By Jeffrey May, J.D.
Funds were required to report prior to acquiring voting securities of DowDuPont Inc. as a result of the consolidation of Dow and DuPont in 2017, according to government.
Third Point LLC and three funds that it controls have agreed to collectively pay $609,810 in civil penalties to settle charges that they violated the premerger notification and waiting period requirements of the Hart-Scott-Rodino (HSR) Act, after their shares of Dow Inc. converted to shares of the newly formed DowDuPont Inc. following the merger of Dow Inc. and E.I. du Pont de Nemours & Company. Third Point LLC, Third Point Partners Qualified L.P., Third Point Ultra, Ltd., and Third Point Offshore Fund Ltd. also agreed to refrain from committing future violations of the HSR Act in connection with corporate consolidations under the terms of a proposed final judgment, subject to approval of the federal district court in Washington, D.C. (U.S. v. Third Point LLC, Case No. 1:19-cv-02593).
The government explained that the funds were still required to file HSR notifications in light of the new DowDuPont holdings, even though they had made HSR filings in 2014 with respect to the acquisition of voting securities of Dow. While Sec. 802.21 of the HSR rules permits subsequent acquisitions of additional voting securities for five years without a notification, so long as the holdings do not exceed the next higher threshold than was indicated in the filing, the exemption did not shield the defendants. The exemption in Sec. 802.21 did not apply to the acquisition of the DowDuPont securities on August 31, 2017, according to the government, because DowDuPont was not the same issuer as Dow within the meaning of the HSR rules.
According to the government, the defendants’ failure to report was inadvertent, and the funds self-reported after discovering the alleged infraction. As a result, the government adjusted downward the civil penalties.
Earlier settlement. This was not the first time that the defendants had been charged with failing to observe the HSR Act’s notification and waiting period requirements, and this is likely the reason for the civil penalties. In 2015, the defendants agreed to settle charges that they violated premerger reporting laws in connection with their 2011 acquisitions of stock in Yahoo! Inc. In that case, the government pointed out that civil penalties were not assessed because the violation was apparently inadvertent and short-lived, and it was the defendants’ first violation of the HSR Act. A final judgment in that case was approved by the federal district court in Washington, D.C. The government does not allege that the current conduct violated the 2015 consent decree.
Attorneys: Kenneth A. Libby, FTC, for United States. Theodore C. Whitehouse and William H. Rooney (Willkie Farr & Gallagher LLP) for Third Point Offshore Fund, Ltd., Third Point Ultra, Ltd., Third Point Partners Qualified LP and Third Point, LLC.
Companies: Dow DuPont Inc.; Third Point LLC; Third Point Partners Qualified L.P.; Third Point Ultra, Ltd.; Third Point Offshore Fund Ltd.
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