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From Antitrust Law Daily, January 18, 2017

Justice Department reaches settlements with Duke Energy, two investors over HSR violations

By Linda O’Brien, J.D., LL.M.

Duke Energy Corporation has settled claims that the company violated the reporting and waiting period requirements of the Hart-Scott-Rodino (HSR) Act after agreeing to purchase the Osprey Energy Center, the Justice Department announced today. The proposed settlement requires Duke to pay $600,000 in civil penalties to resolve the claims (U.S. v. Duke Energy Corporation, Case No. 1:17-cv-00116).

In a separation actions, hedge fund investor Ahmet H. Okumus has agreed to pay $180,000 in civil penalties to resolve FTC charges that he violated the Hart-Scott-Rodino (HSR) Act when he acquired voting securities of Group, Inc., in 2016, the FTC announced yesterday (U.S. v. Okumus, Case No. 1:17-cv-00104).

Additionally, entrepreneur Mitchell P. Rales has agreed to pay under a proposed settlement $720,000 in civil penalties to resolve FTC allegations that he violated the HSR Act by failing to report his purchases of voting securities in two industrial companies, Colfax Corporation and Danaher Corporation (U.S. v. Rales, Case No. 1:17-cv-00103).

Duke. Duke generates and sells electric power on a retail and/or wholesale basis throughout the U.S. When Duke agreed to purchase the Osprey Energy Center (a combined-cycle natural-gas-fired electrical generating plant in Auburndale, Florida) from Calpine Corporation, it also entered into a "tolling agreement" that immediately gave Duke control over Osprey’s output and the right to receive the day-to-day profits and losses from Osprey’s business.

According to the complaint filed by the Justice Department, Duke took control of Osprey’s business before filing the required HSR notifications and waiting for the expiration of the mandatory waiting period for antitrust review.

Okumus. In another complaint, the FTC alleged that Okumus had violated the HSR Act by exceeding the filing threshold and failing to file as required when he bought shares of through his hedge fund, Okumus Opportunistic Value Fund, Ltd. According to the complaint, he was in violation of the HSR Act from June 27, 2016, when he purchased the shares, to July 14, 2016, when he sold enough shares so that he did not exceed the threshold.

Although the Commission found his HSR violation to be inadvertent, it sought penalties because, as noted in the proposed consent decree, which is subject to court approval, this was Okumus’s second HSR violation in two years regarding After the first violation, the Commission advised Okumus that he was still "accountable for instituting an effective program to ensure full compliance with the Act’s requirements."

Rales. The FTC alleged that Rales had violated that HSR Act by failing to file as required when his wife purchased shares in Colfax in 2011. The shares, which are attributed to Rales under the applicable HSR Rules, were above the filing threshold. According to the FTC’s complaint, Rales was in violation of the HSR Act from 2011, when the shares were purchased, to 2016, when he made a corrective filing and observed the waiting period.

The complaint also alleged that, in 2008, Rales violated the HSR Act by buying shares of Danaher that exceeded the filing threshold and by failing to file. Rales was in violation of the HSR Act between 2008, when he bought the shares, and 2016, when he made a corrective filing and observed the waiting period.

Although Rales contended that the violations were inadvertent, the Commission sought penalties because Rales had paid civil penalties to settle an earlier HSR enforcement action brought by the Department of Justice in 1991.

The Justice Department filed the complaints and proposed orders in the U.S. District Court for the District of Columbia.

Companies: Group Inc.; Colfax Corp.; Danaher Corp.; Duke Energy Corporation; Calpine Corporation

MainStory: TopStory AcquisitionsMergers Antitrust AntitrustDivisionNews FederalTradeCommissionNews

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