Lawyer Article

Parties who are required to file pre-merger notifications under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 no longer have to make numerous copies of voluminous attachments before they file the notification. They can now make those filings electronically via the Internet if they want to. On June 23, 2006, the Federal Trade Commission (the "FTC") published amendments to the pre-merger notification rules to allow the electronic filing. 71 Fed. Reg. 35995 (2006) (to be codified at 16 CFR Part 803). The new rules are effective immediately upon publication.

The Clayton Act, 15 U.S.C. 18a, as added by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, Pub. L. 94-435, requires all persons contemplating certain mergers or acquisitions to file notification with the FTC and the Antitrust Division of the Department of Justice (the "DOJ") and wait a designated period of time before consummating such transactions. Under the new rules, a filing person now has three options when filing such notification. It can file the entire package (the notification form and all attachments) the traditional way – send one original and one copy of the entire package to the FTC and three copies to the DOJ. It can also file the entire package electronically. Or, it can do a combination of both – submit the notification form electronically, but send in the documentary attachments in paper copies.

A new website, https://www.hsr.gov has been set up to accommodate the electronic filing of the pre-merger notifications. Because of the highly sensitive nature of the HSR filings, the FTC has taken several steps to ensure the confidentiality and security of the online filings. All filers are required to have an ECA Digital Certificate prior to making any filing. This certificate works as the party’s electronic signature and can be obtained from VeriSign (through https://www.hsr.gov). The HSR website warns that this process can take up to four business days. To avoid delaying the filing, parties should apply for the ECA digital Certificate when they start preparing the notification package. Another security feature is that the notification package is encrypted when electronically filed. Also, once the package is received by FTC’s sever, several security measures, such as authentication via digital certificates, permanent ID tags, and secure storage, will come into play to maintain the security of the documents filed. The system will also automatically generate a return e-mail, informing the filing party of the receipt of the notification package.

There are several new concerns raised by this new filing method that any filing person should be aware of.

• Currently, the new electronic filing system is limited by what formats of electronic files it can view. The HSR website has a list of all acceptable file formats. The filing party must use one of those acceptable formats when submitting their filing electronically. If an unacceptable format is used, the filing party will receive a notice of deficient filing, and this will delay the running of the mandatory waiting period.
• The new electronic filing system has a restriction on the size of the file that can be submitted. According to the FTC, the limitation is high enough it is unlikely to be problematic for most filers. The new HSR website has information about the current maximum submission size. It is the filer’s responsibility to make sure the filing is within the size limitation. As technology improves, the maximum submission size should increase and become even less problematic.
• The mandatory waiting period starts to run when the entire filing package is received by the FTC. For the electronic filing, this means when the delivery of the electronic filing is effected to the FTC server. The filing system usually sends the filer an automatic e-mail, notifying the filer of the receipt of the filing. If no e-mail is received, the party making the filing should confirm receipt of the filing with the FTC by e-mail at HSRhelp@hsr.gov or by phone at 202-326-3100. Electronic filings made after 5:00 p.m. on a business day or at any time on any day other than a business day are considered effected on the next business day. If a party files the notification form electronically but submits the attachments in paper, the waiting period does not start until both the notification form and the attachments are received. Even though the automatic return e-mail shows the time the filing is received by the FTC server, such e-mail is not the official receipt of the filing. As with the traditional paper filing, a written notice will be sent to the parties to the transaction notifying them when the waiting period starts.
• It is important to remember that as with any other computer server, the FTC server can become unavailable. If timing of the closing is sensitive for a particular transaction, parties should not wait till the last minute to electronically file the HSR notification and run the risk that the FTC server may not be available. This is particularly important in the next few months when the electronic filing system is still new. Parties should time the filing as if it would be done with the traditional paper filing method so that if there is problem with the electronic filing, they can always fall back on the traditional paper filing.

If you would like to discuss the new pre-merger notification filing rules or other merger and acquisitions questions under the HSR Act or other antitrust laws, please contact the Womble Carlyle attorney with whom you work or one of the lawyers listed below:

Thomas L. (Tom) McLain  

Guanming Fang email
Atlanta office: (404) 879-2444

Mark J. Horoschak email
Charlotte office: (704) 331-4928

James K. (Jim) Phillips email
Winston-Salem office: (336) 721-3658