By Linda O’Brien, J.D., LL.M.
The Department of Justice Antitrust Division, on behalf of the FTC, filed a complaint yesterday in the federal district court in Washington, D.C. against Caledonia Investments plc for violating the premerger notification and waiting period requirements of the Hart-Scott-Rodino (HSR) Act when it acquired voting securities of helicopter services company Bristow Group, Inc. in February 2014, the Justice Department and FTC jointly announced. At the same time, the Justice Department filed a proposed settlement, subject to approval by the court, under which Caledonia Investments has agreed to pay a $480,000 civil penalty to resolve the lawsuit (U.S. v. Caledonia Investments, plc, Civil Action No. 1:16-cv-01620, FTC File No. 152 0123).
According to the government’s complaint, Caledonia first acquired voting shares in Bristow in June 2008 and reported its purchase to U.S. antitrust authorities, as required under the HSR Act. Subsequently, Caledonia made additional purchases that were exempt from reporting under HSR rules.
During that same timeframe, however, two Caledonia employees were designated to serve on Bristow’s board. Bristow awards restricted-stock voting securities to its board members, and by agreement, it set aside the securities for the two Caledonia board members for purchase by Caledonia. In February 2014, these voting shares vested, and Caledonia acquired them. The government charged that Caledonia was required under the HSR Act to report this purchase but failed to do so.
The HSR Act allows a company that has reported an initial purchase of voting shares to purchase additional voting shares from the same issuer—as long as those purchases do not cause the company’s total holdings to cross a higher reporting threshold over a five-year period following the initial purchase. The complaint charges that Caledonia’s 2014 purchase of voting shares in Bristow fell outside the five-year period following its initial purchase.
The proposed final judgment, under which Caledonia has agreed to pay $480,000 to resolve the allegations, is designed to deter Caledonia from engaging in future HSR Act violations and eliminates the need for a trial in this case.
The HSR Act imposes notification and waiting period requirements for transactions meeting certain size thresholds so that they can undergo premerger antitrust review. Federal courts can assess civil penalties for premerger notification violations under the HSR Act in lawsuits brought by the department. The maximum civil penalty for an HSR violation increased from $16,000 per day to $40,000 per day effective August 1.
Companies: Caledonia Investments plc; Bristow Group, Inc.
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