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Mr. BROWNELL. I do not know that any particular example comes to my mind. I would say that by the very nature of the proposal that if a United States corporation is buying the stock or assets of a company down in South America, we will say something of that sort that would not otherwise be subject to the antitrust laws, that you probably would not want to require advance notification to the Department on such a situation.

Mr. MALETZ. Mr. Attorney General, suppose an American corporation has a foreign subsidiary. Suppose that foreign subsidiary proposes to merge with another foreign subsidiary of a United States corporation. Do you think that should be subject to premerger notification ?

Mr. BROWNELL. I would not think so.

The CHAIRMAN. That is where you have 2 subsidiaries of 2 distinct United States corporations and they merge in some foreign country, you do not think that they need be covered ?

Mr. BROW NELL. If they are not in business here—this, of course, does not exempt them from the antitrust laws generally. It is only from the notice.

Then I would also call your attention to another proposal or two where you might consider exemptions from the notice provisions.

One would be stock and asset acquisitions by corporations which are engaged wholly in religious, educational, or charitable activities.

Another would be acquisition of stock or assets by a corporation in connection with a financing or borrowing transaction where the title is acquired solely for collateral or security purposes.

These sorts of transactions I sum up by saying, so rarely raise antitrust problems that they might well be exempted from the notice requirements.

The CHAIRMAN. Would you be willing to designate someone to confer with counsel of this committee to help us in drafting this?

Mr. BROWNELL. I would be very glad to. I might put in the record at this point, if you think it would be of any help to the committee, a survey that we have made to all objections that were raised before this committee and the Senate Antitrust Subcommittee as well as some objections that were made directly to us urging exemptions from the bill.

We have analyzed that and shown where the bills before the committee treat with those subjects.

The CHAIRMAN. We will be very glad to have that. It will be very helpful.

(The document is as follows:)

CATALOG

OBJECTIONS AND RECOMMENDATIONS TO PREMERGER NOTIFICATION BILLS INTRO

DUCED DURING 84TH CONGRESS

OBJECTION OR RECOMMENDATION

PROVISIONS OF H, R. 2143 1. (a) Notice required only “if the No corporation subject to the proacquiring and the acquired corporation visions of this Act shall acquire dihave combined capital, surplus, and un- rectly or indirectly, the whole or any divided profits in excess of $10 million part of the stock, other share capital or * * *” (FTC comment, House hear- assets of one or more corporations enings,' p. 28).

gaged in commerce, where the combined capital, surplus, and undivided profits of the acquiring and the acquired corporations are in excess of 10 million

dollars * * 2. (a) "We feel that a notice period 2. until 60 days after delivery not in excess of 30 days (rather than the to the Commission or Board vested with 90 days of H. R. 9424) should be a com- jurisdiction under the first paragraph of pletely adequate period for this pur- section 11 of this Act and to the Attorpose” (Department of Commerce com- ney General of notice of proposed acquiment, Senate hearings, p. 372)."

sition, (b) “A fair and workable statute in our opinion (Jerrold, G. Van Cise, New York State Bar Association) should require information with respect to a merger to be furnished only five weeks (rather than the 90 days of H. R. 9424) * * * in advance of the consummation of the merger" (Senate hearings, p. 383).

3. (a) Recommendation that “Such 3. Such notice shall be set forth the notice shall include, separately as to names and addresses, nature of busithe acquiring and acquired corpora- ness, products or services sold or distritions: (1) the name and address; (2) buted, total assets, net sales, and tradthe nature of business and products or ing areas of both the acquiring and the services sold or distributed; (3) net acquired corporations. sales for the last accounting year; (4) copy of last annual report and balance sheet; and (5) location of plants and trading area in which each product or service is sold” (FTC comment, Senate hearings, p. 458).

4. (a) “There is no limitation as to 4. * * The parties shall furnish the length of time in which the Com- within thirty days after request theremission or Board can ask for additional for, such additional relevant informainformation" United States Chamber of tion within their knowledge or control Commerce comment, Senate hearings, p. as may be requested within sixty days 350).

after delivery of notice of the proposed (b) "[T]here is no time limitation acquisition by the Commission or Board on the request for additional informa

; provided, that the Commistion" (Association of the Bar of the sion or Board or Attorney General may City of New York comment, Senate extend the time for furnishing such hearings, p. 507).

additional relevant information.

1 Hearings on amending Clayton Act by requiring prior notification of certain corporate mergers and for other purposes before House Antitrust Subcommittee (Subcommittee No. 5), 84th Cong., 2d sess., January 16, 18, 20, and 23, 1956, hereinafter referred to as "House hearings."

