On January 14, the Committee submitted a comment letter to the Federal Trade Commission (the “FTC”) on its proposed changes to the premerger notification rules (the “HSR Act Proposal”), which would subject registered investment companies (“RICs”) and other investment entities making certain investments to a thirty-day transaction delay, filing fees, and increased reporting obligations under FTC and DOJ pre-clearance process for acquisitions that may have competitive implications.
The Committee does not support the HSR Act Proposal, as it could have negative implications for the U.S. capital markets, including by increasing investor costs. Although it is not clear that acquisitions of a minority stake by RICs in an issuer have any competitive implications, if the FTC seeks information regarding such transactions, then the agency may obtain it from the Securities and Exchange Commission (the “SEC”), which has public databases that provide details regarding the owners of public companies and holdings of RICs. Such an alternative approach by the FTC would avoid the unnecessary disruption of U.S. capital markets.
The Committee’s letter proceeds in four parts. First, we summarize the Hart-Scott-Rodino Act (the “HSR Act”), which is intended to provide the FTC and DOJ with advance notice of acquisitions that may have competitive implications. Second, we summarize the HSR Act Proposal and its potential impact on the filing and delay requirements imposed by the HSR Act on acquisitions by RICs. Third, we describe the impact that the HSR Act Proposal would have on U.S. capital markets and address specific issues with the HSR Act Proposal. Finally, we set forth an alternative approach that would provide the FTC with information that it seeks without disrupting U.S. capital markets.
The Committee’s letter can be found here.