Client Alert

$900,000 DOJ Antitrust Settlement Highlights Gun-Jumping Risk

January 28, 2010

Carl Sanchez

Last weeks $900,000 settlement between Smithfield Foods and the Antitrust Division of the U.S. Department of Justice (the DOJ) is a harsh reminder of the significant penalties parties to a merger may face for engaging in joint activities prior to clearing the pre-transaction notification process under the Hart Scott Rodino Antitrust Improvements Act of 1976 (the HSR Act). Under the HSR Act, parties to a covered transaction are prohibited from transferring a beneficial interest or any operational control from the seller to the buyer prior to receiving HSR Act clearance -- a violation known as gun-jumping, that carries a maximum fine of $16,000 per day. While this area of the law unfortunately remains murky, the Smithfield Foods settlement is clearly a government message that merger parties should be wary of testing the limits. Below is further detail on the Smithfield Foods settlement, and some general guidelines for merger parties to follow.

Click here for a PDF of the full text

Get In Touch With Us

Contact Us