FTC Announces Changes to "Second Request" Procedures During Premerger Review

The Federal Trade Commission today announced a series of new procedures and initiatives to improve the handling of "second requests" issued by its Bureau of Competition during Hart-Scott-Rodino premerger investigations.

The newly adopted procedures are part of the FTC's continuing efforts to make premerger investigations more efficient for both the business community and agency staff. The Commission acknowledges the leadership of the Congress on these issues, particularly the work of the Senate and House Judiciary Committees and their Chairmen, Senator Hatch and Congressman Hyde.

These Chairmen have provided essential guidance and support in the development of these initiatives. In addition, the Commission would also like to acknowledge the contributions of Senators Leahy, DeWine, and Kohl and Congressmen Conyers, Rogan, and Delahunt to these efforts.

"New procedures contribute both to conserving scarce FTC resources and to reducing burdens on business," FTC Chairman Robert Pitofsky said. "We are grateful to the Committees, and particularly to Chairmen Hatch and Hyde, for their contributions to and support of these initiatives."

Since the late 1970s, the Hart-Scott-Rodino Act has required merging companies meeting certain criteria to file premerger notification information with the FTC and the Department of Justice. This enables the agencies to review whether the proposed transaction could be harmful to competition. In a small number of transactions, the agency requests additional documents and information - the "second request" - to supplement the parties' initial filings.

The FTC is announcing four new procedures effective immediately. First, all second requests will be reviewed prior to issuance by senior management in the Bureau of Competition. The increased Bureau involvement is intended to provide additional scrutiny of the scope of the second request.

Second, Bureau of Competition staff will convene a conference promptly following the issuance of a second request to discuss the competitive issues raised by the proposed transaction with the parties. The conference will be held within five business days after the second request is issued, unless the parties request a later date.

Third, Bureau staff will respond to party requests for modifications of second requests within five business days. Prompt responses by staff will afford the parties greater opportunities for more efficient and better-directed records searches.

Fourth, parties will have recourse to the Commission's General Counsel for resolution of second request modification issues not resolved after discussions with staff. This new procedure sets short deadlines for completion of the process - 10 business days from appeal to decision.

"The General Counsel has both the resources and the expertise to perform this task in a way that will earn and maintain credibility with the Bar and the confidence of the Commissioners," FTC Chairman Robert Pitofsky said.

Other initiatives are also underway. The FTC is developing a set of "best practices" for staff's conduct of premerger investigations. The agency also will evaluate its FY 1998 and 1999 investigations to identify strengths and weaknesses and to assess how better to improve management of these investigations. Finally, the Bureau of Competition will provide specialized staff training in an effort to make the second request process more efficient.

The FTC continues to consult with those affected by the premerger review process to develop additional means of reducing the time, effort and costs of premerger review without harm to competition. The FTC's Bureau of Competition will conduct a public workshop on these issues in the near future.

The Commission particularly commends the Antitrust Section of the American Bar Association and its leadership for their contributions and cooperation in addressing these important issues.

Copies of the revised procedures are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File No. P950101)