Question
(redacted)
August 3, 1988
Patrick Sharpe
Premerger Notification Office
Bureau of Competition
Federal Trade Commission
6th & Pennsylvania Avenue, NW
Room 303
Washington, D.C. 20580
Dear Mr. Sharpe :
In the telephone conversation we had on August 3, 1988, we discussed the application of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the Act) to a proposed transaction. I have repeated the fact pattern in more detail for your further review.
Corporation A is a not-for-profit corporation which is the sole member of another not-for-profit corporation, Corporation B, which is the sole member of a not-for profit hospital, Hospital C. (Redacted) a municipal corporation and (redacted) an unincorporated (redacted) owned and operated directly by (redacted) The assets of (redacted) are to be transferred to Hospital C and Hospital C will assume all of the liabilities of (redacted) As part of the transfer, the membership of Corporation B will be changed from one member (Corporation A) to two equal members (Corporation A and (redacted) The following diagram shows these changes in structure.
Before
Corporation
__A____ (Redacted)
(sole member)
Corporation
___B___ (Redacted)
(sole member)
Hospital
C
After
Corporation (Redacted)
A
(duo
membership)
Corporation
B
(sole member)
Hospital
C
(w/Assets &
Liabilities of
(Redacted)
In addition to Hospital Cs assumption of (redacted) liabilities, Corporation B will pay (i) the debt service on (redacted) million general obligation bonds issued to finance a new wing of (redacted) and (ii) amounts needed to fund the retirement illegible (redacted) employees.
As we discussed, paragraph (c)(4) of the Act exempts transfers to or from a Federal agency or a state of political subdivision thereof. In addition 16 C.F.R. 801.1(a)(2) defined entity to exclude the United States, any of the States thereof or any political subdivision or agency of either (other than a corporation engaged in commerce). Excluding governments and their agencies from the definition of entity means they cannot be persons or included within persons. Since the Act only covers transactions by persons, the Act does not apply to those excluded from the definition. Because (redacted) is a municipal corporation and (redacted) is unincorporated, neither should be considered a corporation engaged in commerce. (Redacted) are therefore not persons subject to the Act by virtue of their exclusion form the definition of entity.
Based upon the foregoing analysis and conclusion, the parties intend to consummate the transaction described above without filing Notification and Report Forms with the Federal Trade Commission and the Antitrust Division of the Department of Justice. Please contact me within the next ten days if you do not agree with this analysis.
Very truly yours,
(Redacted)
(Redacted)