Tag Archive for "hart scott rodino"

Dec

22

Investment Funds Fined for Violating HSR Pre-Merger Notification Requirements

Posted by : Matthew Wild | On : December 22, 2008

Category: Antitrust, Consent Decrees, Government Investigations, HSR Review, U.S. Department of Justice (Antitrust Division)

Tags:autozone, consent decree, ESL, fine, hart scott rodino, HSR, matthew wild, notification requirements, pre-merger, Zam

Antitrust Division’s press release:

“WASHINGTON — Two related investment funds will pay civil penalties totaling $800,000 to settle charges that they violated premerger reporting requirements, the Department of Justice announced today.

The Department’s Antitrust Division, at the request of the Federal Trade Commission, filed a civil lawsuit today in U.S. District Court in Washington, D.C., against ESL Partners L.P. and ZAM Holdings L.P. for violating the notification requirements of the Hart-Scott-Rodino (HSR) Act of 1976. At the same time, the Department filed a proposed settlement that, if approved by the court, will settle the charges. Under the terms of the settlement, ESL Partners has agreed to pay $525,000, and ZAM Holdings $275,000, in civil penalties.

ESL Partners, based in Greenwich, Conn., and ZAM Holdings, based in New York City, are investment funds with holdings in numerous companies. The investment decisions for both ESL Partners and ZAM Holdings were made by RBS Partners, of Greenwich.

According to the complaint, ESL Partners and ZAM Holdings failed to comply with the antitrust premerger notification requirements of the HSR Act before acquiring voting securities of AutoZone Inc., based in Memphis, Tenn., in September and October of 2004. As a result of these acquisitions, ESL Partners and ZAM Holdings each held AutoZone voting securities valued in excess of the $50 million HSR reporting threshold then in effect. The complaint alleges that ESL Partners was in violation of the HSR Act from Sept. 28, 2004, through Feb. 28, 2005, and that ZAM Holdings was in violation from Oct. 12, 2004, through March 2, 2005.

The Hart-Scott-Rodino Act of 1976, an amendment to the Clayton Act, imposes notification and waiting period requirements on individuals and companies over a certain size before they consummate acquisitions resulting in holding stock or assets above a certain value. The violations occurred when the HSR reporting threshold was $50 million. Since March 2005, the threshold has been adjusted annually to reflect changes in gross national product.

The Act permits a federal court, in a lawsuit brought by the Department, to assess a civil penalty of up to $11,000 for each day a person or company is in violation.”

This action shows the agencies’ vigilance in enforcing compliance with the HSR Act. Unwary investment funds can violate the HSR Act when they begin to engage in sizeable transactions. They have done so on many occassions. Unlike the securities laws with which they are generally familar, the HSR Act requires the filing before acquiring the outstanding securities. It is thus important for investmnet funds to obtain antitrust compliance counseling.

Oct

24

DOJ and 13 States Sue to Protect Cattle Suppliers and Beef Consumers

Posted by : Matthew Wild | On : October 24, 2008

On October 20, 2008, the Antitrust Division, Colorado, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Texas and Wyoming sued to enjoin JBS Beef’s acquisition of National Beef Packing in the United States District Court for the Northern District of Illinois. (Beef Complaint; Beef Press Release) The government alleges that the merger would combine the third and fourth largest U.S. beef packers, which would result in lower prices for cattle and higher prices for beef consumers. This action is interesting in two respects. First, one of the theories of competitive harm is that the beef packers will gain monopsony power. While the monopsony theory is well established and has been pursued in Antitrust Division challenges to mergers (e.g., Cargill’s acquisition of Continental Grain’s Commodity Marketing Group), some academics reject it because it is inconsistent with the monopsonist’s economic interest to drive prices so low that suppliers exit. Second, although venue and personal jurisdiction were available in any district where the companies did business, the government chose the Chicago as its forum. It likely did so because it has received favorable treatment there in the past and Seventh Circuit cases are favorable to merger challenges. For example, the government prevailed in United States v. UPM Kymmene Oyj (a case in which this author was trial counsel) even though the government’s case was at best shaky and viewed by many as without merit.

