Question
March 23, 1993
FACSIMILE TRANSMISSION (202) 326-2050
Richard B. Smith, Esq.
Premerger Notification Office
Federal Trade Commission
6th and Pennsylvania Avenue, N.W.
Washington, D.C. 20580
Re: Informal Hart-Scott-Rodino Opinion Letter
Dear Mr. Smith:
As you suggested, I am writing to obtain the Staffs position on the definition of entity as set forth in Section 801.1(a)(2) of the Regulations promulgated under the Hart-Scott-Rodino Antitrust Improvements Act 1976, as amended (the Act), under the facts outlined below.
FACTS
[Redacted], which transacts business in the name of the [redacted], is contemplating purchasing certain assets comprising an enclosed [redacted]. The proposed transaction satisfies the size-of-person and size-of-transaction tests.
ANALYSIS
We have concluded that the transfer of all of the assets of the [redacted] from the seller to [redacted] would be exempt because [redacted] is a state agency and not an entity. The Act only applies to an entity, which is defined 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. 16 C.F.R. Section 801.1(a)(2).
Richard B. Smith, Esquire
March 23, 1993
Page 2
[Redacted] was created by the legislature of the [redacted] and is governed by [redacted].
We believe that the following provisions of the [redacted] clearly show that [redacted] is a state agency:
1. Board of Directors. The Board of Directors of [redacted] consists of 15 members, including the Secretary of Education, the State Treasurer, two (2) State Senators, two (2) members of the House of Representatives and two (2) members appointed by the Governor, and reports to the State Insurance Department. The Board of Directors is responsible for preparing annual financial statements which are submitted to the Governor and made available to the public.
2. Contributions. The Commonwealth makes contributions to [redacted] on behalf of all active members of the [redacted].
3. Budget. The [redacted] prepares its administrative budget year and submits it to the Governor who in turn submits it to the General Assembly for approval. The General Assembly makes an appropriation each year sufficient to provide for the Commonwealths contribution obligations and to pay the administrative expenses of [redacted].
4. Payment of Funds. The State Treasurer is the custodian of the funds deposited in [redacted] and makes all payments from [redacted] in accordance with requisitions signed by the Secretary of the Board of Directors and ratified by the Board.
5. State Guarantee. Statutory interest charges payable, the maintenance of reserves in [redacted] and the payment of all annuities and other benefits granted by the Board are obligations of the Commonwealth.
In addition to these provision of the [redacted] there are two operational matters regarding [redacted] which we believe are dispositive in concluding that [redacted] is a state agency, First, each of the employees of [redacted] is a state employee. Second, any interpretations of [redacted] and disputes by
Richard B. Smith, Esquire
March 23, 1993
Page 3
beneficiaries of [redacted] with respect to the benefits paid to such beneficiaries pursuant to such interpretations are first resolved by an administrative proceeding by [redacted].
Based upon the provisions of the [redacted] and the operational matters discussed above, we believe [redacted] is a state agency and therefore not an entity under the Act. If this is the case, the proposed acquisition of the [redacted] would not be subject to the Acts reporting requirements.
We would appreciate learning from you as soon as practicable the Staffs position on this matter. If you have any questions please call either [redacted].
Yours very truly,
[redacted]
cc: [redacted]