Notice of Policy of Disclosing Investigations of Announced Mergers

Summary

The Federal Trade Commission is revising its policy concerning disclosure of investigations. The Commission's policy is to conduct its investigations on a nonpublic basis. In the past, the Commission has established some narrow exceptions to that policy. The Commission is now establishing an additional exception for circumstances in which a party to a merger or other transaction has publicly disclosed the existence of a transaction or proposed transaction in a press release or in a public filing with a government body. In those limited circumstances, the Commission authorizes public disclosure of whether the agency is investigating the transaction or proposal under Section 7 and 11 of the Clayton Act. Inquires seeking disclosure under this

Full text

SUMMARY: The Federal Trade Commission is revising its policy concerning 
disclosure of investigations. The Commission's policy is to conduct its 
investigations on a nonpublic basis. In the past, the Commission has 
established some narrow exceptions to that policy. The Commission is 
now establishing an additional exception for circumstances in which a 
party to a merger or other transaction has publicly disclosed the 
existence of a transaction or proposed transaction in a press release 
or in a public filing with a government body. In those limited 
circumstances, the Commission authorizes public disclosure of whether 
the agency is investigating the transaction or proposal under Section 7 
and 11 of the Clayton Act. Inquires seeking disclosure under this 
authority should be addressed to the Commission's Office of Public 
Affairs.
    This change of policy will more closely conform the Commission's 
practice in such matters with that of the Antitrust Division of the 
Department of Justice. The change of policy does not alter the 
Commission's confidentiality policies or practices with respect to 
documents and information submitted to or developed by the agency in 
connection with such investigations, or with respect to information 
concerning the course of such investigations. The change of policy also 
does not affect the Commission's confidentiality policies or practices 
regarding any other type of investigations.
EFFECTIVE DATE: April 16, 1997.

FOR FURTHER INFORMATION CONTACT:
Victoria A. Streitfeld, Office of Public Affairs, 202-326-2718, or 
Stephen Calkins, General Counsel, 202-326-2481.

SUPPLEMENTARY INFORMATION: The Commission's policy is to hold 
confidential the existence and targets of law enforcement 
investigations, until either the Commission issues or authorizes a 
complaint or the matter is closed. See 42 FR 64135, Dec. 22, 1977. The 
Commission believes generally that public disclosure of pending 
investigations and identification of targets before the Commission has 
had an opportunity to weight the evidence may unjustifiably harm the 
companies investigated and interfere with the conduct and successful 
resolution of such matters. The laws applicable to the Commission do 
not, however, require confidential treatment of the existence of 
investigations, and the Commission's policy has long included narrow 
exceptions for disclosure of ``industrywide investigation'' (where 
particular targets are not identified), and of particular 
investigations that involve significant risk of economic harm or risk 
of public health or safety.
    The Commission is now establishing a further exception, permitting 
disclosure of whether the agency is investigating a proposed or 
consummated merger or other transaction under Sections 7 and 11 of the 
Clayton Act, 15 U.S.C. 18, 21, where a party to the transaction has 
issued a press release or made a public filing with the governmental 
body that discloses the existence of the transaction. The Commission 
considers the concerns underlying the general policy of nondisclosure 
to have little application in these instances. Furthermore, while the 
Hart-Scott-Rodino (``HSR'') Act prohibits the Commission from making 
public (except in specified circumstances) ``information or documentary 
material filed with the . . . Commission pursuant to'' that Act, 15 
U.S.C. 18a(h), nothing in the HSR Act prevents the Commission from 
publicly disclosing information that has already been made available to 
the public by a party, even if that information is also included in an 
HSR filing. Accordingly, where a party has issued a press release or 
made a public filing with a government body that discloses the 
existence of a transaction or proposed transaction, the Commission 
authorizes public disclosure of whether the agency is investigating the 
matter. This approach confirms closely with that of the Antitrust 
Division of the Department of Justice, with which the Commission shares 
enforcement of the Clayton Act.
    Regardless of whether a transaction or proposed transaction is 
reported by the media, however, the agency will disclose an 
investigation under this authority only after the Office of Public 
Affairs (or another designated office) has confirmed that a party has 
in fact disclosed the existence of the transaction or proposal in the 
manner stated. Inquires seeking disclosure under this authority should 
be addressed to the Office of Public Affairs.
    The Commission is not changing its treatment of any other 
information relating to mergers or similar transactions. Thus, the 
authority granted here to disclose the existence of certain 
investigations does not include authority to disclosure any details 
about those investigations. In particular, because the Commission 
considers the HSR Act to restrict disclosure of whether a party to 
proposed transaction has filed a notification under that Act, the 
agency will not, except as permitted by that law, reveal whether a 
filing under HSR has been made. The Commission will continue to keep 
confidential, as appropriate under its existing laws and policies, 
documents and information submitted pursuant to the HSR Act to relating 
to an investigation under that Act. The policy revision also does not 
affect the confidentiality treatment of other types of investigation 
under the Commission's antitrust or consumer protection authority.

