Recent FTC Action Underscores Narrow Interpretation of HSR “Investment-Only” Exemption

Morrison & Foerster LLP

On August 24, 2015, the Federal Trade Commission (“FTC” or the “Commission”) filed a proposed settlement in federal court regarding alleged violations by Third Point LLC (“Third Point”) of the premerger reporting laws related to Third Point’s 2011 open market acquisition of stock in Yahoo! Inc. (“Yahoo”). In its complaint, the FTC alleged that Third Point’s conduct—including assembling an alternate slate for the Yahoo Board and publicly stating that it was prepared to propose a slate of directors at Yahoo’s next annual meeting—established that its open market acquisitions of stock were not exempt from the law’s reporting requirements on the ground that they were “solely for the purpose of investment.”


The Hart-Scott-Rodino Act (“HSR Act”) requires that companies and individuals notify the FTC and the Department of Justice (“DOJ”) of most large transactions that affect commerce in the United States and satisfy the HSR Act reporting thresholds. Those acquirers must then observe a waiting period before closing their transaction, while one of the two agencies determines whether the transaction may result in a substantial lessening of competition.

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