will

exempt as well divestitures pursuant to

consent agreements that have been

accepted by the Commission for public

comment or have been filed with a court

by the Commission or the Department of

Justice and are subject to public

comment, but are not yet final orders.

These transactions are adequately

reviewed for potential antitrust

concerns during the approval process

under the consent agreement, in which

the antitrust agencies determine that the

divestiture to that party does not raise

antitrust concerns. The Commission has

thus made this change to Section 802.70

because such acquisitions are unlikely

to raise antitrust concerns.

The Commission has made this final

rule without notice and comment

because notice and comment would be

unnecessary and the delay in

implementing the rule would be

contrary to the public interest. Section

802.70 already exempts from the

reporting requirements transactions that

satisfy divestiture requirements under

Commission or Court orders in cases

brought by the Commission or the

Department of Justice. The amendment

merely extends the exemption to

transactions entered into before the

relevant order has been made final.

Whatever delay and cost result from the

HSR reporting requirements are contrary

to the public interest where the antitrust

agencies already have notice of the

transaction and have completed their

review.

Notice and comment in this matter are

unnecessary because the Commission

has already exempted acquisitions

pursuant to a final divestiture order, and

there is no relevant difference between

the two situations. The agencies in each

case already have all the notice and

information they would otherwise

obtain under HSR. No other person has

access to or interest in the information

provided under HSR, and therefore no

other person has an interest in ensuring

a filing in these circumstances.

DATES: This final rule is effective on

June 25, 1998. The Commission will,

however, accept comments on the

revised rule that are received on or

before July 27, 1998, and may reevaluate

the rule in light of those comments.

ADDRESSES: Written comments should

be submitted to both (1) the Secretary,

Federal Trade Commission, Room 159,

Washington, D.C. 20580, and (2) the

Assistant Attorney General, Antitrust

Division, Department of Justice, Room

3214, Washington DC 20530.

FOR FURTHER INFORMATION CONTACT:

Roberta S. Baruch, Deputy Assistant

Director, Bureau of Competition, Room

S–2115, Federal Trade Commission,

Washington, DC 20580. Telephone:

(202) 326–2687.

SUPPLEMENTARY INFORMATION:

Regulatory Flexibility Act

The Regulatory Flexibility Act, 5

U.S.C. 601–12, requires that the agency

conduct an analysis of the anticipated

economic impact of the proposed

amendment on small businesses.

The purpose of a regulatory flexibility

analysis is to ensure that the agency

considers impact on small entities and

examines alternatives that could achieve

the regulatory purpose while

minimizing burdens on small entities.

Section 605 provides, however, that

such an analysis is not required if the

agency head certifies that the regulatory

action will not have a significant

economic impact on a substantial

number of small entities. Because of the

size of the transactions necessary to

invoke a Hart-Scott-Rodino filing, the

premerger notification rules rarely, if

ever, affect small businesses.

Furthermore, the amendment will

merely exempt companies from HartScott-Rodino reporting requirements for

certain transactions. Accordingly,

pursuant to the Regulatory Flexibility

Act provisions of the Administrative

Procedure Act, 5 U.S.C. 605(b), the

Federal Trade Commission has certified

that this rule will not have a significant

economic impact on a substantial

number of small entities. Section 603 of

the Administrative Procedure Act, 5

U.S.C. 603, requiring a final regulatory

flexibility analysis of these rules; is

therefore, inapplicable.

Paperwork Reduction Act

The premerger notification rules and

report form contain information

collection requirements that have been

reviewed and approved by the Office of

Management and Budget under OMB

Control Number 3084–0005. The

Paperwork Reduction Act, 44 U.S.C.

3501 et seq., requires agencies to submit

requirements for ‘‘collections of

information’’ to OMB and obtain
Federal Register / Vol. 63, No. 122 /Thursday, June 25, 1998 /Rules and Regulations 34593

clearance prior to instituting them. Such

collections of information include

reporting, recordkeeping, or disclosure

requirements contained in regulations.

