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WASHINGTON � The latest government statistics support the perception among many dealmakers that a new merger boom is under way. Data obtained under the Freedom of Information Act show that pre-merger notifications to the government soared 40 percent in the first quarter of the fiscal year, the first sizable increase in more than three years. The Federal Trade Commission said there were 363 Hart-Scott-Rodino Act notices filed in October, November and December. That is up from 259 in the same period of the previous year, reported the agency, which administers the pre-merger notification program on behalf of itself and the Department of Justice. The average deal size is getting larger as well. The government, which charges higher HSR filing fees for big deals, said net fee income from filings jumped 44 percent from the year-earlier period to $40.4 million. The government took in $28 million in the first quarter of fiscal 2003. Antitrust lawyers said the data confirm anecdotal evidence that merger activity began to pick-up last summer. “Deals are on the upswing,” said Janet L. McDavid, a partner at Hogan & Hartson LLP in Washington. “We have a whole bunch under evaluation.” Joseph Sims, a partner at Jones Day in Washington, said the increase in activity over the summer took several months to translate into higher HSR filings. “Filing fees are a lagging indicator,” Mr. Sims said. “You start working on deals before you make a filing.” Mr. Sims said the increased activity from the summer has continued through fall and winter. “We are not at the merger wave level yet,” he said. “But there are a lot of deals being talked about and many are getting done.” The FTC data support Mr. Sims’ argument. The number of filings hit 93 in October before jumping to 127 in November and 143 in December. Filing fees followed a similar pattern, going from $10.26 million in October to $14.37 million in November to $15.8 million in December. Congress amended the HSR Act in 2001 so comparing the latest data � which at an annualized rate would result in about 1,500 HSR filings in 2004 � to the more than 5,000 filings per year in the late 1990s is deceptive. The change exempted most small mergers from the filing requirement while imposing a three-tiered fee system for larger deals. Filing fees are now $50,000 for deals valued between $50 million and $100 million, $125,000 for those valued between $100 million and $500 million, and $280,000 for transactions worth more than $500 million. The FTC reported the biggest increase was for deals valued between $100 million and $500 million. Companies reported 40 of those deals in October, 51 in November and 73 in December. Small deals followed a similar pattern, with 36 in October, 50 in November and 51 in December. The mega-deals peaked in November at 21 transactions, compared with 13 in October and 15 in December. The HSR Act was changed at the behest of the business community and antitrust experts, who complained about having to pay the $45,000 fee for deals worth as little as $15 million. The agencies also complained that they were being flooded with small deals that did not raise antitrust concerns. The fees from these small deals were being used to subsidize the investigation of large and complex transactions. Lawmakers responded with the three-tiered filing fee structure, which took effect in February 2001. Because the bulk of mergers are valued at less than $50 million, the new law caused the number of HSR filings to plunge. Aggravating the situation was the end of the 1990s merger wave. As a result, HSR filing fees have dropped to the point where the agencies last year collected enough money to cover about half of their budgets. Jaret Seiberg is the Washington bureau chief for The Deal, an affiliate of the New York Law Journal.

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