As if wading through the NAICS codes to complete the Hart-Scott-Rodino form's Item 5 wasn't exciting enough already, this fall HSR filers can anticipate an added adrenaline surge when reporting annual revenues under Item 5. On June 27, the FTC, with the concurrence of the DOJ, announced that effective September 25, the 10-digit North America Product Classification Systems ("NAPCS") codes will replace the outdated 10-digit codes from the existing North American Industry Classification System ("NAICS") (curiously pronounced "Nicks" by many seasoned antitrust practitioners).

But "Nicks" (and "Naaks") lovers can take heart. Although the beloved 10-digit NAICS product codes will soon go the way of the Dodo bird, the 6-digit NAICS industry codes will live on. Non-manufacturing revenue data will continue to be reported using the latest and greatest 6-digit 2017 NAICS codes. And the fun doesn't stop there — manufacturing revenue data must be reported using both the 6-digit NAICS industry and the 10-digit NAPCS product codes.

Like most (i.e., both) readers of this scintillating topic, at this point you're probably pausing to ask, Why? Why both codes? Well, the FTC furnished a compelling rationale to satisfy nosy inquiries from even the most curious HSR nerds. Currently, manufactured product revenues (NAICS Sectors 31-33) are reported using only the 10-digit NAICS product code because the first six digits in the 10-digit product code are the same as the relevant 6-digit NAICS industry code. But the new NAPCS-based codes don't track the 6-digit NAICS industry codes, so that's why manufactured product revenue will (as of September 25, 2019) have to be reported using both the 6-digit NAICS and the 10-digit NAPCS codes.

In an effort to preempt the potential torrent of calls to the premerger staff attorneys, the FTC has offered a helpful real-world example, seizing on an industry near and dear to everyone's heart — pet food:

  • Assume that a filing person determined that its Item 5 revenues should be reported as follows using NAICS codes:
    • 3111111131 Canned dog food — $50 million
    • 3111111411 Dry and semi-moist dog food — $45 million
    • 3111114411 Canned cat food — $35 million
    • 3111114511 Dry and semi-moist cat food — $25 million
  • That filing person would now report the following in Item 5 using NAICS and NAPCS codes:
    • 311111 Dog and Cat Food Manufacturing — $155 million
    • 2009750000 Canned dog food — $50 million
    • 2009775000 Dry and semi-moist dog food — $45 million
    • 2009800000 Canned cat food — $35 million
    • 2009825000 Dry and semi-moist cat food — $25 million

(As an aside, the above dog/cat chow example would appear to illustrate a relatively small hypothetical merger in the canine and feline nutrition industry, given that the global pet food sales in 2018 topped $91 billion, $35 billion of which was for dry dog food alone.)

The FTC explained that "incorporating the 10-digit NAPCS codes into the HSR Form and the Instructions will ensure that filing persons provide revenues in a format that can be compared to the most recent and complete economic data published by Census." Happily, overlap reporting under Items 6 and 7 of the HSR form will not change, but will continue to be based on the six-digit NAICS industry codes.

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