Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Exelon Resolves Allegations of Order Violations in Merger Case, (Nov 15, 2012)
Organizations Mentioned:Constellation Energy Group, Inc. | Exelon | Skadden Arps
By Jeffrey May, J.D.
Exelon Corporation has agreed to pay $400,000 to resolve a civil contempt claim arising from alleged violations of orders entered in connection with its proposed acquisition of Constellation Energy Group. The payment to the United States represents disgorgement of profits gained through Exelon’s alleged violations and reimbursement to the Justice Department for the cost of its investigation. The Department of Justice announced the civil contempt claim and settlement on November 15 (U.S. v. Exelon Corp.).
In December 2011, the Justice Department approved the $7.9 billion merger of the electricity companies subject to the divesture of three electricity generating plants. A consent decree, resolving Justice Department concerns that the proposed transaction would substantially lessen competition in the provision of wholesale electricity in certain mid-Atlantic markets, was entered in May 2012 (2012-1 Trade Cases ¶77,911). The parties also had agreed to the terms of a Hold Separate Stipulation and Order, which placed restrictions on Exelon's conduct between the time Exelon closed its acquisition of Constellation and the time it completed the plant divestitures required by the consent decree. The order required Exelon, during this period, to bid certain of its electricity generating plants at or below cost to ensure that Exelon would not be able to raise market prices for electricity. In consenting to entry of the Hold Separate Order and the consent decree, Exelon specifically agreed to “take all steps necessary to comply” with its legal obligations.
According to the Justice Department’s civil contempt claim, Exelon inadvertently made prohibited above-cost offers. Upon discovering that the offers were made, Exelon notified the United States and market regulators of the offers, agreed with market regulators to return any incremental revenues Exelon had earned and to redress any market harm, and implement measures to ensure that no additional above-cost offers occurred. The Justice Department said that these efforts were taken into account in determining the disgorgement amount.
The case is Civil No. 1:11-cv-02276.
Steven C. Sunshine (Skadden, Arps, Slate, Meagher & Flom LLP) for Exelon Corp.
News: Antitrust AntitrustDivisionNews