Request mergers (Summary and Highlights of the Report, pp. 17-18)

ADVISORY OPINIONS WITH REQUESTS THEREFOR 1069 1055 Request mergers (Summary and Highlights of the Report, pp. 17-18). According to the Bureau, the following criteria describe conglomerate mergers most likely to violate the law: (1) When the acquiring corporation is a large enterprise having a substantial volume ($250 million in sales or assets) in one or more concentrated industries, and (2) when the acquired firm is one of the leading firms in at least one concentrated industry (a leading firm is one of the 4 to 6 largest sellers, and a concentrated industry is one where the four leading firms account for 40% or more of sales.

The Department of Justice Guidelines, {4 17, 18, focus on conglomerate acquisition by potential entrants. The Department says that it will ordinarily challenge any merger between one of the most likely entrants and (i) any firm with 25% or more of the market, or (ii) one of the two largest firms in a market in which the shares of the two largest amounts to 50% or more, or (iil) one of the four largest firms in a market in which the shares of the eight largest firms amount to 75% or more, providing the merging firm’s share amounts to 10% or more, or (iv) one of the eight largest firms in a market in which the shares of these firms amount to 75% or more, provided either (a) the merging firm’s share is not insubstantial and there are no more than one or two likely entrants, or (b) the merging firm is a rapidly growing firm.

MONY’s acquisition of N. Am falls far short of the Bureau’s and the Department’s standards for a merger which might be challenged. On the basis of non-par ordinary insurance in force™ of $264,766,000,000 in 1969, the top four companies had 17.90% of the market and the top eight had 27.13%. Concentration in this assumed submarket is therefore even less than in the total life market, and far short of the Bureau and Department: of Justice Guidelines. The company to be acquired, N. Am, in 1969, on the basis of ordinary non-par insurance, ranked 23rd among all stock companies, and had a market share of 0.72%. Again, according to the Guidelines, the proposed acquisition plainly is not one that should be challenged. With particular reference to the Department’s Guidelines, which focus on conglomerate acquisitions by potential entrants, it should be noted that MONY is not “one of the most likely entrants” by internal expansion because it is legally prohibited from selling non-par insurance. 27 McKinney's Insurance Law § 216(5). Under these circumstances, MONY instead proposes to acquire a small company which, we respectfully submit, satisfies the conditions 15 We are advised that as a practical matter group insurance can be eliminated from a consideration of market shares and rankings in the non-par market because the bulk of group insurance is issued on a participating basis. Opinion 79 F.T.C.

of the Commission’s “toehold” acquisition theory as enunciated in Matter of Bendix, Docket No. 8739, 3 CCH Trade Reg. Rep. § 19,288 at 21,489 (1970). There, it will be recalled, the Commission held illegal Bendix’s acquisition of Fram, which ranked third in the automotive filter industry with 12.4% of the market, when smaller companies were available for acquisition. Although the Commission did not expressly place an advance stamp of approval on an acquisition of a company such as Hastings Manufacturing Company, ranking seventh with 3.2% of the market, it did not disapprove that possibility and, in the context of the opinion, seems to grant at least tacit approval.7¢ Here, N. Am is a much smaller factor than Fram and, with a market share in the non-par market of 0.72% and a ranking among all stock companies of 28rd, it is, indeed, a much smaller factor than Hastings. Accordingly, we believe that under any of the tests discussed, MONY’s proposed acquisition of N. Am, even assuming that the acquisition has a conglomerate aspect, is valid. In conclusion we respectfully request an Advisory Opinion as to the validity of the proposed acquisition. We will be happy to respond to requests for any additional facts, and to cooperate in any way possible.

Sincerely,
Royall, Koegel & Wells,
(S) H. Auttex Locuner,
Attorneys for the Mutual Life
Insurance Company of New York.

Applicability of the Standard for the Surface Flammability of Small Carpets and Rugs (DOC FF 2-70) to Terry Bath Mats.

(File No. 723 7003)
Opinion Letter
Dercemper 2, 1971
Dear Mr. Lucas:

This is in response to your request for an advisory opinion as to the applicability of the Standard for the Surface Flammability of Small Carpets and Rugs (DOC FF 2-70), issued under the Flammable Fabrics Act to terry bath mats. On December 18, 1969, the Department of Commerce published in the Federal Register a proposed Standard for the Surface Flammability of Carpets and Rugs and invited comments from interested parties. 16 See also Matter of Kennecott Copper Corporation, FTC Docket No. 8765, issued May 5, 1971, where Kennecott, the largest copper company, sought to acquire Peabody Coal Company, the largest coal producer. . ADVISORY OPINIONS WITH REQUESTS THEREFOR 1071 1070 Opinion On April 16, 1970, the Department of Commerce published in the Federal Register the final Standard for the Surface Flammability of Carpets and Rugs (DOC FF 1-70). However, as a result of the comments received, this Standard excluded smaller carpets and rugs. Nonetheless, in the same issue of the Federal Register of April 16, 1970, the Department of Commerce published a notice of need and a proposed complementary standard for small carpets and rugs. Subsequently, a final Standard for the Surface Flammability of Small Carpets and Rugs (DOC FF 2-70) was published on December 29, 1970, which becomes effective on December 29, 1971. It must be noted that the definition of “Small Carpet” as contained in the DOC FF 2-70, clearly appears to encompass bath mats. This, in part, reads as follows:

(ec) “Small Carpet” means any type of finished product made in whole or in part of fabric or related material and intended for use or which may reasonably be expected to be used as a floor covering which is exposed to traffic in homes, offices, or other places of assembly or accommodation. * * * Moreover, further inquiries by members of the Commission’s staff disclose that bath mats were the product which was responsible for the exclusion of smal] carpets and rugs from the Standard of April 16, 1970 (DOC FF 1-70), and for the development of the less rigid Standard (DOC FF 2-70), which permits the cautionary labeling for small carpets and rugs which do not meet the minimum flammability requirements.

In view of the circumstances as outlined above, there appears to be no doubt that bath mats are included within the scope of the Standard for the Surface Flammability of Small Carpets and Rugs (DOC

FF 2-70).
By direction of the Commission.
Letter of Request
Avcust 31, 1971