The proposed amendment does not

impose any such requirements beyond

those that have already been approved

by OMB. The amendment will exempt

reporting requirements for transactions

that have been made pursuant to

consent agreements that have been

accepted by the Commission for public

comment or that have been filed with a

court by the Commission or the

Department of Justice for public

comment, but that are not yet final

orders. This revision will eliminate an

unnecessary burden in connection with

these acquisitions and will generally

provide some reduction of the

Paperwork Reduction Act burden

currently associated with the Rule.

Background

Section 7A of the Clayton Act, 15

U.S.C. 18a, as added by §§ 201 and 202

of the Hart-Scott-Rodino Antitrust

Improvements Act of 1976 (‘‘the act’’ or

‘‘HSR’’), requires persons contemplating

certain acquisitions of assets or voting

securities to give advance notice to the

Federal Trade Commission (hereafter

referred to as ‘‘the Commission’’) and

the Assistant Attorney General in charge

of the Antitrust Division of the

Department of Justice (hereafter referred

to as ‘‘the Assistant Attorney General’’),

and to wait certain designated periods

before the consummation of such

acquisitions. The transactions to which

the advance notice requirement is

applicable and the length of the waiting

period required are set out respectively

in subsections (a) and (b) of § 7A. This

amendment to the Clayton Act did not

change the standards used in

determining the legality of mergers and

acquisitions under the antitrust laws.

The legislative history suggests

several purposes underlying the act.

Congress wanted to assure that large

acquisitions were subjected to

meaningful scrutiny under the antitrust

laws prior to consummation. To this

end, Congress expressly intended to

eliminate the large ‘‘midnight merger,’’

which is negotiated in secret and

announced just before, or sometimes

only after, the closing takes place.

Congress also provided an opportunity

for the Commission or the Assistant

Attorney General (who are sometimes

hereafter referred to collectively as the

‘‘antitrust agencies’’ or the ‘‘enforcement

agencies’’) to seek a court order

enjoining the completion of those

transactions that the agencies deem to

present significant antitrust problems.

Finally, Congress sought to facilitate an

effective remedy when a challenge by

one of the enforcement agencies proved

successful.

Thus, the act requires that the

antitrust agencies receive prior

notification of certain acquisitions;

provides certain tools to facilitate a

prompt, thorough investigation of the

competitive implications of those

acquisitions; and assures the

enforcement agencies an opportunity to

seek a preliminary injunction before the

parties to an acquisition are legally free

to consummate it, reducing the problem

of unscrambling the assets after the

transaction has taken place.

Subsection 7A(d)(1) of the act, 15

U.S.C. 18a(d)(1), directs the

Commission, with the concurrence of

the Assistant Attorney General, in

accordance with the Administrative

Procedure Act, 5 U.S.C. 553, to require

that the notification be in such form and

contain such information and

documentary material as may be

necessary and appropriate to determine

whether the proposed transaction may,

if consummated, violate the antitrust

laws. Subsection 7A(d)(2) of the act, 15

U.S.C. 18a(d)(2), grants the Commission,

with the concurrence of the Assistant

Attorney General, in accordance with 5

U.S.C. 553, the authority to: (a) define

the terms used in the act; (b) exempt

additional classes of persons or

transactions which are not likely to

violate the antitrust laws from the act’s

notification and waiting period

requirements; and (c) prescribe such

other rules as may be necessary and

appropriate to carry out the purposes of

§ 7A.

The rules are divided into three parts,

which appear at 16 CFR Parts 801, 802,

and 803. Part 801 defines a number of

the terms used in the act and 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 rules. Changes of a

substantive nature have been made in

the premerger notification rules or Form

on nine occasions since they were first

promulgated.

