United States v. Leucadia National Corporation; Proposed Final Judgment and Competitive Impact Statement, 25420-25425 [2016-09915]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 81, Number 82 (Thursday, April 28, 2016)]
[Notices]
[Pages 25420-25425]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-09915]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Leucadia National Corporation; Proposed Final 
Judgment and Competitive Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Stipulation, and Competitive Impact Statement have been filed with the 
United States District Court for the District of Columbia in United 
States of America v. Leucadia National Corporation, Civil Action No. 
1:15-cv-01547-RDM. On September 22, 2015, the United States filed a 
Complaint alleging that Leucadia National Corporation (``Leucadia'') 
violated the premerger notification and waiting period requirements of 
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 U.S.C. 
18a, with respect to its acquisition of voting securities of KCG 
Holdings, Inc. The proposed Final Judgment, filed at the same time as 
the Complaint, requires Leucadia to pay a civil penalty of $240,000.
    Copies of the Complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection on the Antitrust 
Division's Web site at https://www.justice.gov/atr and at the Office of 
the Clerk of the United States District Court for the District of 
Columbia. Copies of these materials may be obtained from the Antitrust 
Division upon request and payment of the copying fee set by Department 
of Justice regulations.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, including the name of the submitter, and 
responses thereto, will be posted on the Antitrust Division's Web site, 
filed with the Court, and, under certain circumstances, published in 
the Federal Register. Comments should be directed to Daniel P. Ducore, 
Special Attorney, c/o Federal Trade Commission, 600 Pennsylvania Avenue 
NW., CC-8416, Washington, DC 20580 (telephone: 202-326-2526; email: 
dducore@ftc.gov).

Patricia A. Brink,
Director of Civil Enforcement.

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

    UNITED STATES OF AMERICA, c/o Department of Justice, Washington, 
DC 20530, Plaintiff, v. LEUCADIA NATIONAL CORPORATION, 520 Madison 
Avenue, New York, NY 10022, Defendant.

CASE NO.: 1:15-cv-01547 JUDGE: Randolph D. Moss FILED: 09/22/2015

COMPLAINT FOR CIVIL PENALTIES FOR FAILURE TO COMPLY WITH THE PREMERGER 
REPORTING AND WAITING REQUIREMENTS OF THE HART-SCOTT RODINO ACT

    The United States of America, Plaintiff, by its attorneys, acting 
under the direction of the Attorney General of the United States and at 
the request of the Federal Trade Commission, brings this civil 
antitrust action to obtain monetary relief in the form of civil 
penalties against Defendant Leucadia National Corporation 
(``Leucadia''). Plaintiff alleges as follows:

NATURE OF THE ACTION

    1. Leucadia violated the notice and waiting period requirements of 
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 U.S.C. 18a 
(``HSR Act'' or ``Act''), with respect to the acquisition of voting 
securities of KCG Holdings, Inc. (``KCG'') in July 2013.

JURISDICTION AND VENUE

    2. This Court has jurisdiction over the subject matter of this 
action pursuant to
    Section 7A(g) of the Clayton Act, 15 U.S.C. 18a(g), and pursuant to 
28 U.S.C. 1331, 1337(a), 1345, and 1355 and over the Defendant by 
virtue of Defendant's consent, in the Stipulation relating hereto, to 
the maintenance of this action

[[Page 25421]]

and entry of the Final Judgment in this District.
    3. Venue is properly based in this District by virtue of 
Defendant's consent, in the Stipulation relating hereto, to the 
maintenance of this action and entry of the Final Judgment in this 
District.

THE DEFENDANT

    4. Defendant Leucadia is a corporation organized under the laws of 
Delaware with its principal office and place of business at 520 Madison 
Avenue, New York, NY 10022. Leucadia is engaged in commerce, or in 
activities affecting commerce, within the meaning of Section 1 of the 
Clayton Act, 15 U.S.C. 12, and Section 7A(a)(1) of the Clayton Act, 15 
U.S.C. 18a(a)(1). At all times relevant to this complaint, Leucadia had 
sales or assets in excess of $141.8 million. Leucadia is the ultimate 
parent entity of Jeffries, LLC (``Jeffries'').

