Activist Investor Settles DOJ Premerger Notification Case for Record $11 Million
On July 12, 2016, the U.S. Department of Justice (DOJ) announced that it had reached a settlement in its landmark lawsuit against activist investor ValueAct. As previously reported, the DOJ’s complaint accused ValueAct of improperly relying on the “investment-only” exemption to the Hart-Scott-Rodino Act’s reporting requirements when it failed to report certain acquisitions of securities in connection with a proposed merger between two oilfield services companies.
Pursuant to the parties’ stipulation of settlement and proposed final judgment in the case, ValueAct will pay a record $11 million civil penalty — over half the “at least $19 million” civil penalty sought in the complaint. ValueAct also will agree to a broad injunction against relying on the “investment-only” exemption when it intends to take, or has an investment strategy that identifies the potential for taking, any of several actions enumerated in the proposed final judgment in connection with a transaction subject to Hart-Scott-Rodino. ValueAct’s compliance with the terms of the settlement will be monitored by a compliance officer to be appointed by the company, and subject to ongoing DOJ rights of inspection. The settlement is pending public comment and court approval.
FTC Dismisses Administrative Complaint Challenging West Virginia Hospital Merger
On July 6, 2016, the Federal Trade Commission (FTC) unanimously ordered the dismissal, without prejudice, of an administrative complaint filed in November 2015 regarding the proposed merger of two West Virginia hospitals located approximately three miles away from each other. The complaint alleged that the proposed merger would give the combined entity over 75 percent of the market for general acute-care inpatient hospital services in a four-county region surrounding Huntington, West Virginia. The FTC’s decision to dismiss the complaint came after the March passage of West Virginia Senate Bill 597, which authorized certain “cooperative agreements” between hospitals within West Virginia, and the subsequent approval of such an arrangement between the proposed merger parties by the West Virginia Health Care Authority and the West Virginia Attorney General.
In its statement regarding the dismissal, however, the FTC voiced its concerns about such agreements, stating that “[t]his case presents another example of healthcare providers attempting to use state legislation to shield potentially anticompetitive combinations from antitrust enforcement.” The FTC further emphasized that it “will continue to vigorously investigate and, where appropriate, challenge anticompetitive mergers in the courts and, if necessary, through state cooperative agreement processes.”
Norwegian Ocean Shipping Firm to Pay $98.9 Million Fine for Price-Fixing Conspiracy
On July 13, 2016, the DOJ announced that Norwegian ocean shipping firm Wallenius Wilhelmsen Logistics AS (WWL) has agreed to pay a $98.9 million criminal fine for its role in a price-fixing conspiracy in the market for international ocean shipping of “roll-on, roll-off” cargo, including cars, trucks and heavy equipment. According to the single-count criminal information filed in the U.S. District Court for the District of Maryland, the conspiracy spanned over a decade and involved price-fixing, bid-rigging, and allocation of customers and routes among WWL and its co-conspirators. WWL is the fourth company to agree to plead guilty in the DOJ’s ongoing investigation, which also has yielded charges against eight individual executives and netted a total of $230 million in agreed-upon fines. WWL’s plea agreement is subject to court approval.
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