us-ftc-hsr-informal-interpretations-51d0181ef5c14778b4de2a495113f6db•2102003 Informal Interpretation
2102003 Informal Interpretation
us-ftc-hsr-informal-interpretations-51d0181ef5c14778b4de2a495113f6db2102003 Informal InterpretationGuidance
Tags:
We agree.
Question
From: Berg, Karen E.
Sent: Friday, February 5, 2021 1:36:07 PM (UTC-05:00) Eastern Time (US & Canada)
To: [Redacted]
Cc: [Redacted]
Subject: RE: Item 5
We agree.
Karen
From: [Redacted]
Sent: Friday, February 5, 2021 11:58:13 AM (UTC-05:00) Eastern Time (US & Canada)
To: [Redacted]
Subject: Item 5
Dear all,
I have a question regarding the proper reporting of revenues for Item 5 of the HSR form in relation to manufactured products sold by the acquired person in the US.
The products that are sold in the US are manufactured by third parties. After manufacture by third parties, the products are shipped to the acquired person’s controlled subsidiary outside the US where they are repackaged, and some items are added to the box. No two pieces are put together, it is simply a matter of transferring the manufactured product and inserting additional items into the box. The boxes are then sent to the acquired person’s controlled US entity where additional items are added to the box before being sold to US customers. Again, no separate pieces are joined together by the US entity.
It seems to me that the revenues for the acquired person should be reported in Item 5 under a wholesale/retail NAICS code rather than a manufacturing code, and at the transfer price from the acquired person’s non-US entity to the US entity.
Do you agree?
1 Sheinberg, Samuel I. From: Sent: Wednesday, January 6, 2021 11:51 AM To: Walsh, Kathryn E.; Berg, Karen E.; Sheinberg, Samuel I.; Six, Anne; Musick, Vesselina Subject: FW: Intraperson Question From: Whitehead, Nora Sent: Wednesday, January 6, 2021 11:50:40 AM (UTC-05:00) Eastern Time (US & Canada) To: Cc: Subject: RE: Intraperson Question No, it doesn’t qualify for 802.30 because A controls B (which controls C) through the contractual right to appoint directors and not via ownership of voting securities. From: Sent: Wednesday, January 6, 2021 9:01:53 AM (UTC-05:00) Eastern Time (US & Canada) To: Subject: Intraperson Question Person A controls Company A, a corporation, by virtue of holding 50% of more of the voting securities of Company A. Person A has the contractual right to appoint 50% or more the directors of Company B, a corporation (but holds less than 50% of the voting securities of Company B). Company B owns 100% of the voting securities of Company C, a corporation. Thus, Person A is the UPE of Company A, Company B, and Company C. Company A and Company C plan to merge. Rule 802.30 states, “An acquisition…in which the acquiring and at least one of the acquired persons are, the same person by reason of §801.1(b)(1) of this chapter, … is exempt from the requirements of the Act.” 801.1 (b)(1) states: “(b) Control. The term control (as used in the terms control(s), controlling, controlled by and under common control with) means: (1) Either. (i) Holding 50 percent or more of the outstanding voting securities of an issuer or (ii) In the case of an unincorporated entity, having the right to 50 percent or more of the profits of the entity, or having the right in the event of dissolution to 50 percent or more of the assets of the entity;” [emphasis added] Since Company B, an entity controlled by Person A, owns 50% or more of the outstanding voting securities of the issuer Company C, does the merger of Company A and Company C qualify for the intraperson exemption? Thanks,
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