United States: Department Of Justice To Merging Parties: Altering 4(C) Documents May Land You In Jail

A senior executive of a Korean manufacturer of Automated Teller Machines recently agreed to serve a five-month prison sentence in the United States for tampering with business documents during the Hart-Scott-Rodino (HSR) review of the proposed acquisition by his employer, Hyosung Corporation, of one of its US competitors.1 The case is an important reminder of the significance of pre-existing documents in HSR merger review and sends a strong signal to the business community that the US antitrust agencies view unobstructed access to responsive party documents as a lynchpin of the integrity of the merger review process.

Pre-existing business documents in US merger review. Pre-existing business documents play a much greater role in the HSR pre-merger review process than in similar reviews in most other countries. The focus on documents begins with items 4(c) and 4(d) of the HSR reporting form, which requires merging parties to submit certain transaction-related business documents discussing competition, competitors, markets, the potential for sales growth or expansion into product or geographic markets, and other categories of information.2 Collecting and submitting item 4(c) and 4(d) documents often is the most time-consuming and expensive aspect of completing an HSR pre-merger notification, which otherwise places relatively little burden on merging parties, especially compared to the European Commission's Form CO and notification forms in other jurisdictions modeled after it.

Once an HSR filing has been submitted, business documents remain an important element of the investigative process. In complex transactions, the US antitrust agencies routinely issue voluntary requests for information during the initial 30-day waiting period, which typically include requests for business or strategy plans of the merging parties.3 And the issuance of a Second Request for information4—similar to opening a "Phase II" investigation in other jurisdictions—can exponentially increase the document production burden on the parties and, as a result, the significance of ordinary course business documents for the agencies' analysis of a deal.

There are several reasons why the US HSR process focuses intensively on documents. One is that the US antitrust agencies prepare for litigation if they wish to block a transaction: neither the Department of Justice (DOJ) nor the Federal Trade Commission can block mergers by administrative decision; therefore, merger review by necessity is both an investigative process and a process of preparing to litigate in court if necessary, where documents are often one of the pillars of the government's case.5

Sanctions for failure to collect and produce responsive documents. In light of the significance of business documents in HSR merger review, the US antitrust agencies take very seriously failures to conduct a thorough search for documents responsive to Second Requests or violations in connection with 4(c) and 4(d) submissions. Under applicable law, failure to produce 4(c) or 4(d) documents not only allows the agencies to restart the 30-day HSR clock, the company and individual officers or directors who withheld documents potentially also are liable for civil fines of up to $16,000 per day.6 Failure to include significant responsive documents in a Second Request response, for its part, jeopardizes "substantial compliance" and therefore the parties' ability to close the transaction.7

The DOJ's recent enforcement action against the Hyosung executive starkly illustrates that sanctions for misconduct relating to documents in merger review are not limited to civil fines or transaction delay. Violations of document production obligations may also have criminal consequences and, in extreme cases, even land individuals in jail.

The case involved Hyosung's proposed—but later abandoned—acquisition of Triton Systems, a US-based manufacturer of ATMs. The defendant executive was involved in collecting documents for Hyosung's HSR filing and subsequent response to a DOJ voluntary request for additional documents during the initial waiting period. Based on the DOJ filings with the District Court for the District of Columbia,8 the executive on at least two occasions falsified 4(c)9 documents and materials responsive to the DOJ's request in ways that "misrepresented and minimized the competitive impact of the proposed acquisition."10 He also instructed subordinates to do the same.

The DOJ charged both Hyosung's parent and the executive with criminal obstruction of justice, which carries a maximum penalty of 20 years in prison and a criminal fine of $250,000 for individuals and a maximum fine of $500,000 per count for corporations. In 2011, Hyosung's parent pleaded guilty and paid a $200,000 criminal fine for its role in the alleged conduct.11 The executive has now agreed to plead guilty and serve a five-month prison term in the US for the charges against him.

