82 FR 8845 - United States of America v. Duke Energy Corporation; Proposed Final Judgment and Competitive Impact Statement
DEPARTMENT OF JUSTICE
Antitrust Division Federal Register Volume 82, Issue 19 (January 31, 2017)
Antitrust Division
Federal Register Volume 82, Issue 19 (January 31, 2017)
| Page Range | 8845-8852 | |
| FR Document | 2017-02026 |
[Federal Register Volume 82, Number 19 (Tuesday, January 31, 2017)] [Notices] [Pages 8845-8852] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-02026] ----------------------------------------------------------------------- DEPARTMENT OF JUSTICE Antitrust Division United States of America v. Duke Energy Corporation; Proposed Final Judgment and Competitive Impact Statement Notice is hereby given pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, Stipulation, and Competitive Impact Statement have been filed with the United States District Court for the District of Columbia in United States of America v. Duke Energy Corporation, Civil Action No. 1:17-cv- 00116. On January 18, 2017, the United States filed a Complaint alleging that Duke Energy Corporation violated Section 7A of the Clayton Act, 15 U.S.C. 18a, by acquiring the Osprey Energy Center from Calpine Corporation before filing the required notification form and observing the required waiting period. The proposed Final Judgment, filed at the same time as the Complaint, requires Duke Energy Corporation to pay a civil penalty of $600,000. [[Page 8846]] Copies of the Complaint, proposed Final Judgment, and Competitive Impact Statement are available for inspection on the Antitrust Division's Web site at http://www.justice.gov/atr and at the Office of the Clerk of the United States District Court for the District of Columbia. Copies of these materials may be obtained from the Antitrust Division upon request and payment of the copying fee set by Department of Justice regulations. Public comment is invited within 60 days of the date of this notice. Such comments, including the name of the submitter, and responses thereto, will be posted on the Antitrust Division's Web site, filed with the Court, and, under certain circumstances, published in the Federal Register. Comments should be directed to Caroline E. Laise, Assistant Chief, Transportation, Energy & Agriculture Section, Antitrust Division, Department of Justice, 450 Fifth Street NW., Suite 8000, Washington, DC 20530 (telephone: (202) 353-9797). Patricia A. Brink, Director of Civil Enforcement. UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA United States of America, U.S. Department of Justice, Antitrust Division, 450 Fifth St. NW., Suite 8000, Washington, DC 20530, Plaintiff, v. Duke Energy Corporation, 550 South Tryon Street, Charlotte, NC 28202, Defendants. Case No.: 1:17-cv-00116 Judge: Beryl A. Howell Filed: 01/18/2017 COMPLAINT The United States of America, acting under the direction of the Attorney General of the United States, brings this civil action to obtain monetary relief in the form of civil penalties against the Defendant, Duke Energy Corporation (``Duke''), for violating Section 7A of the Clayton Act, as amended, 15 U.S.C. 18a, also commonly known as the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (``HSR Act''), and alleges as follows: I. NATURE OF THE ACTION 1. The HSR Act is an essential part of modern antitrust enforcement. The HSR Act and implementing regulations require purchasers to notify the Department of Justice and the Federal Trade Commission and wait for agency review before acquiring assets valued in excess of certain thresholds. A purchaser can ``acquire'' assets without taking formal legal title, for instance by obtaining operational control over the assets or otherwise obtaining ``beneficial ownership.'' The HSR Act's notice and waiting period requirements ensure that the parties to a proposed transaction continue to operate independently during review, preventing anticompetitive acquisitions from harming consumers before the government has had the opportunity to review them according to the procedures established by Congress in the Clayton Act. A purchaser that prematurely takes beneficial ownership of assets, sometimes referred to as ``gun jumping,'' is subject to statutory penalties for each day it is in violation. 2. In August 2014, Duke agreed to terms to purchase the Osprey Energy Center (``Osprey'') from its owner, Calpine Corporation (``Calpine''), a competing seller of wholesale electricity nationally and in Florida. Osprey is a combined-cycle natural gas-fired electrical generating plant located in Auburndale, Florida. Duke violated the HSR Act by obtaining beneficial ownership of Osprey before filing the required notification and observing the required waiting period. 3. Specifically, as part of the agreement to acquire the plant, Duke also entered into a ``tolling agreement'' whereby Duke immediately began exercising control over Osprey's output, and immediately began reaping the day-to-day profits and losses from the plant's business. Duke, for example, assumed control of purchasing all the fuel for the plant, arranging for delivery of that fuel, and arranging for transmission of all energy generated. Duke, not Calpine, retained the profit (or loss) from the difference between the price of the energy generated at Osprey and the cost to generate the energy, bearing all the risk of changes in the market price for fuel and the market price for energy. Based on these potential risks and rewards, Duke, and not Calpine, decided exactly how much energy would be generated by the plant on an hour-by-hour basis, and relayed those detailed instructions each day to plant personnel. Thus, from the moment the tolling agreement went into effect, Osprey ceased to be an independent competitive presence in the market for generating electricity for Florida consumers. 4. Duke was never interested in a tolling agreement alone--Duke was only interested in the tolling agreement as a step in the process of purchasing the plant. As a Duke executive explained in testimony to the Florida Public Service Commission, the tolling agreement reflected an effort to obtain expedited approval for the purchase of Osprey from the Federal Energy Regulatory Commission (``FERC''). When FERC reviews a proposed power plant acquisition, it typically employs a ``screen'' to assess how much the proposed acquisition would increase market concentration. While planning the acquisition of Osprey, Duke and Calpine anticipated the acquisition would fail the FERC screen. But with a tolling agreement in place, Duke hoped that FERC would treat Osprey as already effectively controlled by Duke, and would therefore conclude that an acquisition would lead to no change in Duke's market share and no increase in concentration under FERC's screen. Indeed, after entering into the tolling agreement, Duke argued to FERC that its acquisition of Osprey posed no competitive threat and did not increase concentration because Duke ``already controls [Osprey] pursuant to the Tolling Agreement.'' 5. The combination of Duke's agreement to purchase Osprey and the contemporaneously negotiated and interdependent tolling agreement transferred beneficial ownership of Osprey's business to Duke before Duke had fulfilled its obligations under the HSR Act. As a result, Duke and Calpine did not continue to act as independent entities during the required waiting period while the Department of Justice investigated the proposed acquisition and determined whether to challenge it. Therefore, the Court should assess a civil penalty against Duke for its violation of the HSR Act. II. JURISDICTION, VENUE, AND INTERSTATE COMMERCE 6. This Complaint is filed and these proceedings are instituted under Section 7A of the Clayton Act, 15 U.S.C. 18a, added by Title II of the HSR Act, to recover civil penalties for violations of that section. 1. 7. This Court has jurisdiction over the subject matter of this action pursuant to Section 7A(g) of the Clayton Act, 15 U.S.C. 18a(g), and pursuant to 28 U.S.C. 1331, 1337(a), 1345 and 1355. 8. The Defendant has consented to personal jurisdiction and venue in the District of Columbia for purposes of this action. 9. Duke is engaged in commerce, or in activities affecting commerce, within the meaning of Section 7A(a)(1) of the Clayton Act, 15 U.S.C. 18a(a)(1). III. THE DEFENDANT 10. Defendant Duke Energy Corporation is organized under the laws of Delaware with its principal office and place of business at 550 South Tryon Street in Charlotte, North Carolina. Through various subsidiaries, Duke Energy Corporation generates and sells [[Page 8847]] electric power on a retail and/or wholesale basis in numerous local markets throughout the United States. IV. WAITING PERIOD REQUIREMENTS OF THE HSR ACT 11. The HSR Act requires parties to file a notification with the Federal Trade Commission and the Department of Justice and to observe a waiting period before consummating acquisitions of voting securities or assets that exceed certain value thresholds. The required notification gives the federal antitrust agencies prior notice of, and information about, proposed transactions. The waiting period provides the antitrust enforcement agencies with an opportunity to investigate and to seek an injunction to prevent harm from anticompetitive transactions. 12. The HSR Act requirements apply to a transaction if, as a result of the transaction, the acquirer will ``hold'' assets or voting securities valued above the thresholds. Section 801(c)(1) of the Premerger Notification Rules, 16 CFR 800 et seq., defines ``hold'' to mean to have ``beneficial ownership.'' An acquiring person may prematurely obtain beneficial ownership of assets by, among other things, assuming the risk or potential benefit of changes in the value of the relevant assets and exercising control over day-to-day business decisions of the acquired person's business before the end of the HSR waiting period. This conduct, sometimes referred to as ``gun jumping,'' violates Section 7A of the Clayton Act. 13. Section 7A(g)(1) of the Clayton Act, 15 U.S.C. 18a(g)(1), states that any person, or any officer, director, or partner thereof, who fails to comply with any provision of the HSR Act is liable to the United States for a civil penalty for each day during which the person is in violation. Beginning February 10, 2009, the maximum amount of civil penalty was increased to $16,000 per day, pursuant to the Debt Collection Improvement Act of 1996, Pub. L. 104-134, 31001(s) (amending the Federal Civil Penalties Inflation Adjustment Act of 1990, 28 U.S.C. 2461 note), and Federal Trade Commission Rule 1.98, 16 CFR 1.98, 74 FR 857 (Jan. 9, 2009). Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Pub. L. 114-74, 701 (further amending the Federal Civil Penalties Inflation Adjustment Act of 1990), and Federal Trade Commission Rule 1.98, 16 CFR 1.98, 81 FR 42,476 (June 30, 2016), the maximum amount of civil penalty was increased to $40,000 per day. V. THE TRANSACTION AND THE DEFENDANT'S UNLAWFUL CONDUCT 14. In August 2014, Duke and Calpine reached an agreement for Duke to purchase Osprey. The parties memorialized their agreement in an August 25, 2014 term sheet. The structure of the transaction included a tolling agreement to be put into effect until the closing of the acquisition. Duke and Calpine executed the tolling agreement on September 30, 2014, and it became effective the next day. 15. Tolling agreements are relatively common in the electricity industry, but the circumstances surrounding Duke's tolling agreement for the Osprey plant are not. Duke said in testimony to the Florida Public Service Commission that there was no separate rationale to enter this tolling agreement independent of the acquisition. Duke was only interested in the tolling agreement as a bridge to the acquisition of the plant itself. As a Duke executive testified, the tolling agreement was a ``mechanism to transfer the acquisition of the plant to [Duke].'' Duke insisted that it was only willing to enter into a tolling agreement in combination with an acquisition agreement, and only if Duke had the right to terminate the tolling agreement without penalty in the event that FERC rejected the acquisition. 16. The tolling agreement was designed to smooth approval by FERC by enabling Duke to argue that it ``already controls'' Osprey through the tolling agreement and thus that no new harm could come from permitting Duke to acquire Osprey outright. Under the tolling agreement, Duke was responsible for determining the amount of power that would be generated at Osprey, and for purchasing and delivering all the fuel necessary to produce that power. Duke was then entitled to receive all of the electricity generated by the facility. 