Antitrust Law Daily Wrap Up, TOP STORY—Media mogul Barry Diller to pay $480,000 civil penalty over alleged HSR violations, (Jul 2, 2013)

By Jeffrey May, J.D.

For the second time in less than two weeks, the federal antitrust agencies have filed a civil antitrust lawsuit, alleging violations of the premerger notification requirements of the Hart-Scott-Rodino (HSR) Act. Today, a complaint was filed in the federal district court in Washington, D.C. against corporate investor Barry Diller for failing to submit the requisite HSR filings when he acquired shares of The Coca Cola Company between 2010 and 2012, even though the premerger reporting threshold had been met. At the same time, a proposed final judgment was filed with the court that would resolve the government's allegations against the media mogul (U.S. v. Diller, Case No. 1:13-cv-01002, FTC File No. 121 0179).

On November 1, 2010, Diller, a member of Coke's board of directors, acquired 120,000 shares of voting securities of Coke, the complaint alleged. As a result of the acquisition, Diller held Coke voting securities valued in excess of $63.4 million (the filing threshold for most of 2010). Between November 1, 2010, and April 26, 2012, Diller acquired an additional 605,000 shares of Coke voting securities. According to the complaint, each acquisition of Coke voting securities by Diller during this time period resulted in Diller holding a reportable amount of Coke voting securities. However, Diller did not file under the HSR Act prior to acquiring the Coke voting securities on November 1, 2010, or prior to making any of the additional acquisitions between November 1, 2010, and April 26, 2012. In addition, Diller did not file under the HSR Act prior to acquiring an additional 264,000 shares of Coke through open market purchases on April 27, 2012.

Eventually, Diller made corrective filings for the Coke voting securities he had acquired. However, he was allegedly in continuous violation of the HSR Act from November 1, 2010, through June 22, 2012, when the waiting period expired.

Diller did not qualify for an exception to the rules, the agencies alleged. Further, he had previously made a corrective filing in connection with the acquisition of voting securities of CitySearch Inc. in 1998. At that time, the government declined to seek penalties.

The maximum daily civil penalty for a violation is $16,000. Under the terms of the proposed final judgment, Diller would be required to pay a $480,000 civil penalty to settle the charges.

U.S. v. MacAndrews & Forbes Holdings Inc.

Yesterday, the federal district court in Washington, D.C. entered a final judgment in the other recent HSR filing case, which was announced on June 20. In that case, MacAndrews & Forbes Holdings Inc., a New York-based holding company wholly-owned by Ronald O. Perelman, was charged with failing to comply with HSR premerger notification requirements when it acquired voting securities of Scientific Games Corporation, a New York-based provider of lottery and gaming services, in July 2012. The final judgment imposed a $720,000 civil penalty on the holding company. MacAndrews also had previously made a corrective filing in connection with its acquisition of voting securities of SIGA Technologies Inc. in 2011, but was not charged with an HSR violation at that time (U.S. v. MacAndrews & Forbes Holdings Inc., Case No. 1:13-cv-00926, FTC File No. 121 0203).

Attorneys: Joseph D. Larson (Wachtell, Lipton, Rosen & Katz) for Barry Diller. Kenneth Libby, Department of Justice Antitrust Division. Robert B. Barnett (Williams & Connolly LLP) for MacAndrews & Forbes Holdings Inc.

Companies: Coca Cola Co.; MacAndrews & Forbes Holdings Inc.

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