Question
(redacted)
December 20,1983
Premerger Notification Office
Bureau of Competition
Room 301
Federal Trade Commission
Washington, D.C. 20580
Attn: Patrick Sharpe, Esq.
Dear Mr. Sharpe:
This letter will serve as a confirmation to our several telephone conversations this past two weeks. In these conversations, we discussed the following hypothetical: Corporation A and Corporation B are entities which meet the size-of-person test of the Rules of the Federal Trade Commission under Section 7A of the Clayton Act (the Rules). Corporation A is 100 percent controlled by individual I and Corporation B is controlled 100 percent by individual J according to the Rules, and I and J meet the size-of the-person test as well.
A partnership will be formed, wherein A will have a 60 percent interest and B will have a 40 percent interest, to purchase a majority of the voting securities of Corporation X. X meets the size-of-person test under the Rules. The consideration paid by the partnership for the shares of X meets the size-of-the transaction test under the Rules.
A and I have some relation to B and J. However, neither A, nor I, control B or J as that term is defined under the Rules. Likewise, neither B, nor J, control A or I. The partnership which will be formed will simply pass through the monies provided to it by the partners to the seller as consideration for the voting securities of X. There will not be left over in the partnership assets of $10 million or more, and, of course, the partnership has had no sales.
As we discussed, this transaction would not be a reportable one under the Rules and the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the Act) since, according to the Federal Trade Commissions interpretation of the Rules and the Act, the partnership making the purchase in this situation would not meet the size-of-the-person test under the Rules.
If, to your recollection, this does not accurately reflect our recent conversations, please let me know.
Very truly yours,
(Redacted)