One does not usually associate the possibility of criminal
penalties with the Hart-Scott-Rodino Act premerger review process.
However, on May 3, 2012, the U.S. Department of Justice
("DOJ") announced that an executive of a South Korean
company agreed to plead guilty to obstruction of justice charges
and to serve five months in prison for altering documents filed
with the DOJ and the Federal Trade Commission ("FTC") in
connection with a proposed merger.
This plea agreement is the latest development in a civil merger
investigation initiated by the Antitrust Division of the DOJ of the
proposed acquisition by automated teller machine maker Nautilus
Hyosung Holdings Inc. ("NHI") of a competing manufacturer
of ATM systems, Triton Systems of Delaware Inc., in 2008. The
Hart-Scott-Rodino Antitrust Improvements Act of 1976
("HSR"), as amended, requires companies contemplating
mergers and acquisitions valued above certain thresholds to make
premerger filings with the DOJ and the FTC. The federal antitrust
agencies have authority to investigate and challenge the proposed
transactions under Section 7 of the Clayton Act, if the
transactions may substantially lessen competition. Before the
Antitrust Division reached a decision regarding whether to
challenge the transaction, the parties abandoned it.
In the two-count felony charge, the DOJ stated that Kyoungwon
Pyo, in his role as senior vice president for corporate strategy at
Hyosung Corporation, an affiliate of NHI, altered and directed
subordinates to alter numerous corporate documents before they were
submitted to the DOJ and the FTC in conjunction with the premerger
HSR filings. The DOJ further alleged that, after the Antitrust
Division opened a civil investigation of the proposed acquisition,
Pyo falsified additional documents in response to a document
request with the intention of impairing their integrity and
availability for use in an official proceeding. According to the
DOJ "the alterations misrepresented and minimized the
competitive impact of the proposed acquisition."
On October 20, 2011, after voluntarily disclosing that numerous
documents had been altered before being submitted to the government
and agreeing to cooperate in the ongoing investigation, NHI pleaded
guilty to two counts of obstruction of justice and paid a $200,000
criminal fine for its role in the document tampering. Following his
employer, Pyo has agreed to plead guilty and to serve five months
in prison for his conduct in a plea agreement which is subject to
court approval. Pyo is charged with obstruction of justice, which
carries a maximum penalty of 20 years in prison and a criminal fine
of $250,000 for individuals.
An interesting and growing debate in the antitrust arena is whether most favored nation ("MFN") pricing provisions are pro-competitive or anticompetitive. For many years, MFN provisions have been considered a fairly noncontroversial contract term included by purchasers in an attempt to assure that other buyers do not receive a more favorable price.
A well-attended program on antitrust treatment of "bundled pricing" and "loyalty discounts" at the American Bar Association Antitrust Section Spring Meeting highlighted the confusion generated by the antitrust law implications.
In remarks made this week at the International Competition Network annual conference, Federal Trade Commission (FTC) Chairwoman Edith Ramirez stated that health care will continue to be a top priority for the FTC.
An EU General Court (GC) judgment has considered the difficult issue of independent parallel behaviour by competitors under EU competition law, and in particular when this strays into a "concerted practice".
The U.S. Department of Justice ("DOJ") has reached a settlement with Anheuser-Busch InBev ("ABI") and Grupo Modelo S.A.B. de C.V. ("Modelo"), requiring ABI to divest Modelo’s entire U.S. business to Constellation Brands Inc. ("Constellation").
Microsoft v. Motorola is precedential only in the Western District of Washington, but at 207 thorough and well-reasoned pages, it provides a valuable roadmap and will likely be quite influential in future RAND cases in other U.S. and foreign jurisdictions.