This advisory discusses the Federal Trade Commission’s (FTC) annual adjustment of the jurisdictional thresholds for pre-merger notification filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) and for interlocking directorates under Section 8 of the Clayton Act. The revisions account for changes in the level of the U.S. gross national product and constitute an increase of approximately four percent.

The advisory is provided in PDF on the Alston & Bird website: www.alston.com/advisories/mergers-antitrust-ftc-revises-thresholds

Written by Adam Biegel, Partner and Ankith Kamaraju, Associate | Alston & Bird LLP 

The SEC’s proxy access rule, which would allow stockholders to have their nominees for director positions included in the company’s proxy materials, is under challenge in the U.S. Court of Appeals for the D.C. Circuit.  The challenge was brought by the U.S. Chamber of Commerce and the Business Roundtable, with amicus curiae support from the State of Delaware.  On the opposing side, the Council of Institutional Investors, TIAA-CREF and fourteen other funds have filed a brief supporting the SEC’s position.

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The Federal Trade Commission announced its annual increase in the threshold for reporting mergers and acquisitions under the Hart-Scott-Rodino Antitrust Improvements Act. Among other changes, the threshold related to transaction value is increasing from $63.4 million to $66.0 million. This increase will be effective for transactions closing on or after February 24, 2011. The FTC also announced increases to the thresholds that trigger a prohibition preventing companies from having interlocking directorships under Section 8 of the Clayton Act. The new thresholds are $26,867,000 (minimum capital, surplus and undivided profits) and $2,686,700 (minimum amount of competitive sales). These increases took effect on January 25, 2011.  For more detail, see the Client Advisory prepared by Alston & Bird.

On January 25, 2011, the SEC adopted final rules implementing Section 951 of the Dodd-Frank Act. These rules include requirements related to disclosure of golden parachute arrangements and shareholder advisory votes on such arrangements, as related to change in control transactions. The rules will be effective for change in control proxy statements and similar forms filed on or after April 25, 2011.

With respect to disclosure, the final rules require that proxy materials for a shareholder meeting to approve a change in control transaction must include both tabular and narrative disclosure of named executive officers’ golden parachute arrangements. The current disclosure required by Item 402(j) of Regulation S-K does not satisfy the new requirements, and there is no exclusion of de minimis amounts. The disclosure is required regardless of whether the company is required to include a “Say on Parachutes Vote,” as discussed below.

With respect to shareholder advisory votes, the final rules require a nonbinding shareholder vote on golden parachute arrangements in connection with any change in control transaction. However, this requirement does not apply to golden parachute arrangements between the acquiring company and the named executive officers of the target, or to compensation that has been subjected to a prior “Say on Pay” vote.

For further information, see the Client Advisory prepared by Alston & Bird’s Employee Benefits and Executive Compensation Group.

The FTC has released its long anticipated preliminary staff report on consumer privacy and protection. In Chairman Jon Leibowitz’s remarks accompanying the release of the report, he expressed that the report is aimed at sending a message to the industry that self-regulation of consumer privacy is not working and this report seeks to provide concrete guidance for both the industry and Congress as it legislates in the privacy arena.  The 122 page report includes a proposed framework that would apply to both online and offline commercial entities that “collect, maintain, share, or otherwise use consumer data that can be reasonably linked to a specific consumer, computer or device.”  The FTC will accept public comments on the report through January 31, 2011.

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In a July 2010 letter, the Federal Trade Commission recently warned potential purchasers of certain customer data that the transfer and use of such data could violate the seller’s own privacy policies and, therefore, constitute an unfair or deceptive act or practice in violation of the Federal Trade Commission Act. The Director of the FTC’s Bureau of Consumer Protection, David Vladeck, made this position clear in a letter written to several investors who had expressed a desire to purchase customer data collected by the now defunct XY Magazine and XY.com in a bankruptcy sales process. The letter cautions of the likelihood that sensitive personal information of customers may be used lawfully only in the transaction for which it was collected. Sellers of such customer data, including when the sale is part of a larger business combination, should make certain the sale is permitted by their privacy policies. Purchasers of such customer data need to make certain they perform proper due diligence on the seller’s privacy policies, as well as make certain their plans for using the data post-acquisition will be permissible under the FTC Act.

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Sometimes an acquired business has received income on which it has not been taxed, such as prepaid subscription income. The buyer will often have to assume the contractual obligation for which the seller has already paid.  This advisory discusses the various issues associated with such a transaction, including the surprising possibility of the buyer's income inclusion.

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On May 24, 2010, the United States Supreme Court handed down the first ruling for an antitrust plaintiff in years, and reiterated that the activities of independent parties, even when closely coordinated as part of a joint venture, are not presumptively immune from antitrust liability. Specifically, the Court held in American Needle, Inc. v. National Football League that the National Football League, its teams and National Football League Properties, which the teams formed to coordinate the joint licensing of their intellectual property, could not shield themselves from scrutiny under Section 1 of the Sherman Act.  The Court rejected the NFL entities' claim that they operated only as a single enterprice and, thus, were incapable of having the multiple independent actors required for liability under that statute. 

Alston & Bird has prepared an advisory providing an analysis of the ruling and its impact for joint venture partners.

For the first time in more than a decade, the federal antitrust enforcement agencies have proposed modifications to their guidelines for determining when and how mergers among competitors should be challenged as being anticompetitive. The agencies explained the revisions as codifications of the "flexible" and fact-specific approach to merger analysis they have used in recent years rather than a major analytical shift, but it remains to be seen whether the changes are also the foundation for more aggressive merger enforcement.