Lessons for merging parties. The Hyosung investigation involves an egregious type of misconduct that rarely will be an issue in the ordinary course of preparing for an HSR filing or responding to later stage document requests. However, it sends at least two messages to merging parties:

  • First, as Acting Assistant Attorney General Joseph Wayland noted, "maintaining the integrity of the merger review and investigation process is one of [the DOJ's] highest priorities."12 This means that acts of falsification in HSR merger review may be prosecuted with the criminal enforcement tools ordinarily reserved for "hard core" antitrust violations such as price fixing or bid rigging.
  • Second, because the US antitrust agencies rely on business documents both to understand the parties' transaction goals and to prepare for potential litigation, other—less egregious—failures to comply with items 4(c) and 4(d) or production obligations are unlikely to be viewed leniently, even if they do not provide a basis for criminal prosecution. As noted above, the agencies can impose up to $16,000 per day for failure to provide 4(c) and 4(d) documents, and the procedural delay resulting from a "bounced" filing or failure to trigger the second 30-day waiting period for lack of substantial compliance with a Second Request ordinarily has serious negative consequences for the merging parties.

In summary, the Hyosung case is an important reminder that document production obligations in HSR merger review must be taken seriously. This does not mean that merging parties may not, with the help of counsel, make reasonable judgments as to whether specific documents are responsive to items 4(c) and 4(d) or a subsequent information request, or the scope of the search for such documents within the company. But the US antitrust agencies are not likely to view leniently failures to conduct reasonable searches or to produce documents that those searches reveal, let alone the deliberate falsification of responsive documents.


1 See United States Department of Justice, Hyosung Corporation Executive Agrees to Plead Guilty to Obstruction of Justice for Submitting False Documents in an ATM Merger Investigation, Press Release (May 3, 2012), available at www.justice.gov/atr/public/press_releases/2012/282873.htm. Hyosung's parent corporation agreed to plead guilty and pay a $200,000 criminal fine for its involvement in the alleged conduct in 2011. See note 11 infra.

2 The Federal Trade Commission has published a "tip sheet" for item 4(c),  available at www.ftc.gov/bc/hsr/4cTipSheet.pdf. Guidance on item 4(d) is available at www.ftc.gov/bc/hsr/item4d.shtm.

3 A list of information typically requested in Access Letters is available on the DOJ website at www.justice.gov/atr/public/220237.htm.

4 See 15 U.S.C. §18a(e).

5 For example, the Federal Trade Commission famously relied on internal business documents in its challenge of the proposed acquisition of Wild Oats Markets by Whole Foods Markets, two organic grocery store chains. See FTC v. Whole Foods Market and Wild Oats Market, Plaintiff Federal Trade Commission's Proposed Findings of Fact (D.D.C. Aug. 3, 2007), available at http://www.ftc.gov/os/caselist/0710114/0710114ProposedFindingsofFactPV.pdf (citing the parties' contemporaneous business documents as evidence of "unique and intense competition" between them).

6 In 2001, for example, the Hearst Corporation and related entities agreed to pay a civil penalty of $4,000,000 for failure to submit 4(c) documents with the HSR notification of its proposed acquisition of Medi-Span, Inc. and Medi-Span International, Inc. See United States v. The Hearst Trust and The Hearst Corporation, www.justice.gov/atr/cases/indx330.htm.

7 The court may also impose such other equitable relief as it deems necessary or appropriate. See 15 U.S.C. §18a(g)(2).

8 Case 12-cr-118-RLW.

9 At the time of the conduct at issue, item 4(d) of the HSR reporting form did not exist. It was introduced with the July 2011 revisions to the form.

10 DOJ Press Release, note 1 supra.

11See United States v. Nautilus Hyosung Holdings, Inc., www.justice.gov/atr/cases/nautilus.html.

12 DOJ Press Release, note 1 supra.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

James W. Lowe
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.