17. After entering into the tolling agreement, Duke began to make all competitively significant decisions for the Osprey plant. Each day, Duke sent hour-by-hour instructions to Osprey personnel directing them to produce a certain amount of power. Duke also arranged to procure and deliver the necessary natural gas to Osprey--functions previously performed by Calpine. Duke also arranged for all of the power generated at Osprey to be transmitted to its destination. In other words, Duke decided when and how much natural gas would be delivered to the plant and decided when and how much energy would be produced by the plant. Duke was free to make all of these decisions based on its own business interests, and Osprey's function was limited to the mechanical operation of the facility consistent with Duke's instructions. Calpine ceased to make any significant competitive decisions for Osprey. 18. The combination of the tolling agreement and the asset purchase agreement transferred market risk (or potential gain) of a change in the fortunes of Osprey's business. Duke paid Calpine a fixed monthly fee plus a small amount to reimburse the plant's variable operations and maintenance costs. Duke also assumed financial responsibility for procuring natural gas, the plant's primary input cost. Thus, it was Duke who gained the profit or loss from sale of the energy, and it was Duke who assumed all the risk that fuel prices would increase or that energy market prices would fall. Calpine was no longer exposed to any risk of changes in the fuel or energy markets. 19. Months after the tolling agreement was executed and Duke had taken beneficial ownership of Osprey, Duke submitted a notification and report form pursuant to the HSR Act concerning its intent to acquire the Osprey plant, valued at approximately $166 million. On February 27, 2015, the antitrust agencies terminated the HSR waiting period. Duke had beneficial ownership of Osprey for the entire waiting period. VI. VIOLATION OF SECTION 7A OF THE CLAYTON ACT 20. Plaintiff alleges and incorporates paragraphs 1 through 19 as if set forth fully herein. 21. Duke's acquisition of Osprey was subject to Section 7A premerger notification and waiting-period requirements. 22. Duke obtained beneficial ownership of Osprey prior to making its required premerger notification and observing the applicable waiting period in violation of Section 7A. 23. Accordingly, Defendant was continuously in violation of the requirements of the HSR Act each day beginning on October 1, 2014, until the waiting period was terminated on February 27, 2015. VII. REQUEST FOR RELIEF Wherefore, Plaintiff requests: (a) that the Court adjudge and decree that Defendant violated the HSR Act and was in violation during the period of 150 days beginning on October 1, 2014, and ending on February 27, 2015; (b) order that Defendant pay to the United States an appropriate civil penalty as provided under Section 7A(g)(1) of the Clayton Act, 15 U.S.C. 18(a)(g)(1), and 16 CFR 1.98(a); [[Page 8848]] (c) that the Court award the Plaintiff its costs of this suit; and, (d) that the Court order such other and further relief as the Court may deem just and proper. Dated: January 18, 2017. Respectfully Submitted, /s/-------------------------------------------------------------------- Renata B. Hesse (D.C. Bar #466107), Acting Assistant Attorney General. /s/-------------------------------------------------------------------- Jonathan B. Sallet, Deputy Assistant Attorney General for Litigation. /s/-------------------------------------------------------------------- Patricia A. Brink, Director of Civil Enforcement. /s/-------------------------------------------------------------------- Robert A. Potter, Chief, Legal Policy Section. /s/-------------------------------------------------------------------- Caroline E. Laise, Assistant Chief, Transportation, Energy & Agriculture Section. /s/-------------------------------------------------------------------- Robert A. Lepore, Assistant Chief, Transportation, Energy & Agriculture Section. /s/-------------------------------------------------------------------- Jade A. Eaton (D.C. Bar #939629) Njeri Mugure, Trial Attorneys, Transportation, Energy & Agriculture Section. /s/-------------------------------------------------------------------- Kara B. Kuritz, Attorney Advisor, Legal Policy Section. U.S. Department of Justice, Antitrust Division, 450 Fifth Street NW., Suite 8000, Washington, DC 20530, Phone: (202) 307-6316, Facsimile: (202) 307-2784, Email: [email protected]. UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA United States Of America, Plaintiff, v. Duke Energy Corporation, Defendant. Case No.: 1:17-cv-00116 Judge: Beryl A. Howell Filed: 01/18/2017 COMPETITIVE IMPACT STATEMENT Plaintiff United States of America (``United States''), pursuant to Section 2(b) of the Antitrust Procedures and Penalties Act (``APPA''), 15 U.S.C. 16(b)-(h), files this Competitive Impact Statement relating to the proposed Final Judgment submitted for entry in this civil antitrust proceeding. I. NATURE AND PURPOSE OF THE PROCEEDING On January 18, 2017, the United States filed a Complaint against Defendant Duke Energy Corporation (``Duke''), related to Duke's acquisition of the Osprey Energy Center (``Osprey'') from Calpine Corporation (``Calpine''). The Complaint alleges that Duke violated Section 7A of the Clayton Act, 15 U.S.C. 18a, commonly known as the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the ``HSR Act''). The Complaint alleges that Duke acquired Osprey, through a transaction in excess of the then-applicable statutory thresholds, without making the required HSR Act filings with the agencies and without observing the required HSR Act waiting period. The HSR Act provides that ``no person shall acquire, directly or indirectly, any voting securities of any person'' exceeding certain thresholds until that person has filed pre-acquisition notification and report forms with the Department of Justice and the Federal Trade Commission (collectively, the ``federal antitrust agencies'' or ``agencies'') and the post-filing waiting period has expired. 15 U.S.C. 18a(a). A key purpose of the notification and waiting period is to protect consumers and competition from potentially anticompetitive transactions by providing the agencies an opportunity to conduct an antitrust review of proposed transactions before they are consummated. At the same time the Complaint was filed, the United States also filed a Stipulation and proposed Final Judgment. Under the proposed Final Judgment, which is explained more fully below, Duke is required to pay a civil penalty to the United States in the amount of $600,000. The proposed Final Judgment is designed to deter HSR Act violations by Duke and similarly situated acquirers. The United States and the Defendant have stipulated that the proposed Final Judgment may be entered after compliance with the APPA. Entry of the proposed Final Judgment would terminate this action, except that the Court would retain jurisdiction to construe, modify, or enforce the provisions of the proposed Final Judgment and punish violations thereof. II. DESCRIPTION OF THE EVENTS GIVING RISE TO THE ALLEGED VIOLATION A. Duke's Acquisition of Osprey Energy Center From Calpine In August 2014, Duke agreed to terms to purchase Osprey from Calpine, a competing seller of wholesale electricity nationally and in Florida. As part of the acquisition, Duke entered into a ``tolling agreement'' whereby Duke immediately began exercising control over Osprey's output, and immediately began reaping the day-to-day profits and losses from the plant's business. Duke, for example, assumed control of purchasing all the fuel for the plant, arranging for delivery of that fuel, and arranging for transmission of all energy generated. Duke retained the profit (or loss) from the difference between the price of the energy generated at Osprey and the cost to generate the energy, bearing all the risk of changes in the market price for fuel and the market price for energy. Based on these potential risks and rewards, Duke decided exactly how much energy would be generated by the plant on an hour-by-hour basis, and relayed those detailed instructions each day to plant personnel. Thus, from the moment the tolling agreement went into effect, Osprey ceased to be an independent competitive presence in the market for generating electricity for Florida consumers. The tolling agreement was entered months before Duke made its required HSR filing for the acquisition of Osprey. Duke made clear in testimony filed with federal and state regulators that it only ever considered the tolling agreement in conjunction with an agreement to acquire Osprey. As Duke explained in its application to the Federal Energy Regulatory Commission (``FERC'') for permission to acquire the plant, Duke's negotiation with Calpine ``led to an agreement in principle whereby [Duke] would purchase power from Osprey Energy Center under a two-year power purchase agreement [the Tolling Agreement] and then purchase the facility itself.'' B. Duke's Alleged Violation of Section 7A Before the HSR Act was enacted, the agencies were often forced to investigate anticompetitive mergers that had already been consummated without public notice. In those situations, the agencies' only recourse was to sue to unwind the parties' merger. During this time, the loss of competition continued to harm consumers, and if the court ultimately found that the merger was illegal, effective relief was often impossible to achieve. The HSR Act addressed these problems and strengthened antitrust enforcement by providing the antitrust agencies the ability to investigate certain large acquisitions before they are consummated. In particular, the HSR Act prohibits certain acquiring parties from undertaking an acquisition before required filings are made with the antitrust agencies and a prescribed waiting period expires or is terminated. The HSR Act requirements apply to a transaction if, as a result of the transaction, the acquirer will ``hold'' [[Page 8849]] assets or voting securities valued above the thresholds. Under HSR Rule 801.1(c), to ``hold'' assets or voting securities means ``beneficial ownership, whether direct, or indirect through fiduciaries, agents, controlled entities or other means.'' 16 CFR 801.1(c). Thus, under the Act, parties must make an HSR filing and observe a waiting period before transferring beneficial ownership of the assets or voting securities to be acquired. The Statement of Basis and Purpose accompanying the Rules explains that beneficial ownership is determined on a case-by-case basis, based on the indicia of beneficial ownership which include among others, the right to obtain the benefit of any increase in value or dividends, and the risk of loss of value. 43 FR 33,449 (July 31, 1978). The agencies have explained that a firm may also gain beneficial ownership by obtaining ``operational control'' of an asset.\1\ --------------------------------------------------------------------------- \1\ See, e.g., Complaint, United States v. Flakeboard Am. Ltd., No. 3:14-cv-4949 (N.D. Cal. Nov. 7, 2014), available at https://www.justice.gov/atr/case-document/file/496511/download; Complaint, United States v. Smithfield Foods, Inc., No. 1:10-cv-00120 (D.D.C. Jan. 21, 2010), available at https://www.justice.gov/atr/case-document/complaint-211; Complaint, United States v. Qualcomm Inc., No. 1:06CV00672 (PLF) (D.D.C. Apr. 13, 2006), available at https://www.justice.gov/atr/case-document/complaint-civil-penalties-violation-premerger-reporting-requirements-hart-scott-0. --------------------------------------------------------------------------- The combination of Duke's agreement to purchase Osprey and the tolling agreement transferred beneficial ownership of Osprey's business to Duke before Duke had fulfilled its obligations under the HSR Act. Duke's tolling agreement with Calpine gave it significant operational control over the Osprey plant, and allowed Duke to assume the risks or potential benefits of changes in the value of Osprey's business. Duke procured and decided how much fuel would be delivered to the plant, decided when and how much energy would be produced by the plant, and decided when and where that energy would be delivered. Calpine's function was limited to the mechanical operation of the Osprey facility consistent with Duke's instructions. In addition, Duke, and not Calpine, retained the margin between the cost of gas and the price of electricity. If the spread between the cost of gas and the market price of electricity increased or decreased prior to closing, Duke realized that gain or loss. A tolling agreement alone does not necessarily confer beneficial ownership. Tolling agreements are relatively common in the electricity industry, and control over output and the shift of risk and benefit to the buyer over the term are typical features of such agreements. However, in this instance, as Duke admitted to regulators, the tolling agreement for the Osprey plant was entered as part and parcel of a broader agreement to acquire the plant and had no economic rationale independent from the acquisition. Considering the intertwined agreements in their totality, Calpine ceased to be an independent competitive presence in the market after entering the tolling agreement, and beneficial ownership of Osprey transferred to Duke. Agreements that transfer some indicia of beneficial ownership, even if common in an industry, may violate Section 7A if entered into while the buyer intends to acquire the asset.