the Hart-Scott-Rodino Act
At Friday's hearing in the case of Diamond Glass, during which
the court approved the sale of the company's assets to Columbus,
Ohio-based Belron US, Michael Richman of Foley and Lardner, counsel
for Diamond, advised the judge that the two companies were still
determining whether they would need to file under the Hart-Scott-Rodino
Act, based on the size of the sale, which was valued at more than
According to Thomas G. Buchanan, an attorney for Buchanan Ingersoll,
the Act was developed to give the federal government a chance "to
review the potential effects on competition of certain mergers,
acquisitions or other consolidations
before such transactions
If this filing is required, the Federal Trade Commission (FTC)
and/or Department of Justice (DOJ), which govern the act, require
a 15-day waiting period before the transaction is completed.
In the case of Diamond, if the filing is required, according to
Richman, Belron US has agreed to fund Diamond during the waiting
period-as the Guggenheim debtor-in-possession agreement will expire
on the June 30, the scheduled day for the closing of the sale.
In order for the filing to be required, according to the FTC, the
following tests must be met:
- Identification of the Parties: Both parties must be parent
companies or the holders of 50 percent or more of the company's
- The Size-of-Person Test: One of the companies involved in the
transaction must have $100 million or more in annual net sales
or total assets, and the other must have $10 million or more in
annual net sales or total assets;
- The Size-of-Transaction Test: This test takes into account the
"value of voting securities and assets to be held" as
a result of the acquisition.
Once the filing is made, the FTC and DOJ have the opportunity to
review the potential sale-and to determine whether it may violate
any antitrust laws. If either the FTC or DOJ determines during the
waiting period that further inquiry is necessary, it is authorized
by Section 7A(e) of the Clayton Act to request additional information
from the parties. This "second request" extends the waiting
period ten days after the acquiring party (i.e., Belron) complies.
This additional time provides the reviewing agency with the opportunity
to analyze the information and to take appropriate action before
the transaction is finalized.
At press time, attorneys in the case had not yet determined whether
this filing was necessary.
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