0602003 Informal Interpretation

From: (redacted)

Sent: Wednesday, February 01, 2006 2:41 PM

To: Verne, B. Michael

Subject:An 802.1(d)(4) question

A company is in the businessof generating computerized data and selling it to customers. It has its ownterrestrially interconnected computer network, including the facilities forworldwide data delivery to its customers via the network. The company wishes tooutsource the data delivery function and the network that performs thatfunction. The acquisition price exceeds the HSR minimum filing threshold andthe parties satisfy the SOP tests. The buyer will continue to provide the samedata delivery services to the company and its customers over the acquiredcomputer network.

Rule 802.1(d)(4) provides anexemption if the network data delivery function constitutes "managementand administrative support services," but the rule also says that"distribution" is not eligible for the exemption. The buyer of thecomputer network will not engage in "distribution" the way a typicaldistributor would seek out and sell or re-sell to its own customers. Rather,the buyer will receive data supplied by the company and deliver it to customersof the company, as directed by the company. Seems to me that is a classic"administrative support service" and ought to be within, rather thanoutside, the exemption.

Yes?