\2\ Entering into such agreements before filing the required HSR notifications and before the HSR waiting period expires defeats the purpose of the HSR Act by enabling the acquiring person to direct the acquired person's business to bring about the effects of an acquisition prior to completion of the agencies' antitrust review. Hence, Duke's obligation to file and observe the waiting period arose as of October 1, 2014, the effective date of the tolling agreement relating to the plant it intended to acquire. --------------------------------------------------------------------------- \2\ For example, the Department expressed this view in a 1996 speech by former Deputy Assistant Attorney General Larry Fullerton in which he discussed certain management contracts sometimes entered into by radio stations. Lawrence R. Fullerton, Deputy Assistant Attorney General, Antitrust Division, Dep't of Justice, Address at Business Development Associates Antitrust 1997 Conference (Oct. 21, 1996), available at https://www.justice.gov/atr/file/518686/download. --------------------------------------------------------------------------- III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT The proposed Final Judgment imposes a $600,000 civil penalty for violation of the HSR Act. The United States adjusted the penalty downward from the maximum permitted under the HSR Act in part because the Defendant was willing to resolve the matter by consent decree and avoid prolonged investigation and litigation. The relief will have a beneficial effect on competition because it will deter future instances in which parties seek to immediately remove an independent competitive presence from an industry before filing required pre-acquisition notifications with the agencies and observing the required waiting period. At the same time, the penalty will not have any adverse effect on competition. IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS There is no private antitrust action for HSR Act violations; therefore, entry of the proposed Final Judgment will neither impair nor assist the bringing of any private antitrust action. V. PROCEDURES AVAILABLE FOR MODIFICATION OF THE PROPOSED FINAL JUDGMENT The United States and the Defendant have stipulated that the proposed Final Judgment may be entered by this Court after compliance with the provisions of the APPA, provided that the United States has not withdrawn its consent. The APPA conditions entry of the decree upon this Court's determination that the proposed Final Judgment is in the public interest. The APPA provides a period of at least sixty (60) days preceding the effective date of the proposed Final Judgment within which any person may submit to the United States written comments regarding the proposed Final Judgment. Any person who wishes to comment should do so within sixty (60) days of the date of publication of this Competitive Impact Statement in the Federal Register, or the last date of publication in a newspaper of the summary of this Competitive Impact Statement, whichever is later. All comments received during this period will be considered by the United States Department of Justice, which remains free to withdraw its consent to the proposed Final Judgment at any time prior to the Court's entry of judgment. The comments and the response of the United States will be filed with this Court. In addition, comments will be posted on the U.S. Department of Justice, Antitrust Division's internet Web site and, under certain circumstances, published in the Federal Register. Written comments should be submitted to: Caroline Laise, Assistant Chief, Transportation Energy and Agriculture Section, Antitrust Division, United States Department of Justice, 450 Fifth Street NW., Suite 8000, Washington, DC 20530, [email protected]. The proposed Final Judgment provides that this Court retains jurisdiction over this action, and the parties may apply to this Court for any order necessary or appropriate for the modification, interpretation, or enforcement of the Final Judgment. VI. ALTERNATIVES TO THE PROPOSED FINAL JUDGMENT The United States considered, as an alternative to the proposed Final Judgment, a full trial on the merits against the Defendant. The United States is satisfied, however, that the proposed relief is an appropriate remedy in this matter. Given the facts of [[Page 8850]] this case, the United States is satisfied that the proposed civil penalty is sufficient to address the violation alleged in the Complaint and to deter violations by similarly situated entities in the future, without the time, expense, and uncertainty of a full trial on the merits. VII. STANDARD OF REVIEW UNDER THE APPA FOR THE PROPOSED FINAL JUDGMENT The APPA requires that proposed consent judgments in antitrust cases brought by the United States be subject to a sixty (60) day comment period, after which the court shall determine whether entry of the proposed Final Judgment is ``in the public interest.'' 15 U.S.C. 16(e)(1). In making that determination, the court, in accordance with the statute as amended in 2004, is required to consider: (A) The competitive impact of such judgment, including termination of alleged violations, provisions for enforcement and modification, duration of relief sought, anticipated effects of alternative remedies actually considered, whether its terms are ambiguous, and any other competitive considerations bearing upon the adequacy of such judgment that the court deems necessary to a determination of whether the consent judgment is in the public interest; and (B) the impact of entry of such judgment upon competition in the relevant market or markets, upon the public generally and individuals alleging specific injury from the violations set forth in the complaint including consideration of the public benefit, if any, to be derived from a determination of the issues at trial. Id. Sec. 16(e)(1)(A) & (B). In considering these statutory factors, the court's inquiry is necessarily a limited one, as the government is entitled to ``broad discretion to settle with the defendant within the reaches of the public interest.'' United States v. Microsoft Corp., 56 F.3d 1448, 1461 (D.C. Cir. 1995); see generally United States v. SBC Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public interest standard under the Tunney Act); United States v. U.S. Airways Group, Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) (noting the court has broad discretion of the adequacy of the relief at issue); United States v. InBev N.V./S.A., No. 08-1965 (JR), 2009-2 Trade Cas. (CCH) ] 76,736, 2009 U.S. Dist. LEXIS 84787, at *3, (D.D.C. Aug. 11, 2009) (noting that the court's review of a consent judgment is limited and only inquires ``into whether the government's determination that the proposed remedies will cure the antitrust violations alleged in the complaint was reasonable, and whether the mechanism to enforce the final judgment are clear and manageable.'').\3\ --------------------------------------------------------------------------- \3\ The 2004 amendments substituted ``shall'' for ``may'' in directing relevant factors for court to consider and amended the list of factors to focus on competitive considerations and to address potentially ambiguous judgment terms. Compare 15 U.S.C. 16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc'ns, 489 F. Supp. 2d at 11 (concluding that the 2004 amendments ``effected minimal changes'' to Tunney Act review). --------------------------------------------------------------------------- As the United States Court of Appeals for the District of Columbia Circuit has held, a court conducting an inquiry under the APPA may consider, among other things, the relationship between the remedy secured and the specific allegations set forth in the government's complaint, whether the decree is sufficiently clear, whether enforcement mechanisms are sufficient, and whether the decree may positively harm third parties. See Microsoft, 56 F.3d at 1458-62. With respect to the adequacy of the relief secured by the decree, a court may not ``engage in an unrestricted evaluation of what relief would best serve the public.'' United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (quoting United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787, at *3. Courts have held that: [t]he balancing of competing social and political interests affected by a proposed antitrust consent decree must be left, in the first instance, to the discretion of the Attorney General. The court's role in protecting the public interest is one of insuring that the government has not breached its duty to the public in consenting to the decree. The court is required to determine not whether a particular decree is the one that will best serve society, but whether the settlement is ``within the reaches of the public interest.'' More elaborate requirements might undermine the effectiveness of antitrust enforcement by consent decree. Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\4\ In determining whether a proposed settlement is in the public interest, a district court ``must accord deference to the government's predictions about the efficacy of its remedies, and may not require that the remedies perfectly match the alleged violations.'' SBC Commc'ns, 489 F. Supp. 2d at 17; see also U.S. Airways, 38 F. Supp. 3d at 75 (noting that a court should not reject the proposed remedies because it believes others are preferable); Microsoft, 56 F.3d at 1461 (noting the need for courts to be ``deferential to the government's predictions as to the effect of the proposed remedies''); United States v. Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that the court should grant due respect to the government's prediction as to the effect of proposed remedies, its perception of the market structure, and its views of the nature of the case). --------------------------------------------------------------------------- \4\ Cf. BNS, 858 F.2d at 464 (holding that the court's ``ultimate authority under the [APPA] is limited to approving or disapproving the consent decree''); United States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the court is constrained to ``look at the overall picture not hypercritically, nor with a microscope, but with an artist's reducing glass''). See generally Microsoft, 56 F.3d at 1461 (discussing whether ``the remedies [obtained in the decree are] so inconsonant with the allegations charged as to fall outside of the `reaches of the public interest' ''). --------------------------------------------------------------------------- Courts have greater flexibility in approving proposed consent decrees than in crafting their own decrees following a finding of liability in a litigated matter. ``[A] proposed decree must be approved even if it falls short of the remedy the court would impose on its own, as long as it falls within the range of acceptability or is `within the reaches of public interest.' '' United States v. Am. Tel. & Tel. Co., 552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd sub nom., Maryland v. United States, 460 U.S. 1001 (1983); see also U.S. Airways, 38 F. Supp. 3d at 76 (noting that room must be made for the government to grant concessions in the negotiation process for settlements (citing Microsoft, 56 F.3d at 1461)); United States v. Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985) (approving the consent decree even though the court would have imposed a greater remedy). To meet this standard, the United States ``need only provide a factual basis for concluding that the settlements are reasonably adequate remedies for the alleged harms.'' SBC Commc'ns, 489 F. Supp. 2d at 17. Moreover, the court's role under the APPA is limited to reviewing the remedy in relationship to the violations that the United States has alleged in its Complaint, and does not authorize the court to ``construct [its] own hypothetical case and then evaluate the decree against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways, 38 F. Supp. 3d at 75 (noting that the court must simply determine whether there is a factual foundation for the government's decisions such that its conclusions regarding the proposed settlements are reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (concluding that ``the `public interest' is not to be measured by comparing the violations alleged in the complaint against those the court believes could have, or even should have, been [[Page 8851]] alleged''). Because the ``court's authority to review the decree depends entirely on the government's exercising its prosecutorial discretion by bringing a case in the first place,'' it follows that ``the court is only authorized to review the decree itself,'' and not to ``effectively redraft the complaint'' to inquire into other matters that the United States did not pursue. Microsoft, 56 F.3d at 1459-60. As this Court confirmed in SBC Communications, courts ``cannot look beyond the complaint in making the public interest determination unless the complaint is drafted so narrowly as to make a mockery of judicial power.'' 489 F. Supp. 2d at 15. In its 2004 amendments, Congress made clear its intent to preserve the practical benefits of utilizing consent decrees in antitrust enforcement, adding the unambiguous instruction that ``[n]othing in this section shall be construed to require the court to conduct an evidentiary hearing or to require the court to permit anyone to intervene.'' 15 U.S.C. 16(e)(2); see also U.S. Airways, 38 F. Supp. 3d at 76 (indicating that a court is not required to hold an evidentiary hearing or to permit intervenors as part of its review under the Tunney Act). This language codified what Congress intended when it enacted the Tunney Act in 1974, as the author of this legislation, Senator Tunney, explained: ``The court is nowhere compelled to go to trial or to engage in extended proceedings which might have the effect of vitiating the benefits of prompt and less costly settlement through the consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of Sen. Tunney). Rather, the procedure for the public interest determination is left to the discretion of the court, with the recognition that the court's ``scope of review remains sharply proscribed by precedent and the nature of Tunney Act proceedings.'' SBC Commc'ns, 489 F. Supp. 2d at 11.\5\ A court can make its public interest determination based on the competitive impact statement and response to public comments alone. U.S. Airways, 38 F. Supp. 3d at 76. --------------------------------------------------------------------------- \5\ See also United States v. Enova Corp., 107 F. Supp. 2d 10, 17 (D.D.C. 2000) (noting that the ``Tunney Act expressly allows the court to make its public interest determination on the basis of the competitive impact statement and response to comments alone''); United States v. Mid-Am. Dairymen, Inc., No. 73-CV-681-W-1, 1977-1 Trade Cas. (CCH) ] 61,508, at 71,980, *22 (W.D. Mo. 1977) (``Absent a showing of corrupt failure of the government to discharge its duty, the Court, in making its public interest finding, should . . . carefully consider the explanations of the government in the competitive impact statement and its responses to comments in order to determine whether those explanations are reasonable under the circumstances.''); S. Rep. No. 93-298, at 6 (1973) (``Where the public interest can be meaningfully evaluated simply on the basis of briefs and oral arguments, that is the approach that should be utilized.''). --------------------------------------------------------------------------- VIII. DETERMINATIVE DOCUMENTS There are no determinative materials or documents within the meaning of the APPA that were considered by the United States in formulating the proposed Final Judgment. Date: January 18, 2017. Respectfully Submitted, ___ /s/ ___ Robert A. Lepore, U.S. Department of Justice, Antitrust Division, 450 Fifth Street NW., Suite 8000, Washington, DC 20530, Phone: (202) 532-4928, Facsimile: (202) 307-2784, Email: [email protected]. IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA United States of America, Plaintiff, v. Duke Energy Corporation, Defendant. Case No.: 1:17-cv-00116 Judge: Beryl A. Howell Filed: 01/18/2017 [PROPOSED] FINAL JUDGMENT WHEREAS, Plaintiff, United States of America, filed this action on January 18, 2017, alleging that Defendant, Duke Energy Corporation, violated Section 7A of the Clayton Act, 15 U.S.C. 18a, commonly known as the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and the United States and Defendant, by their respective attorneys, have consented to the entry of this Final Judgment without trial or adjudication of any issue of fact or law and without this Final Judgment constituting any evidence against or an admission by the Defendant with respect to any issue of fact or law; NOW THEREFORE, before any testimony is taken, without trial or adjudication of any issue of fact or law, and upon consent of the parties, it is ORDERED, ADJUDGED, AND DECREED: I. JURISDICTION The Court has jurisdiction over the subject matter of and each of the parties to this action. The Complaint states a claim upon which relief may be granted against the Defendant under Section 7A of the Clayton Act, 15 U.S.C. Sec. 18a. II. CIVIL PENALTY Judgment is hereby entered in this matter in favor of Plaintiff United States of America and against Defendant Duke Energy Corporation, and pursuant to Section 7A(g)(1) of the Clayton Act, 15 U.S.C. 18a(g)(1), the Debt Collection Improvement Act of 1996, Pub. L. 104-134 Sec. 31001(s) (amending the Federal Civil Penalties Inflation Adjustment Act of 1990, 28 U.S.C. 2461), and Federal Trade Commission Rule 1.98, 16 CFR 1.98, 61 FR 54549 (Oct. 21, 1996), and 74 FR 857 (Jan. 9, 2009), and the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Pub. L. 114-74, 701 (further amending the Federal Civil Penalties Inflation Adjustment Act of 1990), and Federal Trade Commission Rule 1.98, 16 CFR 1.98, 81 FR 42,476 (June 30, 2016). Defendant is hereby ordered to pay a civil penalty in the amount of six hundred thousand dollars ($600,000). Payment of the civil penalty ordered shall be made by wire transfer of funds or cashier's check. If the payment is made by wire transfer, Defendant shall contact Janie Ingalls of the Antitrust Division's Antitrust Documents Group at (202) 514-2481 for instructions before making the transfer. If the payment is made by cashier's check, the check shall be made payable to the United States Department of Justice and delivered to: Janie Ingalls, United States Department of Justice, Antitrust Division, Antitrust Documents Group, 450 Fifth Street NW., Suite 1024, Washington, DC 20530. Defendant shall pay the full amount of the civil penalty within thirty (30) days of entry of this Final Judgment. In the event of a default or delay in payment, interest at the rate of eighteen (18) percent per annum shall accrue thereon from the date of default to the date of payment. III. COSTS Each party shall bear its own costs of this action. IV. PUBLIC INTEREST DETERMINATION The entry of this Final Judgment is in the public interest. The parties have complied with the requirements of the Antitrust Procedures and Penalties Act, 15 U.S.C. 16, including making copies available to the public of this Final Judgment, the Competitive Impact Statement, and any comments thereon and the United States' responses to comments. Based upon the record before the Court, which includes the Competitive Impact Statement and any comments and response to comments filed with the Court, entry of this Final Judgment is in the public interest. Date:------------------------------------------------------------------ Court approval subject to procedures of Antitrust Procedures and Penalties Act, 15 U.S.C. 16 ----------------------------------------------------------------------- [[Page 8852]] United States District Judge [FR Doc. 2017-02026 Filed 1-30-17; 8:45 am] BILLING CODE 4410-11-P
![Federal Register / Vol. 82, No. 19 / Tuesday, January 31, 2017 / Notices 8845
record are moot. The investigation is membership. The notifications were Technology, Ltd., Petersfield, UNITED
terminated in its entirety. filed for the purpose of extending the KINGDOM; NBC Universal, New York,
The authority for the Commission’s Act’s provisions limiting the recovery of NY; NewTek, Inc., San Antonio, TX;
determination is contained in section antitrust plaintiffs to actual damages Synco Services, Inc., New York, NY;
337 of the Tariff Act of 1930, as under specified circumstances. Brooks Harris (individual member),
amended, 19 U.S.C. 1337, and in part Specifically, Moore Foundation, Palo New York, NY; and Christine MacNeill
210 of the Commission’s Rules of Alto, CA; and Datacamp, Cambridge, (individual member), Aultbea,
Practice and Procedure, 19 CFR part MA, have been added as parties to this Achnasheen, UNITED KINGDOM, have
210. venture. withdrawn as parties to this venture.
By order of the Commission.
No other changes have been made in No other changes have been made in
either the membership or planned either the membership or planned
Issued: January 25, 2017.
activity of the group research project. activity of the group research project.
Lisa R. Barton, Membership in this group research
Secretary to the Commission.
Membership in this group research
project remains open, and R Consortium project remains open, and Advanced
[FR Doc. 2017–02002 Filed 1–30–17; 8:45 am] intends to file additional written Media Workflow Association, Inc.
BILLING CODE 7020–02–P notifications disclosing all changes in intends to file additional written
membership. notifications disclosing all changes in
On September 15, 2015, R Consortium membership.
JUDICIAL CONFERENCE OF THE filed its original notification pursuant to
Section 6(a) of the Act. The Department On March 28, 2000, Advanced Media
UNITED STATES Workflow Association, Inc. filed its
of Justice published a notice in the
Hearings of the Judicial Conference Federal Register pursuant to Section original notification pursuant to Section
Advisory Committee on the Federal 6(b) of the Act on October 2, 2015 (80 6(a) of the Act. The Department of
Rules of Criminal Procedure FR 59815). Justice published a notice in the Federal
The last notification was filed with Register pursuant to Section 6(b) of the
AGENCY: Advisory Committee on the the Department on October 7, 2016. A Act on June 29, 2000 (65 FR 40127).
Federal Rules of Criminal Procedure, notice was published in the Federal The last notification was filed with
Judicial Conference of the United States. Register pursuant to Section 6(b) of the the Department on September 21, 2016.
ACTION: Notice of cancellation of public Act on November 3, 2016 (81 FR 76629). A notice was published in the Federal
hearing. Register pursuant to Section 6(b) of the
Patricia A. Brink, Act on October 26, 2016 (81 FR 74480).
SUMMARY: The following public hearing Director of Civil Enforcement, Antitrust
on proposed amendments to the Federal Division. Patricia A. Brink,
Rules of Criminal Procedure has been [FR Doc. 2017–02020 Filed 1–30–17; 8:45 am] Director of Civil Enforcement, Antitrust
canceled: Criminal Rules Hearing on BILLING CODE P
Division.
February 24, 2017 in Washington, DC. [FR Doc. 2017–02016 Filed 1–30–17; 8:45 am]
The announcement for this meeting was BILLING CODE P
previously published in 81 FR 52713. DEPARTMENT OF JUSTICE
FOR FURTHER INFORMATION CONTACT:
Antitrust Division DEPARTMENT OF JUSTICE
Rebecca A. Womeldorf, Rules
Committee Secretary, Rules Committee
Notice Pursuant to the National Antitrust Division
Support Office, Administrative Office of
Cooperative Research and Production
the United States Courts, Washington, United States of America v. Duke
Act of 1993—Advanced Media
DC 20544, telephone (202) 502–1820. Energy Corporation; Proposed Final
Workflow Association, Inc.
Dated: January 26, 2017. Judgment and Competitive Impact
Rebecca A. Womeldorf, Notice is hereby given that, on Statement
December 22, 2016, pursuant to Section
Rules Committee Secretary.
6(a) of the National Cooperative Notice is hereby given pursuant to the
[FR Doc. 2017–02015 Filed 1–30–17; 8:45 am]
Research and Production Act of 1993, Antitrust Procedures and Penalties Act,
BILLING CODE 2210–55–P 15 U.S.C. 16(b)–(h), that a proposed
15 U.S.C. 4301 et seq. (‘‘the Act’’),
Advanced Media Workflow Association, Final Judgment, Stipulation, and
Inc. has filed written notifications Competitive Impact Statement have
DEPARTMENT OF JUSTICE simultaneously with the Attorney been filed with the United States
General and the Federal Trade District Court for the District of
Antitrust Division Commission disclosing changes in its Columbia in United States of America v.
