Antitrust Law Daily Tunney Act procedures must be followed for HSR Act civil penalty settlements
Tuesday, February 16, 2016

Tunney Act procedures must be followed for HSR Act civil penalty settlements

By Jeffrey May, J.D.

The Department of Justice must comply with Tunney Act procedures when seeking court approval of a civil penalty settlement resolving allegations of a Hart-Scott-Rodino (HSR) Act premerger notification violation, the federal district court in Washington, D.C. has decided. The court denied the government’s motion for entry of a proposed final judgment that required billionaire businessman Len Blavatnik to pay a $656,000 civil penalty to resolve HSR Act violation allegations because the Tunney Act procedures had not been followed. The government unsuccessfully argued that the settlement with Blavatnik was not subject to Tunney Act procedures because an HSR Act settlement solely for a civil penalty was not a “proposed consent judgment” within the meaning of the Act (U.S. v. Blavatnik, February 12, 2016, Moss, R.).

The Tunney Act applies to “[a]ny proposal for a consent judgment submitted by the United States for entry in any civil proceeding brought by or on behalf of the United States under the antitrust laws.” Among other requirements, the Act calls for publication of the settlement and an opportunity for public comment. The government is instructed to consider any written comments and publish a response to them. Only then, can a federal district court consider the settlement for approval.

The plain language of the Act required its application to monetary antitrust settlements, according to the court. A proposed judgment for civil penalties entered pursuant to a settlement between the parties is a “consent judgment” within the meaning of the Tunney Act, the court held. The government argued that the phrase “consent judgment” referred solely to settlements invoking the equitable—or injunctive—power of the courts. However, the Tunney Act applied to HSR Act settlements for monetary penalties, as well as injunctive relief.

The government failed to sway the court with its contention that district courts had a longstanding practice of exempting settlements for civil penalties from Tunney Act procedures. “[T]he district courts’ practice of entering consent judgments for civil penalties without applying Tunney Act procedures says little, if anything, about whether that practice is consistent with the statute,” the court explained.

Also rejected was the government’s argument that Congress had implicitly ratified the practice of exempting HSR civil penalty settlements from Tunney Act procedures. Nothing in Tunney Act amendments contained in the Antitrust Criminal Penalty Enhancement and Reform Act of 2004 approached “the type of showing required to find an implicit ratification of a judicial or administrative interpretation of a pre-existing statute,” the court held. The court also pointed out that the application of the ratification doctrine to the 2004 amendments was “particularly out of place,” since the 2004 amendments sought to ensure robust judicial review of “consent judgments.”

Pending settlement. Because the government did not comply with the Tunney Act procedures, the government's motion for entry of the proposed final judgment with Blavatnik was denied without prejudice. The settlement has been pending since October 2015, when the Justice Department filed a complaint, on behalf of the FTC, in the federal district court in Washington, D.C. against Blavatnik, along with the proposed settlement. In the complaint, the government alleged that the investor acquired more than 2.8 million shares of voting securities in a California technology startup through his company Access Industries without observing the HSR Act’s notification and waiting period requirements.

The case is No. 1:15-cv-01631-RDM.

Attorneys: Daniel Edward Haar for U.S. Department of Justice. Daniel M. Abuhoff (Debevoise & Plimpton LLP) for Len Blavatnik.

Companies: Access Industries

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