The Commission recognizes that the

premerger notification obligations can

create delay and impose the cost of the

filing fee even for acquisitions that do

not raise competitive concerns, and that

this delay and cost can impose burdens

on buyers and sellers. The delay that

occurs is the necessary consequence of

preventing consummation while the

antitrust agencies assess the likelihood

that proposed transactions will violate

the antitrust laws. The special treatment

of cash tender offers in section

7A(b)(1)(b) of the Act illustrates

congressional concern to avoid

unnecessary disruption of the operation

of the market for corporate control. See

122 Cong. Rec. H. 10,293 (daily ed. Sept.

16, 1976). In addition, the Commission

has tried to minimize any unnecessary

disruptive effect of premerger review by

the design of its procedures and the

speed with which it reviews proposed

transactions and in a majority of

transactions grants early termination of

the waiting period. Moreover, whenever

the Commission can determine that a

class of transactions is unlikely to

violate the antitrust laws, it has sought,

with the concurrence of the Assistant

Attorney General for Antitrust, to

exempt such transactions from all

notification obligations and the delay

and cost inherent in premerger review.

Statement of Basis and Purpose for the

Commission’s Revised Premerger

Notification Rules

The Commission, with the

concurrence of the Assistant Attorney

General, promulgates this amendment

pursuant to 15 U.S.C. 18a(d).

Section 802.70 of the Rules exempts

from the reporting requirements

acquisitions of assets or voting

securities from an entity required to

divest such assets by order of the

Federal Trade Commission or of any

Federal Court in an action brought by

the Federal Trade Commission or the

Department of Justice. The agencies

have recognized that there is no need for

filing under HSR in these

circumstances. Under existing

procedures the agencies already review

divestitures required by final orders.

This review gives the agencies the full

opportunity to weigh the competitive

impact of the proposed transaction prior

to consummation and to prevent the

transaction if appropriate, the same goal

that HSR was designed to accomplish.

Both the Commission’s Rules of

Practice and the Antitrust Procedures

and Penalties Act require a proposed

settlement to be published in the

Federal Register for a 60-day public

comment period. Proposed orders thus

do not become final until at least 60

days following their acceptance by the

parties and the antitrust agencies, and

therefore the exemption created by

section 802.70 of the Rules does not

apply to any divestiture that might be

made during the period between

acceptance of a settlement and issuance

of a final order, even if such divestiture

were to an acquirer and according to a
34594 Federal Register / Vol. 63, No. 122 /Thursday, June 25, 1998 /Rules and Regulations

contract that is specified in the

proposed settlement.

Recently, the Commission has been

shortening the time period in which

divestiture is to take place and has more

frequently included specific approved

acquirers and reference specific

divestiture agreements in proposed

orders when the Commission accepts

proposed orders for public comment.

This trend has increased the likelihood

that the divestiture transaction will

occur before there is a final order

requiring divestiture. In these

circumstances, Rule 802.70 as written,

because it applies only to final orders,

does not provide an exemption.

Nevertheless, the same reasons to

exclude from the HSR filing

requirements divestitures after the order

is entered also apply in cases where the

proposed order identifies the acquirer

and the divestiture contract. The

agencies have already had an

opportunity comparable to that which

HSR provides to weigh the competitive

impact of proposed transaction and to

approve or disapprove the transaction.

There is therefore no need for a separate

HSR filing.

The Federal Trade Commission

believes that an acquisition of assets or

voting securities pursuant to the terms

of a proposed order of divestiture is

unlikely to violate the antitrust laws and

that exempting such acquisitions is

necessary and appropriate to carry out

the purposes of the act. Accordingly, the

Commission has amended § 802.70 of its

premerger notification rules to exempt

such acquisitions from premerger

reporting requirements.

The following section outlines briefly

the rationale for this rulemaking.

Subsequent sections discuss certain key

issues concerning the Commission’s

authority to promulgate § 802.70, and

the nature of the new rule.

Statement of the Underlying Problem

The purpose of section 7A of the

Clayton Act is clear: to give the antitrust

agencies an opportunity to determine

whether a proposed acquisition might

violate the antitrust laws and an

opportunity to challenge any such

transaction prior to consummation. At

the same time, the program is not

without cost, including the cost of

filling out the form, filing fees, delaying

transactions and otherwise. For

transactions that do not rise significant

issues under the antitrust laws these

costs can be particularly burdensome.

