§ 15.166 Premerger clearance: Declining industry.

(a) The Commission issued an advisory opinion July 30, 1964, in which a request for premerger clearance from liability under section 7, amended Clayton Act, was approved permitting acquisition of a failing company in a declining industry.

(b) A single-line manufacturer of a byproduct of the cotton industry desiring to be acquired by a multiproduct company in the chemical industry sought clearance of its proposed acquisition. The firms were competitors but demand for the product was declining due largely to wide fluctuations in price. There was also increasing production of competitive products made from wood pulp which could be used for the same purposes, and reasonable, but unsuccessful attempts had been made to sell to others.

(c) The Commission, basing its belief on the information then before it, advised that the proposed sale probably would not violate any of the laws it administers.

(d) The Commission added that the opinion should not be construed as in any way affecting any other matter involving the requesting party or the the purchaser which the Commission was then or might thereafter investigate. [33 F.R. 2887, Feb. 13, 1968]

§ 15.167

Premerger clearance: Deteriorating industry.

(a) The Commission issued an advisory opinion on August 18, 1964, in which a request for premerger clearance from liability under section 7, amended Clayton Act, was approved permitting acquisition of a failing competitor.

(b) One of the larger manufacturers of industrial clay products sought clearance to acquire a smaller manufacturer of the same product. The smaller manufacturer did not have as extensive a product line as the larger company. The companies partially competed in a limited geographical area; however the smaller firm had been unable to replace key personnel and the trend in its financial condition was downward. Further, its employees, comprising about 20 percent of the work force in a small community, faced loss of jobs if the smaller company went out of business. Lastly, the other party was the only available purchaser

(c) Basing its belief on the informa

tion then before it, the Commission advised the proposed sale probably would not violate any of the laws which it administers.

[33 F.R. 2887, Feb. 13, 1968]

§ 15.168

Premerger clearance: Imminent insolvency.

(a) The Commission issued an advisory opinion on October 27, 1964, in which a request for premerger clearance from liability under section 7, amended Clayton Act, was approved permitting acquisition of a failing competitor in financial distress.

(b) A firm in a local service business requested clearance to merge with a competitor, with whom it was aligned in its activities, and to form a new corporation. The service firm had experienced declining earnings for the past 8 years and there was strong competition from other service businesses in the area in which both did business. The requesting party had experienced an increase in operating costs and expenses in relation to sales, was in a critical financial condition and apparently could not long continue to operate as a solvent and going concern. A national chain was the only other possible purchaser.

(c) The Commission basing its belief on the information then available to it advised that the transaction would not violate any of the laws which it administers.

[33 F.R. 2888, Feb. 13, 1968]

§ 15.169 Premerger clearance: Financial distress.

(a) The Commission issued an advisory opinion on May 26, 1965, in which a request for premerger clearance from liability under section 7, amended Clayton Act, was approved permitting acquisition of an integrated competitor in poor financial condition.

(b) A large diversified manufacturer of closures with less than 3 percent of its total sales accounted for by a speciality closure product, sought to acquire the second largest integrated manufacturer of such products, in an industry dominated by another fully integrated company. The first four firms in the industry accounted for about 55 percent of the market. The company to be acquired was in poor financial condition, and it was doubtful whether its credit standing could support the new financing necessary for plant improvement and

(a) The Commission issued an advisory opinion on June 8, 1965, in which a request for premerger clearance from liability under section 7, amended Clayton Act, was approved permitting acquisition of a competitor's unprofitable operating division.

(b) A large manufacturer of a diverse line of aeronautical supplies sought Commission approval for the disposition of one of its operating divisions which was an unprofitable part of its total business. The proposed purchaser was another diversified corporation also engaged to a small degree in the same line of commerce. It was evident that although these two companies ranked high in market shares, there were many others in the business, and that restrictive licenses were often used by customers to exercise an effective consumer-control of the survey market. The total dollar value of the business being sold was small and it appeared there would be a liquidation of the assets if the sale was not made.