2 Legislation affecting corporate mergers before Senate Antitrust Subcommittee, 84th Cong., 2d sess., May 23-25, 28, 31, and June 2, 1956, hereinafter referred to as "Senate hearings."

CATALOG_Continued OBJECTIONS AND RECOMMENDATIONS TO PREMERGER NOTIFICATION BILLS INTRO

DUCED DURING 84TH CONGRESS-Continued

OBJECTION OR RECOMMENDATION

PROVISIONS OF H. R. 2143 5. (a) "[I]t is an absolute essential 5. * * * The Commission or Board thing (to have procedures which would vested with jurisdiction under section grant general blanket waivers to cer- 11 of this Act, after consultation with tain categories of cases]” (Department and upon approval of the Attorney Genof Commerce comment, Senate hear- eral, shall establish procedures for the ings, p. 381).

waiver by the appropriate Commission (6) Recommendation that "The Com- or Board and the Attorney General of mission or Board vested with jurisdic- all or part of the notification and waittion under section 11 of this Act, after ing requirements in appropriate cases consultation with and upon approval of and in categories of cases where notifi. the Attorney General may establish pro- cation and a waiting period is deemed cedures for the waiver by the appropri- unnecessary to effectuate enforcement ate Commission or Board and the At- of this section of this Act. torney General of all or part of the notification and waiting requirements in appropriate cases" (perfecting amendments to H. R. 9424 submitted in connection with Justice Department comment, Senate hearings on May 24, 1956).

(C) “The Commission or Board vested with jurisdiction under section 11 of this Act and the Attorney General may, in appropriate cases, jointly waive all or any of the waiting requirement" (FTC comment, Senate hearings, p. 458).

6. (a) “It is suggested [by the Asso- 6. The notification and waiting prociation of the Bar of the City of New visions of the preceding paragraph shall York] that this paragraph of the bill not apply to the following: be redrafted to raise [from the 5 per “(1) Any acquisition of stock when centum figure in H. R. 9424] the per- the stock acquired or held does not excentage of stock acquired solely for in- ceed 10 per centum of the voting rights vestment to a more realistic figure as represented by the voting stock or *" (Senate hearings, p. 508). other voting share capital of the cor

poration in which the stock is ac

quired;" (b) “The preceding paragraph shall not apply to corporations purchasing stock solely for investment when the stock acquired or held does not exceed 5 percent of the outstanding stock or other share capital of the corporation in which the investment is made" (American Paper & Pulp Association comment, Senate hearings, p. 315).

7. (a) [T]he acquisition of stock of 7. “(2) Any acquisition of stock, in smaller companies is unlikely to create a single transaction or a series of rea condition having any adverse effect lated transactions, unless the fair marupon competition. * * * It is suggested ket value of the consideration paid for [by the American Mining Congress] such stock in such transactions or transthat the bill be amended to provide a actions exceeds $2,000,000;" flat exemption for acquisitions of stock of companies having capital, surplus, and undivided profits aggregating less than $5 million * * (Senate hearings, p. 280).

906754-57

5

CATALOG_Continued

OBJECTIONS AND RECOMMENDATIONS TO PREMERGER NOTIFICATION BILLS INTRO

DUCED DURING 84TH CONGRESS-Continued

PROVISIONS OF H. R. 2143 8. (a) [Notification requirements 8. “(3) Any acquisition of stock should not attach] “to any acquisition which does not increase, directly or inof stock which does not increase, di- directly, the acquiring corporation's rectly or indirectly, the acquiring cor- share of voting rights in any other corporation share of voting rights in any poration;" other corporation

* * * *

OBJECTION OR RECOMMENDATION

(Justice Department, perfecting amendments to H. R. 9424, Senate hearings, p. 167).

(b) "The preceding paragraph shall not apply to the acquisition of stock or other share capital if such acquisition is made pursuant to a general offer to existing shareholders, in exercise of a preemptive right in exercise of a conversion privilege, by receipt of a stock dividend, or pursuant to a reorganization plan to which the acquiring corporation is not a party" (American Mining Congress comment, Senate hearings, p. 278).