Notice Pursuant to the National membership. The notifications were Duke Energy Corporation, Civil Action
Cooperative Research and Production filed for the purpose of extending the No. 1:17–cv–00116. On January 18,
Act of 1993—R Consortium, Inc. Act’s provisions limiting the recovery of 2017, the United States filed a
antitrust plaintiffs to actual damages Complaint alleging that Duke Energy
Notice is hereby given that, on under specified circumstances. Corporation violated Section 7A of the
December 21, 2016, pursuant to Section Specifically, AJA Video Systems, Inc., Clayton Act, 15 U.S.C. 18a, by acquiring
asabaliauskas on DSK3SPTVN1PROD with NOTICES
6(a) of the National Cooperative Grass Valley, CA; dB Broadcast Limited, the Osprey Energy Center from Calpine
Research and Production Act of 1993, Witchford, Ely, UNITED KINGDOM; Corporation before filing the required
15 U.S.C. 4301 et seq. (‘‘the Act’’), R DELTACAST.TV, Ans, BELGIUM; and notification form and observing the
Consortium, Inc. (‘‘R Consortium’’) has Streampunk Media, Aultbea, UNITED required waiting period. The proposed
filed written notifications KINGDOM, have been added as parties Final Judgment, filed at the same time
simultaneously with the Attorney to this venture. as the Complaint, requires Duke Energy
General and the Federal Trade Also, Australian Broadcasting Corp., Corporation to pay a civil penalty of
Commission disclosing changes in its Sydney, AUSTRALIA; InSync $600,000.
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![8846 Federal Register / Vol. 82, No. 19 / Tuesday, January 31, 2017 / Notices
Copies of the Complaint, proposed waiting period requirements ensure that acquisition, it typically employs a
Final Judgment, and Competitive Impact the parties to a proposed transaction ‘‘screen’’ to assess how much the
Statement are available for inspection continue to operate independently proposed acquisition would increase
on the Antitrust Division’s Web site at during review, preventing market concentration. While planning
http://www.justice.gov/atr and at the anticompetitive acquisitions from the acquisition of Osprey, Duke and
Office of the Clerk of the United States harming consumers before the Calpine anticipated the acquisition
District Court for the District of government has had the opportunity to would fail the FERC screen. But with a
Columbia. Copies of these materials may review them according to the tolling agreement in place, Duke hoped
be obtained from the Antitrust Division procedures established by Congress in that FERC would treat Osprey as already
upon request and payment of the the Clayton Act. A purchaser that effectively controlled by Duke, and
copying fee set by Department of Justice prematurely takes beneficial ownership would therefore conclude that an
regulations. of assets, sometimes referred to as ‘‘gun acquisition would lead to no change in
Public comment is invited within 60 jumping,’’ is subject to statutory Duke’s market share and no increase in
days of the date of this notice. Such penalties for each day it is in violation. concentration under FERC’s screen.
comments, including the name of the 2. In August 2014, Duke agreed to Indeed, after entering into the tolling
submitter, and responses thereto, will be terms to purchase the Osprey Energy agreement, Duke argued to FERC that its
posted on the Antitrust Division’s Web Center (‘‘Osprey’’) from its owner, acquisition of Osprey posed no
site, filed with the Court, and, under Calpine Corporation (‘‘Calpine’’), a competitive threat and did not increase
certain circumstances, published in the competing seller of wholesale electricity concentration because Duke ‘‘already
Federal Register. Comments should be nationally and in Florida. Osprey is a controls [Osprey] pursuant to the
directed to Caroline E. Laise, Assistant combined-cycle natural gas-fired Tolling Agreement.’’
Chief, Transportation, Energy & electrical generating plant located in 5. The combination of Duke’s
Agriculture Section, Antitrust Division, Auburndale, Florida. Duke violated the agreement to purchase Osprey and the
Department of Justice, 450 Fifth Street HSR Act by obtaining beneficial contemporaneously negotiated and
NW., Suite 8000, Washington, DC 20530 ownership of Osprey before filing the interdependent tolling agreement
(telephone: (202) 353–9797). required notification and observing the transferred beneficial ownership of
required waiting period. Osprey’s business to Duke before Duke
Patricia A. Brink, 3. Specifically, as part of the had fulfilled its obligations under the
Director of Civil Enforcement. agreement to acquire the plant, Duke HSR Act. As a result, Duke and Calpine
UNITED STATES DISTRICT COURT also entered into a ‘‘tolling agreement’’ did not continue to act as independent
FOR THE DISTRICT OF COLUMBIA whereby Duke immediately began entities during the required waiting
exercising control over Osprey’s output, period while the Department of Justice
United States of America, U.S. Department and immediately began reaping the day-
of Justice, Antitrust Division, 450 Fifth St. investigated the proposed acquisition
to-day profits and losses from the and determined whether to challenge it.
NW., Suite 8000, Washington, DC 20530,
plant’s business. Duke, for example, Therefore, the Court should assess a
Plaintiff, v. Duke Energy Corporation, 550
South Tryon Street, Charlotte, NC 28202, assumed control of purchasing all the civil penalty against Duke for its
Defendants. fuel for the plant, arranging for delivery violation of the HSR Act.
Case No.: 1:17–cv–00116 of that fuel, and arranging for
Judge: Beryl A. Howell transmission of all energy generated. II. JURISDICTION, VENUE, AND
Filed: 01/18/2017 Duke, not Calpine, retained the profit INTERSTATE COMMERCE
(or loss) from the difference between the 6. This Complaint is filed and these
COMPLAINT price of the energy generated at Osprey proceedings are instituted under Section
The United States of America, acting and the cost to generate the energy, 7A of the Clayton Act, 15 U.S.C. 18a,
under the direction of the Attorney bearing all the risk of changes in the added by Title II of the HSR Act, to
General of the United States, brings this market price for fuel and the market recover civil penalties for violations of
civil action to obtain monetary relief in price for energy. Based on these that section.
the form of civil penalties against the potential risks and rewards, Duke, and 1.
Defendant, Duke Energy Corporation not Calpine, decided exactly how much 7. This Court has jurisdiction over the
(‘‘Duke’’), for violating Section 7A of the energy would be generated by the plant subject matter of this action pursuant to
Clayton Act, as amended, 15 U.S.C. 18a, on an hour-by-hour basis, and relayed Section 7A(g) of the Clayton Act, 15
also commonly known as the Hart-Scott- those detailed instructions each day to U.S.C. 18a(g), and pursuant to 28 U.S.C.
Rodino Antitrust Improvements Act of plant personnel. Thus, from the moment 1331, 1337(a), 1345 and 1355.
1976 (‘‘HSR Act’’), and alleges as the tolling agreement went into effect, 8. The Defendant has consented to
follows: Osprey ceased to be an independent personal jurisdiction and venue in the
competitive presence in the market for District of Columbia for purposes of this
I. NATURE OF THE ACTION generating electricity for Florida action.
1. The HSR Act is an essential part of consumers. 9. Duke is engaged in commerce, or in
modern antitrust enforcement. The HSR 4. Duke was never interested in a activities affecting commerce, within
Act and implementing regulations tolling agreement alone—Duke was only the meaning of Section 7A(a)(1) of the
require purchasers to notify the interested in the tolling agreement as a Clayton Act, 15 U.S.C. 18a(a)(1).
Department of Justice and the Federal step in the process of purchasing the
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Trade Commission and wait for agency plant. As a Duke executive explained in III. THE DEFENDANT
review before acquiring assets valued in testimony to the Florida Public Service 10. Defendant Duke Energy
excess of certain thresholds. A Commission, the tolling agreement Corporation is organized under the laws
purchaser can ‘‘acquire’’ assets without reflected an effort to obtain expedited of Delaware with its principal office and
taking formal legal title, for instance by approval for the purchase of Osprey place of business at 550 South Tryon
obtaining operational control over the from the Federal Energy Regulatory Street in Charlotte, North Carolina.
assets or otherwise obtaining ‘‘beneficial Commission (‘‘FERC’’). When FERC Through various subsidiaries, Duke
ownership.’’ The HSR Act’s notice and reviews a proposed power plant Energy Corporation generates and sells
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![Federal Register / Vol. 82, No. 19 / Tuesday, January 31, 2017 / Notices 8847
electric power on a retail and/or V. THE TRANSACTION AND THE interests, and Osprey’s function was
wholesale basis in numerous local DEFENDANT’S UNLAWFUL limited to the mechanical operation of
markets throughout the United States. CONDUCT the facility consistent with Duke’s
14. In August 2014, Duke and Calpine instructions. Calpine ceased to make
IV. WAITING PERIOD any significant competitive decisions for
REQUIREMENTS OF THE HSR ACT reached an agreement for Duke to
purchase Osprey. The parties Osprey.
11. The HSR Act requires parties to 18. The combination of the tolling
memorialized their agreement in an
file a notification with the Federal Trade agreement and the asset purchase
August 25, 2014 term sheet. The
Commission and the Department of agreement transferred market risk (or
structure of the transaction included a
Justice and to observe a waiting period potential gain) of a change in the
tolling agreement to be put into effect
before consummating acquisitions of fortunes of Osprey’s business. Duke
until the closing of the acquisition.
voting securities or assets that exceed paid Calpine a fixed monthly fee plus a
Duke and Calpine executed the tolling
certain value thresholds. The required small amount to reimburse the plant’s
agreement on September 30, 2014, and
notification gives the federal antitrust variable operations and maintenance
it became effective the next day.
agencies prior notice of, and 15. Tolling agreements are relatively costs. Duke also assumed financial
information about, proposed common in the electricity industry, but responsibility for procuring natural gas,
transactions. The waiting period the circumstances surrounding Duke’s the plant’s primary input cost. Thus, it
provides the antitrust enforcement tolling agreement for the Osprey plant was Duke who gained the profit or loss
agencies with an opportunity to are not. Duke said in testimony to the from sale of the energy, and it was Duke
investigate and to seek an injunction to Florida Public Service Commission that who assumed all the risk that fuel prices
prevent harm from anticompetitive there was no separate rationale to enter would increase or that energy market
transactions. this tolling agreement independent of prices would fall. Calpine was no longer
12. The HSR Act requirements apply the acquisition. Duke was only exposed to any risk of changes in the
to a transaction if, as a result of the interested in the tolling agreement as a fuel or energy markets.
transaction, the acquirer will ‘‘hold’’ 19. Months after the tolling agreement
bridge to the acquisition of the plant
assets or voting securities valued above was executed and Duke had taken
itself. As a Duke executive testified, the
the thresholds. Section 801(c)(1) of the beneficial ownership of Osprey, Duke
tolling agreement was a ‘‘mechanism to
Premerger Notification Rules, 16 CFR submitted a notification and report form
transfer the acquisition of the plant to
800 et seq., defines ‘‘hold’’ to mean to pursuant to the HSR Act concerning its
[Duke].’’ Duke insisted that it was only
have ‘‘beneficial ownership.’’ An intent to acquire the Osprey plant,
willing to enter into a tolling agreement
acquiring person may prematurely valued at approximately $166 million.
