The DOJ Antitrust Division scored another trial win — this time in a real estate foreclosure bid rigging case.
Yesterday’s win follows on the heels of Division wins in a Puerto Rico bus transportation bid rigging/fraud case (DC Office, Criminal I), enjoining of a significant merger (DC Office, Lit I), corruption prosecution of an environmental remediator (New York Office), and another real estate auction case (San Francisco Office).
WHAT THIS MEANS:
The Division is growing a crop of trial-ready and eager attorneys in multiple offices. They can be expected not to shy away from a courtroom challenge.
The Federal Trade Commission (FTC) and Antitrust Division of the Department of Justice (DOJ) announced several antitrust enforcement actions in advance of the inauguration of President Trump, including settlements for failures to file under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act), a challenge to an unreportable deal and a settlement of a “gun-jumping” claim under the HSR Act. These cases illustrate the importance of compliance with the often complex reporting, waiting period and substantive aspects of antitrust laws in connection with acquisitions of various types, whether or not those acquisitions require premerger reporting. Failure to comply can result in significant financial penalties.
Two HSR “Failure to File” Settlements. On January 17, 2017, the FTC announced two settlements for failures to submit HSR filings and observe the statutory waiting period under the HSR Act prior to consummating acquisitions that met the relevant thresholds. The HSR Act requires notification of certain acquisitions of voting securities, assets and non-corporate interests if the value held as result of the transaction is in excess of certain notification thresholds and size of person thresholds (if applicable), and the transaction is not otherwise exempt. Parties to reportable transactions must observe the statutory waiting period prior to closing. If they fail to file, or otherwise do not observe the waiting period under the HSR Act, the parties may be liable for civil penalties of up to $40,654 per day (which was recently increased from $40,000, effective February 24, 2017).
In the first settlement, Ahmet Okumus agreed to pay $180,000 in connection with failing to notify for his purchases of voting securities of Web.com Group, Inc. (Web.com). According to the complaint, in September 2014, Okumus acquired voting securities of Web.com and as a result, held approximately 13.5 percent of the voting securities of Web.com. Okumus continued to acquire voting securities of Web.com through November 2014. Okumus did not file an HSR notification prior to making these acquisitions, relying on the “investment only” exemption, which exempts acquisitions resulting in holdings of 10 percent or less of the issued and outstanding voting securities if the shares are held solely for the purpose of investment (see 15 U.S.C. § 18a(c)(9) and 16 C.F.R. § 802.9). However, because Okumus held in excess of 10 percent, this exemption was not applicable. In late November of 2014, Okumus made a corrective filing that allowed him to acquire additional Web.com voting securities for approximately five years, provided that the value of the voting securities he held as a result of any acquisition did not exceed the $100 million (as adjusted) notification threshold. In a letter that accompanied his corrective filing, he indicated that the failure to file was inadvertent. The FTC did not seek civil penalties in that instance.
In June of 2016, Okumus began acquiring additional voting securities of Web.com. Later that month he acquired 236,589 voting securities of Web.com, and as a result of that acquisition, Okumus held voting securities valued (per the HSR rules) in excess of the $100 million (as [...]
This month, the US Department of Justice Antitrust Division revised its “Frequently Asked Questions About the Antitrust Division’s Leniency Program and Model Leniency Letters” (FAQs), with releases both before and after the new administration took office. The revisions serve as a signal that the continuity we have seen in previous years from the Antitrust Division is likely to continue. The changes include long-needed clarifications and updates since the release of the FAQs in 2008.
McDermott’s Antitrust M&A Snapshot is a resource for in-house counsel and others who deal with antitrust M&A issues but are not faced with these issues on a daily basis. In each quarterly issue, we will provide concise summaries of Federal Trade Commission (FTC), Department of Justice (DOJ) and European Commission (EC) news and events related to M&A, including significant ongoing investigations, trials and consent orders, as well as analysis on the trends we see developing in the antitrust review process.