Aug

20

FTC Clears EA’s Acquisition of Take-Two

Posted by : Matthew Wild | On : August 20, 2008

Category: Antitrust, FTC Actions, HSR Review, Mergers and Acquisitions, Section 7 (Clayton Act)

Tags:Antitrust, ea, electronic arts, federal trade commission, ftc, hart scott rodino, HSR, HSR Review, matthew wild, take-two

The Wall Street Journal reported today that the FTC has informed Electronic Arts and Take-Two Interactive Software that is has no objection to the combination of the companies. As you may recall, on June 4, 2008 the parties agreed to give the FTC an additional 45-days to review the transaction under the HSR Act. The clearance might be too late. EA’s tender offer expired on August 18, 2008. The Wall Street Journal reports, however, that EA is still is exploring ways to acquire Take-Two.

Jul

25

The FTC Protects Vodka Drinkers

Posted by : Matthew Wild | On : July 25, 2008

Category: Antitrust, Consent Decrees, FTC Actions, HSR Review, Mergers and Acquisitions, Relevant Markets, Section 7 (Clayton Act)

Tags:absolut, Antitrust, clayton act, ftc, hart scott rodino, HSR, matthew wild, pernot ricard, section 7, stolichnaya, v&s vin spirits, vodka

It appears that the antitrust agencies are more vigilant to protect the interests of vodka drinkers than beer drinkers. As explained in the June 6, 2008 Post, the Antitrust Division was not concerned that there would be negative effects on competition if Coors and Molson formed a joint venture. However, the FTC has taken the opposite view in a merger among spirit makers because it effectively would put Absolut and Stolichnaya under the control of one company. The buyer Pernot Ricard will gain control V&S Vin Spirit’s Absolut and has a distribution agreement that covers Stolichnaya, In analyzing the transaction, the FTC defined the market as super premium brands of vodka and claimed that consumers viewed Absolut and Stolichnaya as their top two choices. Without discussing market shares, the Analysis to Aid Public Comment asserts that post-merger the buyer will be able to increase the prices of super premium vodka. Under the consent agreement, Pernot Ricard must end its distribution agreement for Stolichnaya within 6 months. The press release and Analysis to Aid Public Comment are attached. FTC Press Release (Vodka); Analysis to Aid Public Comment (Vodka).

Jun

30

HP Receives Antitrust Clearance to Acquire EDS

Posted by : Matthew Wild | On : June 30, 2008

Category: Antitrust, HSR Review, Mergers and Acquisitions

Tags:Antitrust, eds, electronic data services, hart scott rodino, hewlett-packard, hp, HSR, matthew wild, Mergers and Acquisitions

According to Reuters, Hewlett Packard Co. received approval today of its $12.6 billion proposed acquisition of Electronic Data Services. Consummation of the transaction would make HP the second largest provider of technology services behind International Business Machines. The transaction is still subject to approval by the EU Competition Commission.

Jun

04

EA Grants FTC an Extension to Review Its Proposed Acquisition of Take-Two

Posted by : Matthew Wild | On : June 4, 2008

Category: Antitrust, FTC Actions, HSR Review, Mergers and Acquisitions

Tags:ea, electronic arts, federal trade commission, ftc, hart scott rodino, HSR, HSR Review, matthew wild, take-two

On June 4, 2008, Electronic Arts (video game maker) gave the FTC an extension of time under the HSR Act to review the potential competitive effects of its $2 billion proposed acquisition of Take-Two (maker of Grand Theft Auto). Under the agreement, EA must give the FTC 45 days’ notice of its intention to close. Parties often grant the Antitrust Division and FTC more time to review their transactions with the hope of convincing the agencies not to challenge the merger or to allow them to negotiate a remedy.