Question
February 20, 2004
VIA EMAIL (mverne@ftc.gov)
MichaelB. Verne
Pre-merger Notification Office
Federal Trade Commission
600n Pennsylvania Avenue, N.W.
Washington, D.C. 20580'
DearMichael:
I am writing to follow upon our discussion today regardingwhat is properly regarded as making "sales in or into the UnitedStates" for purposes of determining whether the $50 million exemption safeharbor in 16 CFR 802.51(b) is exceeded. We are dealing with a situation where aforeign issuer the shares of which are being acquired in an otherwisereportable transaction has revenues in the United States that slightly exceed $50 million.Those revenues, however, include a substantial payment for a cancellationcharge. No products or services were provided in exchange for this charge, andthus this payment did not pertain to any sales made in or into the United States. Thecancellation charge is, in effect, akin to a penalty or liquidated damages.Under these circumstances you agreed that it is reasonable to conclude thatsums collected as cancellation payments, where there were no products orservices provided in exchange for such payments, are not regarded as sales madein or into the United States for purposes of 16 CFR 802.51 and thus do not need to be included indetermining whether the $50 million exemption safe harbor is exceeded.