On Friday, January 13, 2017, the Department of Justice (DOJ) and Federal Trade Commission (FTC) released the new Antitrust Guidelines for International Enforcement and Cooperation. These guidelines were jointly developed by the agencies and serve to update the Antitrust Enforcement Guidelines for International Operations that have been in place since April 1995. The new guidelines include a revised discussion on conduct involving foreign commerce, a new chapter on international cooperation, and updated language, case law, and illustrative examples throughout.
On January 13, 2017, the Federal Trade Commission (FTC) and the Antitrust Division of the US Department of Justice (DOJ) issued updated Antitrust Guidelines for the Licensing of Intellectual Property (the Guidelines). The revised Guidelines follow nearly half a year of consideration and public commentary. According to the FTC, the updates were “intended to modernize the IP Licensing Guidelines without changing the agencies’ enforcement approach with respect to intellectual property licensing or expanding the IP Licensing Guidelines to address other topics.” In that vein, the modest updates to the Guidelines affirm that the antitrust agencies still believe that IP issues do not require an altered analysis and that the licensing of intellectual property is generally procompetitive.”
President-elect Donald Trump has called for a dramatic increase in defense spending including purchases of new ships and warplanes as well as the addition of tens of thousands of new troops. This increase in spending generally bodes well for the aerospace and defense industry and potentially signals a new era of growth for companies in this space. This article examines how M&A transactions are likely to be reviewed in a Trump administration, with particular focus on “vertical” transactions.
Continuing an active first half of 2016, the Federal Trade Commission (FTC) and US Department of Justice (DOJ) have challenged several large mergers and acquisitions. In fact, trials for the two national health insurer deals are slated to begin Q4 of 2016 in Washington, DC, where the agencies have had success in obtaining preliminary injunctions this year. Adding to the regulators’ successes in Q3 was a victory for the FTC on appeal in the Penn State Hershey Medical Center/PinnacleHealth System transaction, in which the Third Circuit overturned the district court’s formulation of the geographic market. Indeed, with another appeal in a hospital merger outstanding in the Seventh Circuit, Health Care M&A is an active sector to monitor.
In addition to the agencies’ operations, the upcoming US presidential election has also propelled antitrust policy into a national discussion. For the first time in a few decades, antitrust has appeared on the Democratic Party’s platform, and Hillary Clinton has also issued a statement promising to strengthen antitrust enforcement if elected president.
EUROPEAN UNION:
The July to September period has seen 87 merger control notifications, the vast majority being candidate cases for simplified procedure. There were also eight clearance decisions, five of which were Phase I cases with remedies—in each case, structural remedies were preferred by the European Commission (EC).
Antitrust intervention seems to have been focused more on the telecoms and pharmaceutical sectors, with divestitures being offered in every telecom and pharma Phase I and Phase II clearance decision since July.
On October 20, 2016, the United States Department of Justice Antitrust Division (DOJ) and Federal Trade Commission (FTC) issued joint Antitrust Guidance to Human Resource (HR) Professionals (the Guidance) involved in hiring and compensation decisions. The agencies issued the guidance to educate HR professionals about how the antitrust laws apply in the employment context.
On October 14, 2016, former vice president and director of information technology of Coach USA, Inc. (Coach), Ralph Groen, entered a guilty plea for concealing and attempting to destroy documents and giving false and misleading statements under oath in a deposition during the US Department of Justice Antitrust Division’s (DOJ) investigation of a joint-venture involving Coach.
The DOJ’s complaint alleged that despite two preservation notices issued by Coach to its management team, which included Groen, Groen directed subordinates to destroy month-end backup tapes of emails and electronic records. Due to the destruction, the records were not produced to the United States during discovery. The government argued that these materials were relevant and responsive to the DOJ’s discovery requests. Additionally, Groen then falsely informed the company’s outside counsel that these materials did not exist. Groen also concealed versions of backup procedure documents that would have been relevant and responsive to the DOJ’s requests, and only provided one version. Finally, during a deposition where Groen testified as a 30(b)(6) deponent in September 2013, he lied under oath, providing false and misleading statements to the government about Coach’s document retention practices and policies. (more…)
Subscribe