OTHER ENTITIES

    5. KCG is a corporation organized under the laws of Delaware with 
its principal place of business at 545 Washington Boulevard, Jersey 
City, NJ 07310. KCG is engaged in commerce, or in activities affecting 
commerce, within the meaning of Section 1 of the Clayton Act, 15 U.S.C. 
12, and Section 7A(a)(1) of the Clayton Act, 15 U.S.C. 18a(a)(1). At 
all times relevant to this complaint, KCG had sale or assets in excess 
of $14.2 million.
    6. Goober Drilling LLC (``Goober'') is a limited liability company 
organized under the laws of Oklahoma with its principal place of 
business at 4905 S. Perkins Road, Stillwater, OK 74074. Goober is 
engaged in commerce, or in activities affecting commerce, within the 
meaning of Section 1 of the Clayton Act, 15 U.S.C. 12, and Section 
7A(a)(1) of the Clayton Act, 15 U.S.C. 18a(a)(1). At all times relevant 
to this complaint, Goober had sales or assets in excess of $12 million.

THE HART-SCOTT-RODINO ACT AND RULES

    7. The HSR Act requires certain acquiring persons and certain 
persons whose voting securities or assets are acquired to file 
notifications with the federal antitrust agencies and to observe a 
waiting period before consummating certain acquisitions of voting 
securities or assets. 15 U.S.C. 18a(a) and (b). These notification and 
waiting period requirements apply to acquisitions that meet the HSR 
Act's thresholds, which are adjusted annually. During most of 2013, the 
HSR Act's reporting and waiting period requirements applied to most 
transactions that would result in the acquiring person holding more 
than $70.9 million, and all transactions (regardless of the size of the 
acquiring or acquired persons) where the acquiring person would hold 
more than $283.6 million of the acquired person's voting securities 
and/or assets, except for certain exempted transactions.
    8. The HSR Act's notification and waiting period are intended to 
give the federal antitrust agencies prior notice of, and information 
about, proposed transactions. The waiting period is also intended to 
provide the federal antitrust agencies with an opportunity to 
investigate a proposed transaction and to determine whether to seek an 
injunction to prevent the consummation of a transaction that may 
violate the antitrust laws.
    9. Pursuant to Section (d)(2) of the HSR Act, 15 U.S.C. 18a(d)(2), 
rules were promulgated to carry out the purposes of the HSR Act. 16 CFR 
801-803 (``HSR Rules'').
    The HSR Rules, among other things, define terms contained in the 
HSR Act.
    10. Pursuant to section 801.13(a)(1) of the HSR Rules, 16 CFR 
801.13(a)(1), ``all voting securities of [an] issuer which will be held 
by the acquiring person after the consummation of an acquisition''--
including any held before the acquisition--are deemed held ``as a 
result of'' the acquisition at issue.
    11. Pursuant to sections 801.13(a)(2) and 801.10(c)(1) of the HSR 
Rules, 16 CFR 801.13(a)(2) and. Sec.  801.10(c)(1), the value of 
publicly traded voting securities already held is the market price, 
defined to be the lowest closing price within 45 days prior to the 
subsequent acquisition.
    12. Section 802.9 of the HSR Rules, 16 CFR 802.9, provides that 
acquisitions solely for the purpose of investment are exempt from the 
notification and waiting period requirement if the acquirer will hold 
ten percent or less of the issuer's voting securities.
    13. Section 802.64 of the HSR Rules, 16 CFR 802.64, provides 
generally that certain defined institutional investors, including 
broker-dealers, may acquire up to 15% of the voting securities of an 
issuer without filing under the HSR Act and observing the waiting 
period, if the voting securities are acquired solely for the purpose of 
investment. Section (c)(1) of Rule 802.64 provides, however, that ``no 
acquisition of voting securities of an institutional investor of the 
same type as any entity included within the acquiring person shall be 
exempt under this section.''
    14. Section 7A(g)(1) of the Clayton Act, 15 U.S.C. 18a(g)(1), 
provides that any person, or any officer, director, or partner thereof, 
who fails to comply with any provision of the HSR Act is liable to the 
United States for a civil penalty for each day during which such person 
is in violation. For violations occurring on or after February 10, 
2009, the maximum amount of civil penalty is $16,000 per day, pursuant 
to the Debt Collection Improvement Act of 1996, Pub. L. 104-134, Sec.  
31001(s) (amending the Federal Civil Penalties Inflation Adjustment Act 
of 1990, 28 U.S.C. 2461 note), and Federal Trade Commission Rule 1.98, 
16 CFR 1.98, 74 FR 857 (Jan. 9, 2009).

