Question
(redacted)
October 24, 1990
BY TELECOPIER
(202) 326-2050
Premerger Notification Office
Bureau of Competition
Federal Trade Commission
600 Pennsylvania Avenue, NW, Room 303
Washington, D.C. 20580
Attention:John Patrick Sharpe
Re:Pre-Merger Notification Requirements under the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976
Dear Mr. Sharpe:
Pursuant to our telephone conversation on Monday, October 22, this will confirm our request for an opinion from the staff as to whether a premerger notification is required to be filed in the following circumstances:
1.A division of seller (the "Selling Division") is engaged in the purchase and sale of certain types of goods.
2.Most of these goofs are purchased from Selling Division by a division of our client ("Buying Division A') in the ordinary course of its business on an ongoing basis.
3.A different division of our client ("Buying Division B") is about to purchase substantially all of the operating assets of Selling Division other than its inventories of goods (which are excluded from the transaction), for a price in the range of approximately $2 to $3 million.
4.Between now and the closing date, Buying Division A will continue to purchase the above goods from Selling Division in the ordinary course of business. The aggregate price of these goods will be approximately $20 million. These goods would have been purchased irrespective of the sale of assets. However, they will be priced somewhat higher than they normally would.
5.After the above transactions, Selling Division will be left with other types of goods having a value of approximately $5 million, which will not be purchased by our client.
Our question is whether the ordinary course of business exception set forth in Section 7A(c)(1) of the Clayton Act will be available with respect to the purchase of the inventories by Buying Division A so that the sale of assets will not meet the $15 million threshold. Although we have reviewed Letter No. 14 in the Practice Manual and the accompanying commentary, we believe that our facts are distinguishable because, as stated above, Buying Division A would have purchased the inventories in question in the ordinary course of its business whether or not the sale of assets to Buying Division B took place. Another distinguishing fact is that the Selling Division will retain significant inventories subsequent to the consummation of the purchase transactions described above.
Your prompt response would be appreciated. Thank you for your attention and assistance in this matter.
Sincerely,
(redacted)