Alston & Bird has prepared an advisory describing the proposed modifications.

This advisory discusses the Securities and Exchange Commission (SEC) three-to-two vote to adopt new rules regulating short selling. The new rules will significantly alter current short-selling practices. In addition, the SEC voted unanimously to reiterate its continuing support for the convergence of U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS).

The advisory is provided in PDF on the Alston & Bird web site: http://www.alston.com/securities_shortselling 

This advisory discusses the FTC’s three-percent reduction in the jurisdictional thresholds for pre-merger notification filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”) and for interlocking directorate calculations under Section 8 of the Clayton Act. Since 2005, the HSR Act thresholds have been indexed annually by the FTC to reflect changes in U.S. gross national product. This is the first year since annual indexing was implemented that the thresholds were reduced from the previous year’s thresholds.

The advisory is provided in PDF on the Alston & Bird web site: http://www.alston.com/MA_advisory_FTC_HSR_filings

This advisory discusses yesterday's SEC adoption of amendments to the disclosure requirements related to executive compensation and other corporate governance matters in proxy and information statements, annual reports and registration statements. The adopted amendments will require disclosure of compensation policies as they relate to risk, the potential conflicts of interest of compensation consultants, director and nominee qualifications, board leadership structure, and diversity policies relating to board membership.

The SEC also adopted amendments to require the disclosure of stockholder voting results in a Form 8-K, and to revise the disclosure of stock and option awards in the summary compensation tables and director compensation tables.

The advisory is provided in PDF on the Alston & Bird web site: http://www.alston.com/securities_law_SECform

his advisory discusses the Delaware Supreme Court's highly anticipated decision in the case of Lyondell Chemical Company et al., v. Ryan. The denial of summary judgment by the Chancery Court had given rise to serious concerns that monetary liability for directors based upon violations of the duty of good faith in a sale of corporate control was much more likely than previously thought. In reversing the Chancery Court and entering summary judgment for the directors, the Supreme Court reaffirmed its previous decisions outlining the contours of the duty of good faith, and provided welcome comfort to directors and their advisors as they consider how to fulfill directors' fiduciary duties relating to change of control transactions.

The advisory is provided in PDF on the Alston & Bird website: http://www.alston.com/corporate_governance_advisory_protections

This Securities Law Alert discusses the Securities and Exchange Commission’s (SEC) unanimous vote yesterday to publish for public comment a Roadmap that could potentially phase out the application of United States Generally Accepted Accounting Principles (GAAP) by U.S. issuers, beginning in the year 2014, and instead mandate the application of International Financial Reporting Standards (IFRS) for financial reporting.

The advisory is provided in PDF on the Alston & Bird web site: http://www.alston.com/securities_law_roadmap 

This advisory discusses the Securities and Exchange Commission’s (SEC) unanimous approval today of amendments to certain rules and forms in an effort to modernize its disclosure requirements for foreign companies.

The advisory is provided in PDF on the Alston & Bird web site: http://www.alston.com/securities_alert_new_rules_private_issuers

This advisory discusses the Delaware Court of Chancery’s recent denial of summary judgment to directors who approved a merger transaction in just seven days, and without conducting an active pre-signing or post-signing market check, even though the only bidder offered a “blowout” price. Moreover, given the board’s failure to take an active role in negotiating the merger and in informing itself of the value of the company, the court held that the directors could not benefit from the exculpatory provision in the company’s charter at the summary judgment stage because they may have breached their duty of loyalty by acting in bad faith.

The advisory is provided in PDF on the Alston & Bird Web site: http://www.alston.com/seclit_advisory_merger_revlon 

This advisory discusses a recent roundtable discussion, hosted by the Securities and Exchange Commission (SEC), on the performance of International Financial Reporting Standards (IFRS) and United States Generally Accepted Accounting Principles (U.S. GAAP) during the present subprime crisis. The roundtable participants represented a cross section of investors, issuers, auditors and other market participants, in both the United States and the European markets, with experience in considering and/or evaluating company financial statements prepared in accordance with IFRS or U.S. GAAP, as well as special observers from the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB).

The advisory is provided in PDF on the Alston & Bird web site: http://www.alston.com/seclaw_advisory_SEC_discussion_IFRS

This advisory discusses the full text of proposed amendments to the cross-border tender offer rules under the Securities Exchange Act of 1934, as amended, recently released by the Securities and Exchange Commission. These are the first proposed changes to the rules since they were initially adopted in 1999. The proposed rules generally provide for an expansion of the exemptions for Tier I and Tier II cross-border transactions, including changes in how U.S. securities ownership is calculated and the codification of certain interpretive positions and exemptions frequently granted by the SEC in cross-border transactions due to conflicts with foreign regulatory regimes.

The advisory is provided in PDF on the Alston & Bird web site: http://www.alston.com/securities_advisory_crossborder

On January 18, the SEC released the full text of amendments to the proxy rules under the Securities Exchange Act of 1934, as amended. The amendments promote the use of electronic shareholder forums as an effective means of communication among shareholders and between shareholders and management. This advisory discusses how the new rules work and the related benefits and drawbacks for both companies and shareholders.

The advisory is provided in PDF on the Alston & Bird web site: http://www.alston.com/securities_advisory_final_shareholder_rules

This advisory discussed the amendments the SEC adopted on November 28 to codify its longstanding interpretation of the rule permitting companies to categorically exclude shareholder proposals on shareholder access to company proxy statements for director nominations, and amendments to the proxy rules to facilitate the use of electronic shareholder forums.

The advisory is provided in PDF on the Alston & Bird web site: http://www.alston.com/securities_advisory_shareholder_forum_access