COBRA Small Employer Exception

[Scott]

Company A (with no employees) owns 100% of the stock of Company B. Company B has 6 employees. In December 1999, Holding Company A acquired 100% of the stock of Company C. Company C has 18 employees.

Company C has a medical plan which covers only employees of Company C. In determining whether Company C's plan is subject to COBRA for 2000, what constitutes the "employer" for purposes of counting employees during 1999 for the small employer exception?

Obviously, A, B and C now constitute a single employer as part of a controlled group. But, must they be considered as if they were a single employer during all of 1999 (in which case the group would have more than 20 employees)? Or can Company C be viewed as a single employer up until its acquisition by A (in which case it probably will meet the small employer exception)?