Question
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May 26, 1989
VIA FEDERAL EXPRESS
Pre-Merger Notification Office
Bureau of Competition
Federal Trade Commission
Room 303
6th Street and Pennsylvania Avenue, N.W.
Washington, D.C. 20580
Attention: Victor Cohen, Esq.
Gentlemen:
Pursuant to my May 25, 1989 conversation with Victor Cohen, I would appreciate your advising whether any aspect of the following transaction would require filing of a Notification and Report Form ("Report Form") under the Hart-Scott-Rodino Antitrust Improvements Act (the Act) or the regulations promulgated thereunder (the "Regulations" or "Reg."):
Corporations A and B propose to form a partnership, C. A and B will each have a 50% interest in the profits of C and in the assets of C on its dissolution. A may be its own ultimate parent entity or may be included within another corporate entity, and B is a majority owned subsidiary of another corporation. There currently exists no relationship between A or any ultimate parent entity of A, on the one hand, an B or its parent on the other. A will contribute assets to C in exchange for As partnership interest in C, and B will contribute voting securities of X to C in exchange for Bs partnership interest in C. X is its own ultimate parent entity. C is not being formed with a view to a distribution by C to A of the voting securities of X contributed by B or to B of the assets contributed by A.
In our view, no notification under the Act is required with respect to any aspect of the above transaction, for the following reasons. The long-standing position of the staff of the Federal Trade Commission has been that partnership interest do not constitute voting securities; accordingly, no Report Form must be filed in connection with the formation of a partnership, as opposed to a corporate joint venture or other corporation. See Reg. 801.40. Because C is a partnership, its formation by A and B clearly is outside the coverage of Reg. 801.40, and, therefore, none of A, B, or C is required to file a Report Form with respect to the formation of C.
For similar reasons, A cannot be deemed to have acquired the voting securities of X. Because partnership interests do not constitute voting securities, C cannot be an issuer for purposes of Reg. 801.4, and A cannot have made a primary acquisition for purposes of such section. Accordingly, A could not be considered to have made a secondary acquisition of the voting securities of X as a result of the formation of C, so no filing by A and X should be required by the Act.
Very truly yours,
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