DEFENDANT'S PRIOR VIOLATION OF THE HSR ACT

    15. On August 15, 2007, Leucadia acquired 8% of the non-corporate 
interests in Goober. At the time of the acquisition, Leucadia already 
held 42% of the non-corporate interests of Goober. As a result of the 
August 15 transaction, Leucadia acquired control of Goober as defined 
in the HSR Rules. The value of the membership interests held by 
Leucadia after the acquisition was approximately $125 million.
    16. Although it was required to do so, Leucadia did not file under 
the HSR Act prior to acquiring Goober membership interests on August 
15, 2007.
    17. On October 24, 2008, Leucadia made a corrective filing under 
the HSR Act for the August 15, 2007, acquisition of Goober non-
corporate interests. In a letter accompanying the corrective filing, 
Leucadia acknowledged that the transaction was reportable under the HSR 
Act, but asserted that the failure to file and observe the waiting 
period was inadvertent.
    18. On January 7, 2009, the Premerger Notification Office of the 
Federal Trade Commission sent a letter to Leucadia indicating that it 
would not recommend a civil penalty action regarding the August 15, 
2007 Goober acquisition, but stating that Leucadia ``still must bear 
responsibility for compliance with the Act. In addition, it is 
accountable for instituting an effective program to ensure full 
compliance with the Act's requirements.''

VIOLATION

    19. On July 1, 2013, Leucadia, through Jeffries, acquired 
16,467,774 shares of KCG voting securities. The KCG voting securities 
held as a result of the acquisition by Leucadia represented 
approximately 13.5% of KCG's outstanding voting securities and were 
valued at approximately $173 million.
    20. Prior to acquiring the KCG voting securities, Leucadia sought 
advice from experienced HSR counsel as to whether the transaction was 
subject to the HSR reporting requirements. Counsel

[[Page 25422]]

concluded that the transaction was exempt under Section 802.64 of the 
HSR Rules because Jeffries was a broker-dealer within the meaning of 
the HSR Rules, Jeffries was acquiring the voting securities solely for 
the purpose of investment, and KCG was not a broker-dealer within the 
meaning of the HSR Rules.
    21. KCG was a broker-dealer within the meaning of the HSR Rules and 
the exemption under Section 802.64 therefore did not apply. Leucadia 
was required to observe the notification and waiting period 
requirements of HSR prior to Jeffries acquiring the KCG voting 
securities.
    24. On September 19, 2014, Leucadia made a corrective filing under 
the HSR Act for the KCG voting securities it had acquired on July 1, 
2013. In a letter accompanying the corrective filing, Leucadia 
acknowledged that the acquisition was reportable under the HSR Act. The 
HSR waiting period expired on October 20, 2014.
    25. Leucadia was in continuous violation of the HSR Act from July 
1, 2013, when it acquired the KCG voting securities that resulted in it 
holding more than ten percent of the outstanding KCG voting securities 
valued in excess of the HSR Act's $70.9 million size-of-transaction 
threshold, through October 20, 2014, when the waiting period expired.

REQUESTED RELIEF

WHEREFORE, Plaintiff requests:
    1. That the Court adjudge and decree that Defendant Leucadia's 
acquisition of KCG voting securities on July 1, 2013, was a violation 
of the HSR Act, 15 U.S.C. 18a; and that Defendant Leucadia was in 
violation of the HSR Act each day from July 1, 2013, through October 
20, 2014.
    2. That the Court order Defendant Leucadia to pay to the United 
States an appropriate civil penalty as provided by the HSR Act. 15 
U.S.C. 18a(g)(1), the Debt Collection Improvement Act of 1996, Pub. L. 
104-134, Sec.  31001(s) (amending the Federal Civil Penalties Inflation 
Adjustment Act of 1990, 28 U.S.C. 2461 note), and Federal Trade 
Commission Rule 1.98, 16 CFR 1.98, 74 FR 857 (Jan. 9, 2009).
    3. That the Court order such other and further relief as the Court 
may deem just and proper.
    4. That the Court award the Plaintiff its costs of this suit.