(c) The applicant was advised that based on the available information a proceeding would not be initiated by the Commission to challenge the acquisition. The Commission added that the advice was being given without prejudice to its right to reconsider the questions involved in the event substantial anticompetitive effects attributable to the acquisition were manifested in the future. [33 F.R. 2888, Feb. 13, 1968]

§ 15.171 Premerger clearance denied: Adverse competitive effects probable. (a) The Commission issued an advisory opinion on June 10, 1965, in which a request for premerger clearance from liability under section 7, amended Clayton Act, was denied because of the existence of probable adverse competitive effects.

(b) A manufacturer/retailer of corsumer leather goods requested clearance for its proposed acquisition of a major regional retailer of products produced by the manufacturer. The horizontal and vertical implications of this proposed merger were similar to those which were declared unlawful in the case of United States v. Brown Shoe, 370 U.S. 294 (1962). However, the market shares were smaller and probable adverse competitive effects somewhat less than were present in the Brown Shoe case.

(c) The Commission advised there existed a substantial probability that the proposed acquisition would be a violation of the Clayton and Federal Trade Commission Acts. The application for premerger clearance was denied.

(d) Thereafter, the acquisition was consummated. A complaint issued and a consent settlement effected whereby the acquiring company agreed to make no further acquisitions of retailers or manufacturers of the product involved for a period of several years without prior Commission approval.

[33 F.R. 2888, Feb. 13, 1968]

§ 15.172 Premerger clearance: Adverse competitive effects not discernible.

(a) The Commission issued an advisory opinion on July 23, 1965, in which a request for premerger clearance from liability under section 7, amended Clayton Act, was given limited approval because it did not appear that the acquisition would result in the requisite adverse competitive effects.

(b) A diversified processor, wholesaler, and retailer sought clearance for its proposed acquisition of an independent food supplier which sold a major portion of its products to a subsidiary of the acquiring company. The isolated transaction did not appear to have the requisite substantial adverse competitive effects called for by the statute, but in view of pending investigations of additional acquisitions by the acquiring company, an unrestricted clearance could not be approved by the Commission.

(c) The Commission advised that it would take no action solely as to the proposed transaction if it was consummated. The Commission added that it conditioned its advice on assurances that by accepting and acting upon the opinion, the acquiring company would not use the opinion as precedent or argument in the investigation, or in the formal or informal hearings, of any

matter involving the acquiring company then pending or which might come before the Commission or any other court or agency.

(d) The Commission added that if at some future date the acquiring company was required to divest the subsidiary which was actually taking over the independent company, the parent company would not object to divestiture of the independent food supplier on terms set by the Commission or other court or agency.

[33 F.R. 2888, Feb. 13, 1968]

§ 15.173 Premerger clearance denied: Lack of competitive information.

(a) The Commission issued an advisory opinion on October 29, 1965, in which a request for premerger clearance from liability under section 7, amended Clayton Act, was denied for lack of competitive information concerning competition in the line of commerce involved.

(b) A leading manufacturer of dispensing machines sought approval of its proposed purchase of a smaller, family held manufacturer of dispensing machines which were complementary to the product line of the acquiring company.

(c) The Commission declined to render an opinion because of (1) the paucity of competitive information concerning competition in the line of commerce with which the acquired company's machine was identified, and (2) the short time period available between the date of the request and the closing date agreed upon between the parties. This short time precluded a more complete investigation and analysis.

[33 F.R. 2889, Feb. 13, 1968]

§ 15.174

Premerger clearance denied: Vertical merger would raise questions.

(a) The Commission issued an advisory opinion September 8, 1966, in which a request for premerger clearance from liability under section 7, amended Clayton Act, was denied because the competitive implications of the acquisition would raise economic questions resolvable only by investigation.

(b) A leading construction material producer applied for clearance of its proposed acquisition of a diversified company having a large share of a regional market in the sale of raw materials such as sand, gravel, and stone, which were complementary to its principal

product line. The requesting party offered to dispose of certain producing plants now operated by the company, and to continue appropriate leases of other such plants as the company owned.