in combination with an acquisition
obtain beneficial ownership of assets by, On February 27, 2015, the antitrust
agreement, and only if Duke had the
among other things, assuming the risk or agencies terminated the HSR waiting
right to terminate the tolling agreement
potential benefit of changes in the value period. Duke had beneficial ownership
without penalty in the event that FERC
of the relevant assets and exercising of Osprey for the entire waiting period.
rejected the acquisition.
control over day-to-day business 16. The tolling agreement was VI. VIOLATION OF SECTION 7A OF
decisions of the acquired person’s designed to smooth approval by FERC THE CLAYTON ACT
business before the end of the HSR by enabling Duke to argue that it 20. Plaintiff alleges and incorporates
waiting period. This conduct, ‘‘already controls’’ Osprey through the paragraphs 1 through 19 as if set forth
sometimes referred to as ‘‘gun jumping,’’ tolling agreement and thus that no new fully herein.
violates Section 7A of the Clayton Act. harm could come from permitting Duke 21. Duke’s acquisition of Osprey was
13. Section 7A(g)(1) of the Clayton to acquire Osprey outright. Under the subject to Section 7A premerger
Act, 15 U.S.C. 18a(g)(1), states that any tolling agreement, Duke was responsible notification and waiting-period
person, or any officer, director, or for determining the amount of power requirements.
partner thereof, who fails to comply that would be generated at Osprey, and 22. Duke obtained beneficial
with any provision of the HSR Act is for purchasing and delivering all the ownership of Osprey prior to making its
liable to the United States for a civil fuel necessary to produce that power. required premerger notification and
penalty for each day during which the Duke was then entitled to receive all of observing the applicable waiting period
person is in violation. Beginning the electricity generated by the facility. in violation of Section 7A.
February 10, 2009, the maximum 17. After entering into the tolling 23. Accordingly, Defendant was
amount of civil penalty was increased to agreement, Duke began to make all continuously in violation of the
$16,000 per day, pursuant to the Debt competitively significant decisions for requirements of the HSR Act each day
Collection Improvement Act of 1996, the Osprey plant. Each day, Duke sent beginning on October 1, 2014, until the
Pub. L. 104–134, 31001(s) (amending hour-by-hour instructions to Osprey waiting period was terminated on
the Federal Civil Penalties Inflation personnel directing them to produce a February 27, 2015.
Adjustment Act of 1990, 28 U.S.C. 2461 certain amount of power. Duke also
note), and Federal Trade Commission arranged to procure and deliver the VII. REQUEST FOR RELIEF
Rule 1.98, 16 CFR 1.98, 74 FR 857 (Jan. necessary natural gas to Osprey— Wherefore, Plaintiff requests:
9, 2009). Pursuant to the Federal Civil functions previously performed by (a) that the Court adjudge and decree
Penalties Inflation Adjustment Act Calpine. Duke also arranged for all of that Defendant violated the HSR Act
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Improvements Act of 2015, Pub. L. 114– the power generated at Osprey to be and was in violation during the period
74, 701 (further amending the Federal transmitted to its destination. In other of 150 days beginning on October 1,
Civil Penalties Inflation Adjustment Act words, Duke decided when and how 2014, and ending on February 27, 2015;
of 1990), and Federal Trade Commission much natural gas would be delivered to (b) order that Defendant pay to the
Rule 1.98, 16 CFR 1.98, 81 FR 42,476 the plant and decided when and how United States an appropriate civil
(June 30, 2016), the maximum amount much energy would be produced by the penalty as provided under Section
of civil penalty was increased to plant. Duke was free to make all of these 7A(g)(1) of the Clayton Act, 15 U.S.C.
$40,000 per day. decisions based on its own business 18(a)(g)(1), and 16 CFR 1.98(a);
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![8848 Federal Register / Vol. 82, No. 19 / Tuesday, January 31, 2017 / Notices
(c) that the Court award the Plaintiff The Complaint alleges that Duke the plant’s business. Duke, for example,
its costs of this suit; and, violated Section 7A of the Clayton Act, assumed control of purchasing all the
(d) that the Court order such other 15 U.S.C. 18a, commonly known as the fuel for the plant, arranging for delivery
and further relief as the Court may deem Hart-Scott-Rodino Antitrust of that fuel, and arranging for
just and proper. Improvements Act of 1976 (the ‘‘HSR transmission of all energy generated.
Dated: January 18, 2017. Act’’). Duke retained the profit (or loss) from
Respectfully Submitted, The Complaint alleges that Duke the difference between the price of the
acquired Osprey, through a transaction energy generated at Osprey and the cost
/s/ lllllllllllllllllll
in excess of the then-applicable to generate the energy, bearing all the
Renata B. Hesse (D.C. Bar #466107),
statutory thresholds, without making risk of changes in the market price for
Acting Assistant Attorney General.
the required HSR Act filings with the fuel and the market price for energy.
/s/ lllllllllllllllllll
agencies and without observing the Based on these potential risks and
Jonathan B. Sallet, rewards, Duke decided exactly how
required HSR Act waiting period. The
Deputy Assistant Attorney General for
HSR Act provides that ‘‘no person shall much energy would be generated by the
Litigation.
acquire, directly or indirectly, any plant on an hour-by-hour basis, and
/s/ lllllllllllllllllll
voting securities of any person’’ relayed those detailed instructions each
Patricia A. Brink, day to plant personnel. Thus, from the
Director of Civil Enforcement.
exceeding certain thresholds until that
person has filed pre-acquisition moment the tolling agreement went into
/s/ lllllllllllllllllll effect, Osprey ceased to be an
notification and report forms with the
Robert A. Potter, Department of Justice and the Federal independent competitive presence in
Chief, Legal Policy Section. the market for generating electricity for
Trade Commission (collectively, the
/s/ lllllllllllllllllll ‘‘federal antitrust agencies’’ or Florida consumers. The tolling
Caroline E. Laise, ‘‘agencies’’) and the post-filing waiting agreement was entered months before
Assistant Chief, Transportation, Energy & Duke made its required HSR filing for
period has expired. 15 U.S.C. 18a(a). A
Agriculture Section. the acquisition of Osprey.
key purpose of the notification and
/s/ lllllllllllllllllll Duke made clear in testimony filed
waiting period is to protect consumers
Robert A. Lepore, and competition from potentially with federal and state regulators that it
Assistant Chief, Transportation, Energy & only ever considered the tolling
Agriculture Section.
anticompetitive transactions by
providing the agencies an opportunity agreement in conjunction with an
/s/ lllllllllllllllllll agreement to acquire Osprey. As Duke
to conduct an antitrust review of
Jade A. Eaton (D.C. Bar #939629) proposed transactions before they are explained in its application to the
Njeri Mugure, Federal Energy Regulatory Commission
Trial Attorneys, Transportation, Energy & consummated.
At the same time the Complaint was (‘‘FERC’’) for permission to acquire the
Agriculture Section. plant, Duke’s negotiation with Calpine
/s/ lllllllllllllllllll
filed, the United States also filed a
Stipulation and proposed Final ‘‘led to an agreement in principle
Kara B. Kuritz, whereby [Duke] would purchase power
Attorney Advisor, Legal Policy Section.
Judgment. Under the proposed Final
Judgment, which is explained more from Osprey Energy Center under a two-
U.S. Department of Justice, Antitrust year power purchase agreement [the
Division, 450 Fifth Street NW., Suite 8000, fully below, Duke is required to pay a
civil penalty to the United States in the Tolling Agreement] and then purchase
Washington, DC 20530, Phone: (202) 307– the facility itself.’’
6316, Facsimile: (202) 307–2784, Email: amount of $600,000. The proposed Final
jade.eaton@usdoj.gov. Judgment is designed to deter HSR Act B. Duke’s Alleged Violation of Section
violations by Duke and similarly 7A
UNITED STATES DISTRICT COURT situated acquirers.
FOR THE DISTRICT OF COLUMBIA Before the HSR Act was enacted, the
The United States and the Defendant
agencies were often forced to investigate
United States Of America, Plaintiff, have stipulated that the proposed Final
anticompetitive mergers that had
v. Judgment may be entered after
Duke Energy Corporation, Defendant. already been consummated without
compliance with the APPA. Entry of the public notice. In those situations, the
Case No.: 1:17–cv–00116 proposed Final Judgment would
Judge: Beryl A. Howell agencies’ only recourse was to sue to
terminate this action, except that the unwind the parties’ merger. During this
Filed: 01/18/2017 Court would retain jurisdiction to time, the loss of competition continued
COMPETITIVE IMPACT STATEMENT construe, modify, or enforce the to harm consumers, and if the court
provisions of the proposed Final ultimately found that the merger was
Plaintiff United States of America
Judgment and punish violations thereof. illegal, effective relief was often
(‘‘United States’’), pursuant to Section
2(b) of the Antitrust Procedures and II. DESCRIPTION OF THE EVENTS impossible to achieve. The HSR Act
Penalties Act (‘‘APPA’’), 15 U.S.C. GIVING RISE TO THE ALLEGED addressed these problems and
16(b)–(h), files this Competitive Impact VIOLATION strengthened antitrust enforcement by
Statement relating to the proposed Final providing the antitrust agencies the
A. Duke’s Acquisition of Osprey Energy ability to investigate certain large
Judgment submitted for entry in this
Center From Calpine acquisitions before they are
civil antitrust proceeding.
In August 2014, Duke agreed to terms consummated. In particular, the HSR
asabaliauskas on DSK3SPTVN1PROD with NOTICES
I. NATURE AND PURPOSE OF THE to purchase Osprey from Calpine, a Act prohibits certain acquiring parties
PROCEEDING competing seller of wholesale electricity from undertaking an acquisition before
On January 18, 2017, the United nationally and in Florida. As part of the required filings are made with the
States filed a Complaint against acquisition, Duke entered into a ‘‘tolling antitrust agencies and a prescribed
Defendant Duke Energy Corporation agreement’’ whereby Duke immediately waiting period expires or is terminated.
