US: Purchase of $2.5B of Halliburton and Baker Hughes stock triggers antitrust suit

The US Department of Justice recently filed a lawsuit against ValueAct Capital and its affiliates for allegedly violating US antitrust laws in connection with their purchase of approximately $2.5 billion of voting shares of Houston-based Halliburton and Baker Hughes.

The DOJ’s prosecution centers on the issue of whether ValueAct Capital and its affiliates violated the reporting and waiting period requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 in its recent purchase of the stock. The DOJ Antitrust Division filed the civil antitrust lawsuit in the US District Court for the Northern District of California. The DOJ lawsuit seeks civil penalties and an injunction against further HSR Act violations.

According to the DOJ, the HSR Act imposes notification and waiting period requirements for transactions meeting certain size thresholds so that such transactions can undergo premerger antitrust review by the DOJ and the Federal Trade Commission. The HSR Act has a narrow exemption for acquisitions of less than 10 percent of a company’s outstanding voting securities if that acquisition is made “solely for the purposes of investment” with no intention of participating in the company’s business decisions.

Federal courts can assess civil penalties for pre-merger notification violations under the HSR Act in lawsuits brought by the department. The maximum civil penalty for an HSR violation is $16,000 per day.

Full Content: Texas Lawyer

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