(c) The Commission advised the requesting party that the competitive implications of the integration of construction material distributors with sources of raw materials were such that an investigation to assess the economic effects of the acquisition, if it was consummated, would be necessary.

[33 F.R. 2889, Feb. 13, 1968]

§ 15.175 Interpretation of request for premerger clearance: Declining industry.

(a) The Commission issued an opinion October 8, 1965, in connection with a request for advice by two respondents as to whether a proposed merger, if consummated, would be in violation of an outstanding order prohibiting them from, among other matters, uniting facilities so as to eliminate competition.

(b) One respondent, a small company in the coin operated machine business, desiring to be acquired by the other, a larger company in the same industry, applied for clearance of the proposed acquisition under Commission established procedures. It was reported that the smaller respondent was in financial difficulties to the point where it was approaching failure. Further reasons advanced to support the proposed merger were that demand for the product was on the decline, the industry easy to enter, and reasonable efforts to locate another purchaser had been unsuccessful.

(c) On the basis of available information, the Commission advised that if the smaller respondent sold its business to any company, the Commission did not intend to initiate proceedings with regard to such sale.

[33 F.R. 2889, Feb. 13, 1968]

§ 15.176 Premerger clearance:

minimis competitive effects.

De

(a) The Commission issued an advisory opinion on November 29, 1966, in which a request for premerger clearance from liability under section 7, amended Clayton Act, was approved permitting acquisition of a company in financial distress.

(b) A dairy products processing company in financial difficulty desiring to be acquired by a larger company in the same field applied for clearance of the pro

posed acquisition. The companies competed to a limited extent; however, the applicant had losses for a number of years, could not obtain long-term financing and had made numerous unsuccessful attempts to sell to others.

(c) The requesting party was advised that, relying on his representations as to the hopeless financial condition and unsuccessful efforts to sell, the Commission would not challenge the proposed acquisition if it were consummated. [33 F.R. 2889, Feb. 13, 1968]

§ 15.177 Compliance interpretation of request for premerger clearance: Imminent insolvency.

(a) The Commission issued an opinion February 14, 1964, in connection with a request for advice as to whether a proposed merger, if consummated, would be in violation of an outstanding order prohibiting the acquiring company from making certain acquisitions.

(b) A small company manufacturing food products applied for clearance of its acquisition by a larger producer engaged in operations in the same product line. The larger producer was subject to a Commission order prohibiting certain acquisitions for a designated period of time without prior Commission approval.

(c) Both producers competed in the same general trading area. It was presented that the smaller company was in imminent danger of insolvency and that it had exhausted every possibility of locating success.

another purchaser without

(d) On the basis of available information, but primarily because of the equities affecting the smaller company's position in the industry, the Commission gave its approval to the proposed acquisition.

[33 F.R. 2890, Feb. 13, 1968]

§ 15.178 Compliance interpretation_of request for premerger clearance: Denied, other purchasers available. (a) The Commission issued an opinion April 2, 1964, in connection with a request for advice as to whether a proposed merger, if consummated, would be in violation of an outstanding order prohibiting the acquiring company from making certain acquisitions.

(b) A large company in the food products field applied for clearance of its proposed acquisition of a smaller company engaged in operations in the same product line. The larger company was

subject to a Commission order prohibiting certain acquisitions for a designated period of time without prior Commission approval.

(c) Both companies were in substantial competition in the same general trading area. It was determined that other prospective purchasers were available and that the smaller company was of considerable size when compared with other regional producers.

(d) The Commission advised that the proposed merger could not be approved under the circumstances.

[33 F.R. 2890, Feb. 13, 1968]

§ 15.179 Compliance interpretation of request for premerger clearance: Imminent bankruptcy.

(a) The Commission issued an opinion October 28, 1964, in connection with a request for advice from a small company as to whether its proposal to merge with any other company in the same field would, if consummated, be in violation of section 7, amended Clayton Act.

(b) A small food products manufacturer applied for advice from the Commission regarding the possibility of selling out to any other company operating in the same field, particularly to a large processor in the same products line. The larger producer was subject to a Commission order prohibiting such acquisitions for a designated period of time without prior Commission approval.