(‘‘Duke’’), related to Duke’s acquisition began exercising control over Osprey’s The HSR Act requirements apply to a
of the Osprey Energy Center (‘‘Osprey’’) output, and immediately began reaping transaction if, as a result of the
from Calpine Corporation (‘‘Calpine’’). the day-to-day profits and losses from transaction, the acquirer will ‘‘hold’’
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![8850 Federal Register / Vol. 82, No. 19 / Tuesday, January 31, 2017 / Notices
this case, the United States is satisfied the mechanism to enforce the final match the alleged violations.’’ SBC
that the proposed civil penalty is judgment are clear and manageable.’’).3 Commc’ns, 489 F. Supp. 2d at 17; see
sufficient to address the violation As the United States Court of Appeals also U.S. Airways, 38 F. Supp. 3d at 75
alleged in the Complaint and to deter for the District of Columbia Circuit has (noting that a court should not reject the
violations by similarly situated entities held, a court conducting an inquiry proposed remedies because it believes
in the future, without the time, expense, under the APPA may consider, among others are preferable); Microsoft, 56 F.3d
and uncertainty of a full trial on the other things, the relationship between at 1461 (noting the need for courts to be
merits. the remedy secured and the specific ‘‘deferential to the government’s
allegations set forth in the government’s predictions as to the effect of the
VII. STANDARD OF REVIEW UNDER proposed remedies’’); United States v.
complaint, whether the decree is
THE APPA FOR THE PROPOSED Archer-Daniels-Midland Co., 272 F.
sufficiently clear, whether enforcement
FINAL JUDGMENT Supp. 2d 1, 6 (D.D.C. 2003) (noting that
mechanisms are sufficient, and whether
The APPA requires that proposed the decree may positively harm third the court should grant due respect to the
consent judgments in antitrust cases parties. See Microsoft, 56 F.3d at 1458– government’s prediction as to the effect
brought by the United States be subject 62. With respect to the adequacy of the of proposed remedies, its perception of
to a sixty (60) day comment period, after relief secured by the decree, a court may the market structure, and its views of
which the court shall determine not ‘‘engage in an unrestricted the nature of the case).
whether entry of the proposed Final evaluation of what relief would best Courts have greater flexibility in
Judgment is ‘‘in the public interest.’’ 15 serve the public.’’ United States v. BNS, approving proposed consent decrees
U.S.C. 16(e)(1). In making that Inc., 858 F.2d 456, 462 (9th Cir. 1988) than in crafting their own decrees
determination, the court, in accordance (quoting United States v. Bechtel Corp., following a finding of liability in a
with the statute as amended in 2004, is 648 F.2d 660, 666 (9th Cir. 1981)); see litigated matter. ‘‘[A] proposed decree
required to consider: also Microsoft, 56 F.3d at 1460–62; must be approved even if it falls short
United States v. Alcoa, Inc., 152 F. of the remedy the court would impose
(A) The competitive impact of such on its own, as long as it falls within the
judgment, including termination of alleged Supp. 2d 37, 40 (D.D.C. 2001); InBev,
2009 U.S. Dist. LEXIS 84787, at *3. range of acceptability or is ‘within the
violations, provisions for enforcement and
modification, duration of relief sought, Courts have held that: reaches of public interest.’ ’’ United
anticipated effects of alternative remedies States v. Am. Tel. & Tel. Co., 552 F.
[t]he balancing of competing social and Supp. 131, 151 (D.D.C. 1982) (citations
actually considered, whether its terms are political interests affected by a proposed
ambiguous, and any other competitive omitted) (quoting United States v.
antitrust consent decree must be left, in the
considerations bearing upon the adequacy of first instance, to the discretion of the Gillette Co., 406 F. Supp. 713, 716 (D.
such judgment that the court deems Attorney General. The court’s role in Mass. 1975)), aff’d sub nom., Maryland
necessary to a determination of whether the protecting the public interest is one of v. United States, 460 U.S. 1001 (1983);
consent judgment is in the public interest; insuring that the government has not see also U.S. Airways, 38 F. Supp. 3d at
and breached its duty to the public in consenting 76 (noting that room must be made for
(B) the impact of entry of such judgment to the decree. The court is required to the government to grant concessions in
upon competition in the relevant market or determine not whether a particular decree is
markets, upon the public generally and the negotiation process for settlements
the one that will best serve society, but (citing Microsoft, 56 F.3d at 1461));
individuals alleging specific injury from the whether the settlement is ‘‘within the reaches
violations set forth in the complaint United States v. Alcan Aluminum Ltd.,
of the public interest.’’ More elaborate
including consideration of the public benefit, 605 F. Supp. 619, 622 (W.D. Ky. 1985)
requirements might undermine the
if any, to be derived from a determination of effectiveness of antitrust enforcement by (approving the consent decree even
the issues at trial. consent decree. though the court would have imposed a
greater remedy). To meet this standard,
Id. § 16(e)(1)(A) & (B). In considering Bechtel, 648 F.2d at 666 (emphasis the United States ‘‘need only provide a
these statutory factors, the court’s added) (citations omitted).4 In factual basis for concluding that the
inquiry is necessarily a limited one, as determining whether a proposed settlements are reasonably adequate
the government is entitled to ‘‘broad settlement is in the public interest, a remedies for the alleged harms.’’ SBC
discretion to settle with the defendant district court ‘‘must accord deference to Commc’ns, 489 F. Supp. 2d at 17.
within the reaches of the public the government’s predictions about the Moreover, the court’s role under the
interest.’’ United States v. Microsoft efficacy of its remedies, and may not APPA is limited to reviewing the
Corp., 56 F.3d 1448, 1461 (D.C. Cir. require that the remedies perfectly remedy in relationship to the violations
1995); see generally United States v. that the United States has alleged in its
SBC Commc’ns, Inc., 489 F. Supp. 2d 1 3 The 2004 amendments substituted ‘‘shall’’ for
Complaint, and does not authorize the
(D.D.C. 2007) (assessing public interest ‘‘may’’ in directing relevant factors for court to
court to ‘‘construct [its] own
standard under the Tunney Act); United consider and amended the list of factors to focus on
competitive considerations and to address hypothetical case and then evaluate the
States v. U.S. Airways Group, Inc., 38 F. potentially ambiguous judgment terms. Compare 15 decree against that case.’’ Microsoft, 56
Supp. 3d 69, 75 (D.D.C. 2014) (noting U.S.C. 16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); F.3d at 1459; see also U.S. Airways, 38
the court has broad discretion of the see also SBC Commc’ns, 489 F. Supp. 2d at 11
F. Supp. 3d at 75 (noting that the court
adequacy of the relief at issue); United (concluding that the 2004 amendments ‘‘effected
minimal changes’’ to Tunney Act review). must simply determine whether there is
States v. InBev N.V./S.A., No. 08–1965 4 Cf. BNS, 858 F.2d at 464 (holding that the a factual foundation for the
(JR), 2009–2 Trade Cas. (CCH) ¶ 76,736, government’s decisions such that its
asabaliauskas on DSK3SPTVN1PROD with NOTICES
court’s ‘‘ultimate authority under the [APPA] is
2009 U.S. Dist. LEXIS 84787, at *3, limited to approving or disapproving the consent conclusions regarding the proposed
(D.D.C. Aug. 11, 2009) (noting that the decree’’); United States v. Gillette Co., 406 F. Supp.
713, 716 (D. Mass. 1975) (noting that, in this way,
settlements are reasonable); InBev, 2009
court’s review of a consent judgment is the court is constrained to ‘‘look at the overall U.S. Dist. LEXIS 84787, at *20
limited and only inquires ‘‘into whether picture not hypercritically, nor with a microscope, (concluding that ‘‘the ‘public interest’ is
the government’s determination that the but with an artist’s reducing glass’’). See generally not to be measured by comparing the
proposed remedies will cure the Microsoft, 56 F.3d at 1461 (discussing whether ‘‘the
remedies [obtained in the decree are] so
violations alleged in the complaint
antitrust violations alleged in the inconsonant with the allegations charged as to fall against those the court believes could
complaint was reasonable, and whether outside of the ‘reaches of the public interest’ ’’). have, or even should have, been
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![Federal Register / Vol. 82, No. 19 / Tuesday, January 31, 2017 / Notices 8851
alleged’’). Because the ‘‘court’s authority impact statement and response to public 134 § 31001(s) (amending the Federal
to review the decree depends entirely comments alone. U.S. Airways, 38 F. Civil Penalties Inflation Adjustment Act
on the government’s exercising its Supp. 3d at 76. of 1990, 28 U.S.C. 2461), and Federal
prosecutorial discretion by bringing a Trade Commission Rule 1.98, 16 CFR
VIII. DETERMINATIVE DOCUMENTS
case in the first place,’’ it follows that 1.98, 61 FR 54549 (Oct. 21, 1996), and
‘‘the court is only authorized to review There are no determinative materials 74 FR 857 (Jan. 9, 2009), and the Federal
the decree itself,’’ and not to ‘‘effectively or documents within the meaning of the Civil Penalties Inflation Adjustment Act
redraft the complaint’’ to inquire into APPA that were considered by the Improvements Act of 2015, Pub. L. 114–
other matters that the United States did United States in formulating the 74, 701 (further amending the Federal
not pursue. Microsoft, 56 F.3d at 1459– proposed Final Judgment. Civil Penalties Inflation Adjustment Act
60. As this Court confirmed in SBC Date: January 18, 2017. of 1990), and Federal Trade Commission
Communications, courts ‘‘cannot look Respectfully Submitted, Rule 1.98, 16 CFR 1.98, 81 FR 42,476
beyond the complaint in making the lll /s/ lll (June 30, 2016). Defendant is hereby
public interest determination unless the ordered to pay a civil penalty in the
Robert A. Lepore,
complaint is drafted so narrowly as to amount of six hundred thousand dollars
make a mockery of judicial power.’’ 489 U.S. Department of Justice, Antitrust
Division, 450 Fifth Street NW., Suite 8000, ($600,000). Payment of the civil penalty
F. Supp. 2d at 15. ordered shall be made by wire transfer
Washington, DC 20530, Phone: (202) 532–
In its 2004 amendments, Congress of funds or cashier’s check. If the
4928, Facsimile: (202) 307–2784, Email:
made clear its intent to preserve the robert.lepore@usdoj.gov. payment is made by wire transfer,
practical benefits of utilizing consent Defendant shall contact Janie Ingalls of
decrees in antitrust enforcement, adding IN THE UNITED STATES DISTRICT
COURT FOR THE DISTRICT OF the Antitrust Division’s Antitrust
the unambiguous instruction that
COLUMBIA Documents Group at (202) 514–2481 for
‘‘[n]othing in this section shall be
instructions before making the transfer.
construed to require the court to United States of America, Plaintiff, v. Duke If the payment is made by cashier’s
conduct an evidentiary hearing or to Energy Corporation, Defendant.
require the court to permit anyone to check, the check shall be made payable
Case No.: 1:17–cv–00116 to the United States Department of
intervene.’’ 15 U.S.C. 16(e)(2); see also Judge: Beryl A. Howell
U.S. Airways, 38 F. Supp. 3d at 76 Justice and delivered to: Janie Ingalls,
Filed: 01/18/2017
(indicating that a court is not required United States Department of Justice,
to hold an evidentiary hearing or to [PROPOSED] FINAL JUDGMENT Antitrust Division, Antitrust Documents
permit intervenors as part of its review WHEREAS, Plaintiff, United States of Group, 450 Fifth Street NW., Suite 1024,
under the Tunney Act). This language America, filed this action on January 18, Washington, DC 20530.
