Question
December 15, 2004
By Email
Mr. B. Michael Verne
Federal Trade Commission
Premerger Notification, Office
Room 303
6th and Pennsylvania Avenue, N. W.
Washington, D.C. 20580
Re: Premerger ReportingObligations: Ordinary Course Exemption
Dear Mike.
Thisletter is a follow-up to the telephone conversation that we had yesterdayduring which we discussed the transaction described below and your view t thetransaction should not be subject to the reporting requirements of the Hartt-Scott-RodinoAntitrust Improvements Act of 1976, as amended (the `Act").
Inour discussion, ewe assumed that in connection with an assets transaction, theso-called "size-of-person" test and the so-called"size-of-transaction"' test were met.
Specifically,the assets to be sold in the transaction we discussed are so-called merchantprocessing contracts that held by Seller and its affiliates directly or as aresult of certain agent bank merchant contract relationships. A merchantprocessing contract is a contract pursuant to which a third party providestransaction processing services to a merchant (such as a grocery store, gasolinestation or other retailer). An agent bank merchant contract is a contractpursuant to which a bank either: (a) refers merchants to a third partytransaction processing services provider (a "Processor")in exchange for which the agent bank receives a fee for the referral; or(b) acquires so-called "wholesale" transaction processing services froma Processor and the k resells these services to merchants. In the case ofan agent bank merchant contract under which a bank refers merchants to aProcessor, the Processor enters into an agreement with each referred merchantto provide transaction processing services. In the case of an agent bankmerchant contract under which the bank acquires so-called "wholesale"transaction processing services from a Processor, the k enters into anagreement with each merchant to provide transaction pressing services.
Inthis case, the group of merchant processing contracts to be sold by Sellerconstitutes approximately 2/`0 of the merchant processing contracts heldby Seller and its affiliates.
TheBuyer is an entity that is already engaged in the business of merchantprocessing contracts.
Basedupon these facts, we believe and you concurred that the so-called ordinarycourse of business exemption should be applicable to this transaction and thatno filing under the HSR Act would be required even though theso-called "size-of-person" test and so-called"size-of-transaction action" test are met.
Asalways, we thank you for your prompt attention to our inquiry. If the foregoingdoes not conform to your understanding, please contact us. My direct number islisted above.