(c) It was presented that the requesting company had made reasonable but unsuccessful attempts to locate a purchaser other than the larger company, and moreover was on the verge of bankruptcy.

(d) On the basis of available information, but primarily because of the equities affecting the requesting company's position in the industry, the Commission advised that an acquisition by another producer in the same field would not be in violation of section 7, amended Clayton Act, and in the event a sale is made to a company which is under Commission order requiring approval of such acquisition, said approval would be granted.

(e) In clearing the proposed sale the Commission pointed out that the approval might be reconsidered, revoked or rescinded if it subsequently appeared the facts submitted were inaccurate, incomplete or that they had changed at the time a sale was made. [33 F.R. 2890, Feb. 13, 1968]

§ 15.180 Compliance interpretation of request for premerger clearance: Imminent insolvency.

(a) The Commission issued an opinion September 24, 1965, in connection with a request for advice as to whether a proposed merger, if consummated, would be in violation of an outstanding Commission order prohibiting the acquiring company from making certain acquisitions for a designated period of time without prior Commission approval.

(b) A small food products manufacturer applied for clearance of its proposed acquisition by a larger company under Commission order and which was much more extensively engaged in the same product line. The requesting company was experiencing a decline in annual profits to the point of insolvency. It was reported that refinancing was not available and the smaller company was not, for a number of reasons, a viable concern in the context of the particular market. Exhaustive efforts to locate another purchaser had been unsuccessful.

(c) On the basis of available information the Commission gave its approval to the proposed acquisition. [33 F.R. 2890, Feb. 13, 1968]

§ 15.181 Compliance interpretation of requests for premerger clearance: De minimis competitive effects; one request denied.

(a) The Commission issued opinions on February 9, 1966 and January 26, 1967, in connection with requests for advice as to whether several proposed mergers, if consummated, would be in violation of an outstanding Commission order prohibiting future acquisitions by respondent for a designated period of time without prior Commission approval.

(b) A large automatic machine company under Commission order sought approval for the proposed acquisition of two smaller, local companies engaged in the same line of business. In one metropolitan area respondent and the first smaller company were in competition, and in the other trading area respondent and the second smaller company did not compete to any significant degree. In the first area there were a substantial number of local and national competitors involved, and in the other area a substantial number of local competitors and one national competitor were involved.

(c) In these two instances the Commission approved the proposed acquisitions.

(d) In a third request for advice involving a different trading area, the respondent sought clearance for the proposed acquisition of a smaller, local company engaged in the same line of business in direct competition with the larger company. There was a concentration in the line of commerce involved. The Commission denied the request for clearance because it was incompatible with the objectives of the order prohibiting such acquisitions. [33 F.R. 2890, Feb. 13, 1968]

§ 15.182 Compliance interpretation of request for premerger clearance: Liquidation probable.

(a) The Commission issued an opinion May 24, 1966, in connection with a request for advice as to whether a proposed acquisition, if consummated, would be in violation of an outstanding order prohibiting respondent from making certain acquisitions for a designated period of time without prior Commission approval.

(b) A large manufacturer of food products sought clearance of its proposal to acquire a smaller manufacturer engaged in the same general line of commerce. The requesting manufacturer was, and is now, subject to a Commission order prohibiting, among other things, the making of certain acquisitions for a designated period of time without prior Commission approval. The two manufacturers were not in competition in the same geographical trading area, but to a very limited extent the requesting manufacturer was a supplier to the smaller company.

(c) The smaller manufacturer had made reasonable but unsuccessful attempts to sell to others in the industry and in the circumstances liquidation apparently was the only alternative to the proposed sale.

(d) The Commission advised that, in reliance on the information submitted by the parties, if the proposed acquisition was made, the Commission would not proceed against the acquiring company. [33 F.R. 2891, Feb. 13, 1968]

§ 15.183 Compliance interpretation of request for premerger clearance: Denied, competitive considerations. (a) The Commission issued an opinion July 20, 1966, in connection with a request for advice as to whether a pro