codified what Congress intended when 2017, alleging that Defendant, Duke Defendant shall pay the full amount
it enacted the Tunney Act in 1974, as Energy Corporation, violated Section 7A of the civil penalty within thirty (30)
the author of this legislation, Senator of the Clayton Act, 15 U.S.C. 18a, days of entry of this Final Judgment. In
Tunney, explained: ‘‘The court is commonly known as the Hart-Scott- the event of a default or delay in
nowhere compelled to go to trial or to Rodino Antitrust Improvements Act of payment, interest at the rate of eighteen
engage in extended proceedings which 1976, and the United States and (18) percent per annum shall accrue
might have the effect of vitiating the Defendant, by their respective attorneys, thereon from the date of default to the
benefits of prompt and less costly have consented to the entry of this Final date of payment.
settlement through the consent decree Judgment without trial or adjudication
process.’’ 119 Cong. Rec. 24,598 (1973) of any issue of fact or law and without III. COSTS
(statement of Sen. Tunney). Rather, the this Final Judgment constituting any Each party shall bear its own costs of
procedure for the public interest evidence against or an admission by the this action.
determination is left to the discretion of Defendant with respect to any issue of
the court, with the recognition that the fact or law; IV. PUBLIC INTEREST
court’s ‘‘scope of review remains NOW THEREFORE, before any DETERMINATION
sharply proscribed by precedent and the testimony is taken, without trial or
nature of Tunney Act proceedings.’’ adjudication of any issue of fact or law, The entry of this Final Judgment is in
SBC Commc’ns, 489 F. Supp. 2d at 11.5 and upon consent of the parties, it is the public interest. The parties have
A court can make its public interest ORDERED, ADJUDGED, AND complied with the requirements of the
determination based on the competitive DECREED: Antitrust Procedures and Penalties Act,
15 U.S.C. 16, including making copies
5 See also United States v. Enova Corp., 107 F. I. JURISDICTION available to the public of this Final
Supp. 2d 10, 17 (D.D.C. 2000) (noting that the The Court has jurisdiction over the Judgment, the Competitive Impact
‘‘Tunney Act expressly allows the court to make its
public interest determination on the basis of the subject matter of and each of the parties Statement, and any comments thereon
competitive impact statement and response to to this action. The Complaint states a and the United States’ responses to
comments alone’’); United States v. Mid-Am. claim upon which relief may be granted comments. Based upon the record
Dairymen, Inc., No. 73–CV–681–W–1, 1977–1 Trade against the Defendant under Section 7A
Cas. (CCH) ¶ 61,508, at 71,980, *22 (W.D. Mo. 1977)
before the Court, which includes the
(‘‘Absent a showing of corrupt failure of the of the Clayton Act, 15 U.S.C. § 18a. Competitive Impact Statement and any
asabaliauskas on DSK3SPTVN1PROD with NOTICES
government to discharge its duty, the Court, in comments and response to comments
making its public interest finding, should . . . II. CIVIL PENALTY
filed with the Court, entry of this Final
carefully consider the explanations of the Judgment is hereby entered in this
government in the competitive impact statement Judgment is in the public interest.
and its responses to comments in order to matter in favor of Plaintiff United States
Date: llllllllllllllllll
determine whether those explanations are of America and against Defendant Duke
reasonable under the circumstances.’’); S. Rep. No. Energy Corporation, and pursuant to Court approval subject to procedures of
93–298, at 6 (1973) (‘‘Where the public interest can Antitrust Procedures and Penalties Act, 15
be meaningfully evaluated simply on the basis of
Section 7A(g)(1) of the Clayton Act, 15
U.S.C. 18a(g)(1), the Debt Collection U.S.C. 16
briefs and oral arguments, that is the approach that
should be utilized.’’). Improvement Act of 1996, Pub. L. 104– lllllllllllllllllll
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![8852 Federal Register / Vol. 82, No. 19 / Tuesday, January 31, 2017 / Notices
United States District Judge Pennsylvania Ave., N.W., Suite 800W, Annapolis Junction, MD 20701. Colfax
Washington, D.C. 20037, Defendant. is engaged in commerce, or in activities
[FR Doc. 2017–02026 Filed 1–30–17; 8:45 am]
Case No.: 1:17–cv–00103, Judge: Christopher affecting commerce, within the meaning
BILLING CODE 4410–11–P
R. Cooper, Filed: 01/17/2017 of Section 1 of the Clayton Act, 15
COMPLAINT FOR CIVIL PENALTIES U.S.C. 12, and Section 7A(a)(1) of the
DEPARTMENT OF JUSTICE FOR FAILURE TO COMPLY WITH THE Clayton Act, 15 U.S.C. 18a(a)(1). At all
PREMERGER REPORTING AND times relevant to this complaint, Colfax
Antitrust Division WAITING REQUIREMENTS OF THE had sales or assets in excess of $156.3
HART-SCOTT-RODINO ACT million.
United States v. Mitchell P. Rales; 6. Danaher is a corporation organized
Proposed Final Judgment and The United States of America, under the laws of Delaware with its
Competitive Impact Statement Plaintiff, by its attorneys, acting under principal place of business at 2200
the direction of the Attorney General of Pennsylvania Avenue, N.W., Suite
Notice is hereby given pursuant to the the United States and at the request of 800W, Washington, D.C. 20037. Danaher
Antitrust Procedures and Penalties Act, the Federal Trade Commission, brings is engaged in commerce, or in activities
15 U.S.C. 16(b)–(h), that a proposed this civil antitrust action to obtain affecting commerce, within the meaning
Final Judgment, Stipulation, and monetary relief in the form of civil of Section 1 of the Clayton Act, 15
Competitive Impact Statement have penalties against Defendant Mitchell P. U.S.C. 12, and Section 7A(a)(1) of the
been filed with the United States Rales (‘‘Rales’’). Plaintiff alleges as Clayton Act, 15 U.S.C. 18a(a)(1). At all
District Court for the District of follows: times relevant to this complaint,
Columbia in United States of America v. Danaher had sales or assets in excess of
Mitchell P. Rales, Civil Action No. 1:17– NATURE OF THE ACTION
$156.3 million.
cv–00103. On January 17, 2017, the 1. Rales violated the notice and
United States filed a Complaint alleging waiting period requirements of the Hart- THE HART-SCOTT-RODINO ACT AND
that Mitchell P. Rales violated the notice Scott-Rodino Antitrust Improvements RULES
and waiting period requirements of the Act of 1976, 15 U.S.C. 18a (‘‘HSR Act’’ 7. The HSR Act requires certain
Hart-Scott-Rodino Antitrust or ‘‘Act’’), with respect to the acquiring persons and certain persons
Improvements Act of 1976, 15 U.S.C. acquisitions of voting securities of whose voting securities or assets are
18a, with respect to his acquisitions of Colfax Corporation (‘‘Colfax’’) and acquired to file notifications with the
voting securities of Colfax Corporation Danaher Corporation (‘‘Danaher’’). federal antitrust agencies and to observe
and Danaher Corporation. The proposed a waiting period before consummating
JURISDICTION AND VENUE certain acquisitions of voting securities
Final Judgment, filed at the same time
as the Complaint, requires Mitchell P. 2. This Court has jurisdiction over the or assets. 15 U.S.C. 18a(a) and (b). These
Rales to pay a civil penalty of $720,000. subject matter of this action pursuant to notification and waiting period
Copies of the Complaint, proposed Section 7A(g) of the Clayton Act, 15 requirements apply to acquisitions that
Final Judgment, and Competitive Impact U.S.C. 18a(g), and pursuant to 28 U.S.C. meet the HSR Act’s thresholds. As of
Statement are available for inspection 1331, 1337(a), 1345, and 1355, and over February 1, 2001, the size of transaction
on the Antitrust Division’s Web site at the Defendant by virtue of Defendant’s threshold was $50 million. In addition,
http://www.justice.gov/atr and at the consent, in the Stipulation relating there is a separate filing requirement for
Office of the Clerk of the United States hereto, to the maintenance of this action transactions in which the acquirer will
District Court for the District of and entry of the Final Judgment in this hold voting securities in excess of $100
Columbia. Copies of these materials may District. million, and for transactions in which
be obtained from the Antitrust Division 3. Venue is properly based in this the acquirer will hold voting securities
upon request and payment of the District by virtue of Defendant’s in excess of $500 million. One person
copying fee set by Department of Justice principal office and place of business involved in the transaction had to have
regulations. and Defendant’s consent, in the sales or assets in excess of $10 million,
Stipulation relating hereto, to the and the other person had to have sales
Public comment is invited within 60
maintenance of this action and entry of or assets in excess of $100 million.
days of the date of this notice. Such
the Final Judgment in this District. Since 2004, the size of transaction and
comments, including the name of the
size of person thresholds have been
submitter, and responses thereto, will be THE DEFENDANT adjusted annually.
posted on the Antitrust Division’s Web 4. Defendant Rales is a natural person 8. The HSR Act’s notification and
site, filed with the Court, and, under with his principal office and place of waiting period requirements are
certain circumstances, published in the business at 2200 Pennsylvania Avenue, intended to give the federal antitrust
Federal Register. Comments should be N.W., Suite 800W, Washington, D.C. agencies prior notice of, and
directed to Daniel P. Ducore, Special 20037. Rales is engaged in commerce, or information about, proposed
Attorney, United States, c/o Federal in activities affecting commerce, within transactions. The waiting period is also
Trade Commission, 600 Pennsylvania the meaning of Section 1 of the Clayton intended to provide the federal antitrust
Avenue NW., CC–8416, Washington, DC Act, 15 U.S.C. 12, and Section 7A(a)(1) agencies with an opportunity to
20580 (telephone: 202–326–2526; email: of the Clayton Act, 15 U.S.C. 18a(a)(1). investigate a proposed transaction and
dducore@ftc.gov). to successfully seek an injunction to
asabaliauskas on DSK3SPTVN1PROD with NOTICES
At all times relevant to this complaint,
Patricia A. Brink, Rales had sales or assets in excess of prevent the consummation of a
Director of Civil Enforcement. $15.6 million. transaction that may violate the antitrust
laws.
UNITED STATES DISTRICT COURT OTHER ENTITIES 9. Pursuant to Section (d)(2) of the
FOR THE DISTRICT OF COLUMBIA 5. Colfax is a corporation organized HSR Act, 15 U.S.C. 18a(d)(2), rules were
UNITED STATES OF AMERICA, c/o under the laws of Delaware with its promulgated to carry out the purposes
Department of Justice, Washington, D.C. principal place of business at 420 of the HSR Act (the ‘‘HSR Rules’’). See
20530, Plaintiff, v. Mitchell P. Rales, 2200 National Business Parkway, 5th Floor, 16 CFR 801–03. The HSR Rules, among
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Document Created: 2017-01-31 00:20:07
Document Modified: 2017-01-31 00:20:07
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| Dates | January 18, 2017. | |
| FR Citation | 82 FR 8845 |
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