us-ftc-hsr-informal-interpretations-398737496590d7e90ce754e92c4fa13b•0003009 Informal Interpretation
0003009 Informal Interpretation
us-ftc-hsr-informal-interpretations-398737496590d7e90ce754e92c4fa13b0003009 Informal InterpretationGuidance
Question
(redacted)
Via Facsimile
March 21, 2000
Mr. Mike Verne
Premerger Notification Office
Federal Trade Commission
Washington, D.C.
Re: Compliance with Hart-Scott-Rodino Antitrust Improvements Act (the "Act)
Dear Mike:
The purpose of this letter is to confirm the oral advice you gave me on behalf of the Premerger Notification Office regarding application of the Act to a particular situation. Our client, Company A, proposes (i) to purchase from Company B certain intellectual property, related (inventory, trade names, service marks and like assets, (ii) to license certain intellectual property and (iii) to assume certain limited contractual obligations of Company B. company A and Company B will satisfy the size of person test under the Act.
Company A's license of intellectual property will be an exclusive, irrevocable, worldwide and fully-paid license to such intellectual property for certain enumerated uses. Company B will retain rights in the licensed intellectual property for all other uses, and Company A will grant to Company B an exclusive, irrevocable, world-wide and fully-paid license to the purchased intellectual property for use in relation to other products and services.
In our telephone conversation, you confirmed that, despite the fact that Company B will retain rights in the licensed intellectual property, the license of the intellectual property will nonetheless (exclusive as to a limited field use) be viewed as an assets acquisition subject to the Act's jurisdictional tests. The total consideration being paid by Company A to Company B for the licenses and related purchased assets is $15 million. Company A will not assume any debts, liabilities or obligations of Company B, other than certain existing rights (exactly $15 million) and obligations under executory contracts, which are not related on the balance sheet of Company B and for which no premium is being paid. Among other liabilities, Company B will retain all installation and warranty obligations and will either discharge those obligations ( No liabilities are being assumed. No premium paid to step into contract.) itself or will sub-contract out those obligations to Company A on market rate basis.
After considering the foregoing facts, you advised me that the Premerger Notification Office will not place a value on any of the "assumed" contractual obligations and that the parties can consider the "acquisition price" to be $15 million. Thus, assuming that the board of directors of the ultimate parent entity of Company A or its designee determines in good faith that the fair market value of the assets being acquired does not exceed $15 million, Company A and Company B may proceed without filing under the Act.
Please telephone me at (redacted) if you do not agree with may restatement of our conversation.
Very truly yours,
(redacted)
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