9. (a) “The term 'assets' as used in 9. “(4) Any acquisition, in a single this paragraph [according to the In- transaction or series of related transvestment Bankers Association of actions, by one corporation of assets of America] shall not include stock in any other corporation if the fair martrade sold or held for sale by a corpo- ket value of the consideration paid for ration in the ordinary course of its such assets in such transaction or business * * * (Senate hearings p. transactions (after deducting the por515; see also Justice Department per- tion thereof comprising stock in trade fecting amendment No. 6 to H. R. 9424, used in the ordinary course of the Senate hearings, p. 167).

transferring corporation's business, (b) According to the New York State and transferred by such acquisition) Bar Association: ** * * [M]ere pur- does not exceed $2,000,000;" chase of some assets in the ordinary course of business—however large the amount or percentage of a company's total assets-should not put into operation the statute, for this would necessitate advance notification of ordinary commercial transactions" (House hearings, p. 207).

(c) According to the Chain Belt Company: “Except that where the corporation being acquired has combined capital surplus and undivided profits of $5 million or less (rather than the $1 million figure of some premerger notification proposals] such acquisition be excluded from the reporting requirements of this section" (Senate hearings, p. 520; see also comment of Asso(iation of the Bar of New York, Senate hearings, p. 508; FTC recommendations, Senate hearings, p. 459; American Mining Congress comment, Senate hearings, p. 280; American Paper & Pulp Association comment, Senate hearings, p. 315 ; comment by R. L. Gilpatric: Cravath, Swaine & Moore, Sen. ate hearings, p. 414).

CATALOG_Continued

OBJECTIONS AND RECOMMENDATIONS TO PREMERGER NOTIFICATION BILLS INTRO

DUCED DURING 84TH CONGRESS—Continued

OBJECTION OR RECOMMENDATION

PROVISIONS OF H. R. 2143 10. (a) See Justice Department per- 10. “(5) Acquisition by any corporafecting amendment No. 3 exempting ation of bonds or other obligations with"The acquisition by any corporation of out voting rights of any other corporabonds or any other obligations without tion, securities issued by the United voting rights of any other corporation” States, or by any State, Territory, or (Senate hearings, p. 167).

insular possession thereof, or by any According to Investment Bankers As- political subdivision or public agency or sociation of America, exemption should instrumentality or one or more of any be provided for “securities issued by the of the foregoing ;" United States, or by any State, Territory, or insular possession thereof, or by any political subdivision or public agency or instrumentality of one or more of any of the foregoing" (Senate hearings, p. 512).

11. (a) “[I]f a large corporation de 11. “(6) Any acquisition of real prop cided to purchase an office building val. erty, solely for office space or residenued at a figure in excess of $1 million tial use;" for its own use, acquisition of such building would have no effect at all upon competitive relationships within the particular industry, or otherwise, and consequently there would be no valid basis for requiring such a transaction to be reported * * *" (Department of ('ommerce comment, Senate hearings,

p. 3603.

12. (a) Recommendation to exempt 12. “(7) Any acquisition by any cor“any acquisition by any corporation poration from the Government of the from the Government of the United United States;" States" (Justice Department perfecting amendment No. 1 to H. R. 9424, Senate hearings, p. 166). 13. (a) Recommendation to exempt

13. “(8) Acquisition, solely for the "acquisition, solely for the purposes of purpose of investment of assets, other investment or to realize upon an in- than voting stock or other voting share vestment, of assets, other than voting capital, by any bank, banking associstock or other voting share capital, by ation, trust company or insurance comany bank, bank association, trust com

pany, in the ordinary course of its pany or insurance company, in the ordi- business ;" nary course of its business" (justice Department perfecting amendment No. ī to H. R. 9121, Senate hearings, D. 107). 11. (a) Exemption for "[A]equisi

14. “(9) Acquisition of stock, other tion of stock, other share capital, or share capital, or assets of any corporaassets of any corporation if the acquir- tion, if the acquiring corporation, prior ing corporation, prior to such acqui

to such acquisition, owned directly or sition, owned, directly or indirectly, indirectly, more than 50 per centum of more than 50 percent of the outstand

the outstanding voting stock of the ing voting stock of the corporation corporation whose stock, other share whose stock, other share capital, or capital, or assets are acquired, or if assets are acquired, or if more than 50

more than 50 per centum of the outpercent of the outstanding voting stock standing voting stock of the acquiring of the acquiring corporation is owned, corporation is owned, directly or indirectly or indirectly, by a corporation directly, by a corporation which, prior which, prior to such acquisition, owned, to such acquisition, owned, directly or directly or indirectly, more than 50 per indirectly, more than 50 per centum of cent of the outstanding voting stock of the outstanding voting stock of the corthe corporation whose stock, other poration whose stock, other share capishare capital, or assets are acquired” tal, or assets are acquired ;" (American Mining Congress comment, Senate hearings, p. 278).

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