The Commission has continually

reviewed the premerger notification

program in an effort to increase its

efficiency and decrease the burden on

filing parties. This rulemaking

proceeding is part of this effort.

Analysis of Proposed Revised Rule

802.70

Revised rule 802.70 exempts

completely from HSR premerger

notification requirements acquisitions

pursuant to a divestiture order once the

order is accepted by the Commission for

public comment or is filed with the

Federal court for public comment. It

does so because the Commission

believes that such transactions, having

received a full review and been

accepted by the Commission or the

Antitrust Division, are not likely to

violate the antitrust laws and because

exempting such acquisitions is

necessary and appropriate to carry out

the purposes of the act.

In deciding to revise rule 802.70, the

Commission relied upon its own

extensive merger enforcement

experience, as well as that of the

Antitrust Division of the Department of

Justice.

Congress expressly has authorized the

Commission, with the concurrence of

the Assistant Attorney General, to

‘‘exempt from requirements of [the act],

classes of * * * transactions which are

not likely to violate the antitrust laws.’’

Section 7A(d)(2)(B) of the Act. The

finding required by the statute can be

demonstrated in different ways. The

Commission can exempt a class of

transactions because that class of

transactions is inherently unlikely to be

anticompetitive. Acquisitions pursuant

to divestiture orders are inherently

unlikely to be anticompetitive. Such

transactions are already subject to the

approval of the agencies and such

approval would not be granted if the

transaction would be anticompetitive.

This is true whether or not the

divestiture order is final. Accordingly,

there is no need for a separate HSR

filing.

List of Subjects in 16 CFR Part 802

Antitrust.

Final Rule

The Commission amends Title 16b

Chapter I, Subpart H, The Code of

Federal Regulations as follows:

PART 802—EXEMPTION RULES

1. Authority. The authority citation

for Part 802 continues to read as

follows:

Authority: Sec. 7A(d) of the Clayton Act,

15 U.S.C. 18a(d), as added by sec. 201 of the

Hart-Scott-Rodino Antitrust Improvements

Act of 1976, Pub. L. No. 94–435, 90 Stat.

1390.

2. Section 802.70 is revised to read as

follows:

§ 802.70 Acquisitions subject to order.

An acquisition shall be exempt from

the requirements of the act if the voting

securities or assets are to be acquired

from an entity pursuant to and in

accordance with:

(a) An order of the Federal Trade

Commission or of any Federal court in

an action brought by the Federal Trade

Commission or the Department of

Justice;

(b) An Agreement Containing Consent

Order that has been accepted by the

Commission for public comment,

pursuant to the Commission’s Rules of

Practice; or

(c) A proposal for a consent judgment

that has been submitted to a Federal

court by the Federal Trade Commission

or the Department of Justice and that is

subject to public comment.

Donald S. Clark,

Secretary.

[FR Doc. 98–16954 Filed 6–24–98; 8:45 am]

BILLING CODE 6750–01–M

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 602

[TD 8773]

RIN 1545–AV62

EIC Eligibility Requirements

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Temporary regulations.

SUMMARY: This document contains

temporary regulations that provide

guidance to taxpayers who have been

denied the earned income credit (EIC) as

a result of the deficiency procedures

and wish to claim the EIC in a

subsequent year. The temporary

regulations apply to taxpayers claiming

the EIC for taxable years beginning after

December 31, 1997, where the

taxpayer’s EIC claim was denied for a

taxable year beginning after December

31, 1996. The text of these temporary

regulations also serves as the text of

proposed regulations set forth in the

notice of proposed rulemaking on this

subject in the Proposed Rules section of

this issue of the Federal Register.

DATES: Effective date: June 25, 1998.

Applicability dates: For dates of

applicability, see § 1.32–3T(f) of these

regulations.

FOR FURTHER INFORMATION CONTACT:

Karin Loverud at 202–622–6060 (not a

toll-free number).