Parties Violate HSR Act and Pay $1.8 Million “Gun-Jumping” Fine

In another of a series of enforcement actions over pre-closing activities by parties to a merger, the Department of Justice (DOJ) last Thursday charged two companies with violating the Hart-Scott-Rodino Act (HSR Act) by giving the buyer improper influence over the seller’s business before the HSR Act waiting period expired. The parties settled the lawsuit by agreeing to pay a fine of $1.8 million.

In general, the HSR Act requires parties meeting certain size requirements to file a pre-merger notification with the DOJ and the Federal Trade Commission (FTC) and to observe the applicable waiting period prior to closing transactions over a certain value. “Gun-jumping” occurs when the buyer tries to exercise control or “beneficial ownership” of a seller before expiration of the waiting period.

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