June 18, 2019

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Investors Fight Back – Court Battle Could Determine Scope of HSR Act Exemption

When an enforcement action for a violation of the Hart-Scott-Rodino Act is announced, chances are the matter has already come to a close – by the time the action becomes public, the agency and the parties usually have agreed upon financial penalties and other sanctions to be levied. But that is not the case for ValueAct Capital and its affiliated investment funds. After the Department of Justice filed a complaint against ValueAct on April 4, the company did not take the allegations lying down. Instead, it vowed to vigorously defend its position.

The HSR Act, among other things, requires certain investors to file notice with the Department of Justice and Federal Trade Commission, and to put off acquiring stock valued above the reporting thresholds (presently $78.2 million) until the agencies have completed their review of the investment’s potential for anticompetitive impact. The HSR rules provide several exemptions, including an exemption for purely passive investors that hold less than 10% of a company’s voting stock. The rub is that the agency views the exemption very narrowly, and any intent to do more than simply holding the stock for investment likely will draw the agency’s ire. In the complaint filed against certain ValueAct Capital entities for violating the HSR Act with respect to the purchase of over $2.5 billion of Halliburton and Baker Hughes stock following the companies’ November 17, 2014 merger announcement, the agency is seeking civil penalties of $19 million plus an injunction against further violations. 

© 2019 Proskauer Rose LLP.

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About this Author

Colin Kass, Antitrust LItigation Attorney, Proskauer Rose Law Firm
Partner

Colin Kass is a partner in the Litigation Department and vice-chair of the Antitrust Group. An experienced antitrust and commercial litigation lawyer, Colin has litigated cases before federal and state courts throughout the United States and before administrative agencies. His practice involves a wide range of industries and spans the full-range of antitrust and unfair competition-related litigation, including class actions, competitor suits, dealer/distributor termination suits, price discrimination cases, criminal price-fixing investigations, and merger injunctions.

202.416.6890
Christopher Ondeck, Antitrust Litigator, Proskauer Rose, law firm
Partner

Chris Ondeck is a partner in the Litigation Department and vice-chair of the Antitrust Group. He focuses his practice on representing clients in civil and criminal antitrust litigation, defending mergers and acquisitions before the U.S. antitrust agencies, defending companies involved in government investigations, and providing antitrust counseling.

Chris has handled antitrust matters for clients in a number of industries, including advertising, aerospace, alcoholic beverages, appliances, building materials, defense, medical devices, metals, mining, natural resources, oil and gas, packaging, pharmaceuticals, software, and telecommunications. He also has developed substantial experience advising clients regarding the application of the antitrust laws to the pharmaceutical industry, the agriculture industry, trade associations, and the energy industry.

202-416-5865
John Ingrassia, Antitrust Attorney, Telecommunications, Proskauer Law firm
Special Counsel

John Ingrassia is a special counsel and advises clients on a wide range of antitrust matters in various industries, including chemicals, pharmaceutical, medical devices, telecommunications, financial services, health care, and others. His practice includes a significant focus on the analysis of Hart-Scott-Rodino pre-merger notification requirements, the coordination and submission of Hart-Scott-Rodino filings, and the analysis and resolution of antitrust issues related to mergers, acquisitions, and joint ventures. John has extensive experience with the legal, practical,...

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