Dated: September 22, 2015

    FOR THE PLAINTIFF UNITED STATES OF AMERICA:
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 /s/
William J. Baer
DC Bar No. 324723
Assistant Attorney General
Department of Justice
Antitrust Division
Washington, DC 20530
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 /s/
Daniel P. Ducore
DC Bar No. 933721
Special Attorney
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 /s/
Roberta S. Baruch
DC Bar No. 269266
Special Attorney
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 /s/
Kenneth A. Libby
Special Attorney
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 /s/
Jennifer Lee
Special Attorney

Federal Trade Commission
Washington, DC 20580
(202) 326-2694

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

    UNITED STATES OF AMERICA, Plaintiff, v. LEUCADIA NATIONAL 
CORPORATION, Defendant.
CASE NO.: 1:15-cv-01547 JUDGE: Randolph D. Moss
FILED: 04/20/2016

COMPETITIVE IMPACT STATEMENT

    The United States, pursuant to the Antitrust Procedures and 
Penalties Act (``APPA''), 15 U.S.C. 16(b)-(h), files this Competitive 
Impact Statement to set forth the information necessary to enable the 
Court and the public to evaluate the proposed Final Judgment that would 
terminate this civil antitrust proceeding.

I. NATURE AND PURPOSE OF THIS PROCEEDING

    On September 22, 2015, the United States filed a Complaint against 
Defendant Leucadia National Corporation (``Leucadia''), related to 
Leucadia's acquisition of voting securities of KCG Holdings, Inc. 
(``KCG'') in 2013. The Complaint alleges that Leucadia violated Section 
7A of the Clayton Act, 15 U.S.C. 18a, commonly known as the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 (the ``HSR Act''). The HSR 
Act states that ``no person shall acquire, directly or indirectly, any 
voting securities of any person'' exceeding certain thresholds until 
that person has filed pre-acquisition notification and report forms 
with the Department of Justice and the Federal Trade Commission 
(collectively, the ``federal antitrust agencies'' or ``agencies'') and 
the post-filing waiting period has expired.\1\ The purpose of the 
notification and waiting period is to allow the agencies an opportunity 
to conduct an antitrust review of proposed transactions before they are 
consummated.
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    \1\ 15 U.S.C. 18a(a).
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    The Complaint alleges that Leucadia, via an entity it controls, 
acquired voting securities of KCG in excess of the statutory threshold 
($70.9 million at the time of acquisition) without making the required 
pre-acquisition filings with the agencies and without observing the 
waiting period, and that Leucadia and KCG each met the statutory size 
of person threshold at the time of the acquisition (Leucadaia and KCG 
had sales or assets in excess of $141.8 million and $14.2 million, 
respectively).
    The Complaint further alleges that Leucadia previously violated the 
HSR Act's notification requirements when it acquired shares in Goober 
Drilling LLC (``Goober'') in 2007. On August 15, 2007, Leucadia 
acquired 8% of the non-corporate interests in Goober which, when 
combined with its then existing interest in Goober, gave Leucadia 
control of Goober as defined in the HSR Rules. Although it was required 
to do so, Leucadia did not file under the HSR Act prior to acquiring 
Goober membership interests on August 15th. On October 24, 2008, 
Leucadia made a corrective filing under the HSR Act for the August 15, 
2007, acquisition of Goober non-corporate interests. In a letter 
accompanying the corrective filing, Leucadia acknowledged that the 
transaction was reportable under the HSR Act, but asserted that the 
failure to file and observe the waiting period was inadvertent. On 
January 7, 2009, the Premerger Notification Office of the Federal Trade 
Commission sent a letter to Leucadia indicating that it would not 
recommend a civil penalty action regarding the 2007 Goober acquisition, 
but stated that Leucadia would be ``accountable for instituting an 
effective program to ensure full compliance with the [HSR] Act's 
requirements.'' \2\
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    \2\ Complaint, ] 18.
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    At the same time the Complaint was filed, the United States also 
filed a Stipulation and proposed Final Judgment that eliminates the 
need for a trial in this case. The proposed Final Judgment is designed 
to deter Leucadia's HSR Act violations. Under the proposed Final 
Judgment, Leucadia must pay a civil penalty in the amount of $240,000.
    The United States and the Defendant have stipulated that the 
proposed Final Judgment may be entered after compliance with the APPA, 
unless the

