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Nearly two months after revisions to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 took effect, the Federal Trade Commission is still tinkering with the rules to reduce paperwork. The latest change seeks to simplify how the agency handles deal valuations. This process is now more important because the revised rules impose a $45,000 filing fee for deals valued at $50 million to $100 million, a $125,000 fee for deals of $100 million to $500 million and a $280,000 fee for those above $500 million. The old rules imposed a single $45,000 filing fee on any deal worth more than $15 million. Antitrust experts have worried about how the FTC would handle deals that increase in value between the filing and closing dates. For instance, a deal valued at $97 million would carry a $45,000 fee. But changing market conditions could cause the deal to cross the $100 million threshold before it closes. That technically could have required the filing of a new HSR notice and payment of a $125,000 fee. Marian Bruno, assistant director in charge of the FTC’s premerger notification office, said the agency will let companies stick with their initial valuation provided it was made in good faith. They would not have to file new HSR notices, she said. But companies would have to rely on that initial deal estimate when determining if they must file HSR notices on subsequent purchases. That means if the value of the deal rose above one of the thresholds before the transaction closed — say, the $100 million mark — then the company would need to file a new notice and pay the new fee if it acquires even one additional share of stock. Bruno said some lawyers had wanted the agency to permit companies to cite the value of the deal at closing when determining if additional stock purchases require an HSR filing. The FTC typically does not require companies to file HSR notices every time they buy more shares. A notice is mandated when the company’s holdings pass through the $50 million, $100 million and $500 million thresholds. The firm also must file when gaining control of 25 percent of outstanding stocks valued at more than $1 billion and when it acquires half of the stock valued at more than $50 million. The FTC has a worksheet available on its Web site ( www.ftc.gov) to help companies determine the value of a deal. While deal valuation guidance is intended to reduce paperwork, another HSR change might force companies to do some extra work. The FTC has issued a warning that it intends to require companies to use the North American Industrial Classification System (NAICS) rather than the Standard Industrial Classification System when filling out questions 5, 7 and 8 on the HSR notice. The change is expected to take effect July 1. Such a change may sound like bureaucratic mumbo-jumbo, but antitrust lawyers said it could impose significant costs on merging companies, which will need to produce the new data. “Everyone will have to start from scratch,” said Neil Imus, a partner in the Washington, D.C., office of the Piper, Marbury, Rudnick & Wolfe LLP law firm. “It is a completely different system.” Every company is supposed to be submitting NAICS data to the Department of Commerce. The government uses the data to determine if merging companies have overlapping businesses. The NAICS data replaces the SICS data that companies used to submit. Although companies are already supposed to be producing this data, Imus said firms often have difficulty locating the information. That means the data must be reproduced for the antitrust filing, he said. “This is going to be an accounting headache,” he said. Copyright (c)2001 TDD, LLC. All rights reserved.

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