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The Federal Trade Commission may publish as early as today rules explaining recent changes to the pre-merger notification law, including guidance on whether a deal must be reported and how to calculate the correct filing fee. The interim rules are part of a broad campaign by the FTC to cope with what is expected to be a tumultuous next several months as the antitrust bar and corporate leaders start doing deals under the new system. “The goal is to make this as painless as possible,” said Molly S. Boast, director of the FTC’s competition bureau. Congress last year enacted changes to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, intended to cut in half the 5,000 annual filings now made. Effective Feb. 1, deals valued at less than $50 million will be exempt from the reporting requirement. The previous threshold was $15 million. To make up the lost revenue, lawmakers raised filing fees. Companies will pay $125,000 for deals valued between $100 million and $500 million, while transactions valued at more than $500 million will cost $280,000. Deals valued between $50 million and $100 million will continue to cost $45,000. To capture more deals in the high-technology sector, lawmakers tinkered with an exemption from the filing requirement for deals involving a company with less than $10 million in assets or revenues. These companies now must make an HSR filing despite their size if the value of the deal exceeds $200 million. Boast said she expects the agency to be flooded with procedural questions, come Feb. 1. She said the agency, in preparation, has reorganized the pre-merger notification office to free employees to answer the phone. Staff also may post on the Web the 10 most frequently asked questions and answers, she said. “We don’t want people making erroneous filings and then having to redo them,” she said. “We want them to get them right in the first place.” The FTC will not automatically reject an HSR filing that is incorrectly prepared, she said. “We probably won’t as a matter of policy bounce people if there are technical things that don’t affect the substantive analysis of the pre-merger notification form,” she said. Joel Mitnick, a partner in the New York law firm Brown & Wood LLP, praised the FTC for giving companies a grace period. “They are not going to elevate form over substance,” he said. “That is a very good use of their discretion.” Yet he questioned whether the FTC was doing enough to resolve confusion. He urged the agency to post on the Web copies of nearly all questions and answers provided. Boast declined to discuss the interim rules in detail, noting the full commission has yet to approve them. They are expected to specify how to calculate the size of a deal. This calculation takes on new significance in the revised system because it effects the size of the filing fee. Transactions filed at the agency by Jan. 31 will be covered by the old fee system. But exemptions for deals valued at less than $50 million apply to any transaction that closes after Feb. 1. That means a $40 million deal announced today would not be subject to HSR as long as the transaction is not consummated until next month. Some lawyers have warned that the value of all-stock deals can vary widely, which means that a deal initially valued at $600 million could fall to $400 million within weeks. The rules are expected to clarify if the companies would pay the $280,000 fee based on the $600 million size or the $125,000 fee based on the $400 million figure. Neil Imus, a partner in the Washington, D.C. office of Vinson & Elkins LLP, said the agency is reaching out to lawyers to ensure deals are filed correctly. “I can’t say enough about their responsiveness,” he said. “They do more and do better than 90 percent of the government agencies in this town.” Boast said the agency also plans to streamline the rules and the filing form. It plans, for instance, to eliminate some reporting requirements and adjust the maximum amount of U.S. commerce a foreign firm may have without being covered by the HSR measure. Some changes will not take effect until the FTC adopts a final rule this summer. Other changes will be delayed longer. For instance, the agency has not decided whether to specify what types of material that must be given to the agency when a company makes an HSR filing. The agency has been wrestling with this question for about five years. Copyright (c)2001 TDD, LLC. All rights reserved.

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