    By direction of the Commission.
Donald S. Clark,
Secretary.

Statement of Commissioner Mary L. Azcuenaga; Concurring in Part and 
Dissenting in Part on Decision To Authorize Public Disclosure of 
Certain Merger Investigations

    The policy the Commission announces today in most, perhaps all, 
respects comports with common sense and is long overdue. The policy 
enables the Commission to confirm certain otherwise nonpublic 
information after it has been confirmed (reliably, as defined in the policy) by third parties. The policy also enables the commission 
to confirm certain nonpublic information that has not been confirmed by 
third parties. Under the new policy, the Commission will confirm the 
fact that it is investigating a transaction after the transaction 
itself has been made public and regardless of whether the fact of the 
investigation has been made public by third parties.
    The Commission long has followed a policy of declining to confirm 
the existence of its investigations until it issues or authorizes 
filing of a complaint, or until the matter is closed.\1\ This policy is 
based on the premise that public disclosure of pending investigations 
and identification of targets can interfere with the conduct and 
successful resolution of such matters.\2\ The Commission concluded in 
the 1977 Policy Statement that ``disclosure of the identities of 
businesses under investigation would cause those businesses severe 
economic injury even before the Commission determines whether there is 
reason to believe the law has been violated.''
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    \1\ In 1977, the Commission reaffirmed its then-current policy 
of maintaining the confidentiality of most nonpublic investigations. 
See FTC Policy statement, 42 Fed. Reg. 64,135 (Dec. 22, 1977) 
(``1977 Policy Statement''). This Policy Statement sets forth 
exceptions for industrywide investigations and investigations 
involving ``significant risk of economic harm or risk to public 
health or safety.'' In addition, certain investigations may become 
public by operation of law or the Commission's Rules, for example, 
on filing of a petition to quash compulsory process, 16 C.F.R. 
Sec. 4.9(b)(4), on filing of an application for clearance, 16 C.F.R. 
Sec. 4.9(10(ii), or on publication in the Federal Register of a 
notice of early termination under the Clayton Act, 15 U.S.C. 
Sec. 18a(b)(2).
    \2\ Id. See also Exemption 7A to the mandatory public disclosure 
requirements of the Freedom of Information Act, 5 U.S.C. 
Sec. 552(b)(7)(A); and Exemption 7A to the open meeting requirements 
of the Government in the Sunshine Act, 5 U.S.C. Sec. 552b(c)(7)(A).
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    I have been informed that the business community will have no 
objection to having the Commission confirm the fact that it is 
investigating a transaction even if the parties have not confirmed the 
fact of the investigation. I do not know the basis for this 
information. Assuming the information is correct, I support the new 
policy in its entity because the policy presumably would not result in 
the harm the Commission identified in 1977.\3\ Nevertheless, I would 
have preferred to seek comment on this aspect of the new policy before 
adopting it. Good reasons support the Commission's long standing policy 
not to confirm or deny the existence of a nonpublic investigation, and 
the Commission has been able to live with that policy for many years. 
It seems appropriate and not unduly burdensome for the Commission to 
seek public comment on this aspect of the proposal for thirty days 
before adopting it. To the extent that the Commission has chosen not to 
seek public comment, I dissent.
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    \3\ See note 1.
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[FR Doc. 97-9820 Filed 4-15-97; 8:45 am]
BILLING CODE 6750-01-M  

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