[[Page 25423]]

United States first withdraws its consent. Entry of the proposed Final 
Judgment would terminate this case, except that the Court would retain 
jurisdiction to construe, modify, or enforce the provisions of the 
proposed Final Judgment and punish violations thereof. Entry of this 
judgment would not constitute evidence against, or an admission by, any 
party with respect to any issue of fact or law involved in the case and 
is conditioned upon the Court's finding that entry is in the public 
interest.

II. DESCRIPTION OF THE EVENTS GIVING RISE TO THE ALLEGED VIOLATIONS OF 
THE ANTITRUST LAWS

A. Leucadia and the Acquisitions of KCG Voting Securities

    Leucadia is a holding company with a market capitalization of 
approximately $8 billion. Through its subsidiaries, it engages in 
mining and drilling services, telecommunications, healthcare services, 
manufacturing, banking and lending, real estate, and winery businesses. 
Currently, Leucadia's largest holding is Jeffries Group, a global 
investment bank that provides clients with capital markets and 
financial advisory services, including institutional brokerage.
    KCG is a global financial services firm engaging in market making, 
high-frequency trading, electronic execution, and institutional sales 
and trade.
    On July 1, 2013, Leucadia, through Jeffries, acquired 16,467,774 
shares of KCG voting securities. Leucadia's voting securities 
represented approximately 13.5% of KCG's outstanding voting securities 
and were valued at approximately $173 million. This exceeded the HSR 
Act's $70.9 million size-of-transaction threshold then in effect.
    Prior to acquiring the Leucadia voting securities, Leucadia sought 
advice from experienced HSR counsel as to whether the transaction was 
subject to the HSR reporting requirements. Counsel concluded that the 
transaction was exempt under Section 802.64 of the HSR Rules because 
Jeffries was a broker-dealer within the meaning of the HSR Rules, 
Jeffries was acquiring the voting securities solely for the purpose of 
investment, and KCG was not a broker-dealer within the meaning of the 
HSR Rules. KCG was, however, a broker-dealer within the meaning of the 
HSR Rules and the exemption under Section 802.64 therefore did not 
apply. Leucadia was required to observe the notification and waiting 
period requirements of HSR prior to Jeffries acquiring the KCG voting 
securities. After discovering the missed filing, Leucadia promptly made 
a corrective filing on September 19, 2014. The waiting period expired 
on October 20, 2014.

B. Leucadia's Violation of HSR

    As alleged in the Complaint, Leucadia acquired in excess of the 
$70.9 million in voting securities of KCG without complying with the 
pre-acquisition notification and waiting period requirements of the HSR 
Act. Leucadia's failure to comply undermined the statutory scheme and 
the purpose of the HSR Act. Leucadia's September 19, 2014, corrective 
filing included a letter acknowledging that the acquisitions were 
reportable under the HSR Act.

III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT

    The proposed Final Judgment imposes a $240,000 civil penalty 
designed to deter this Defendant and others from violating the HSR Act. 
The United States adjusted the penalty downward from the maximum 
because the violation was unintentional, the Defendant promptly self-
reported the violation after discovery, and the Defendant is willing to 
resolve the matter by consent decree and avoid prolonged investigation 
and litigation. The penalty also reflects Defendant's previous 
violation of the HSR Act, as well as Defendant's good faith efforts to 
comply with HSR by seeking advice from counsel prior to the 
acquisition. The United States expects this penalty to deter Leucadia 
and others from violating the HSR Act. The relief will have a 
beneficial effect on competition because the agencies will be properly 
notified of acquisitions, in accordance with the law. At the same time, 
the penalty will not have any adverse effect on competition.

IV. REMEDIES AVAILABLE TO POTENTIAL PRIVATE LITIGANTS

    There is no private antitrust action for HSR Act violations; 
therefore, entry of the proposed Final Judgment will neither impair nor 
assist the bringing of any private antitrust action.

V. PROCEDURES AVAILABLE FOR MODIFICATION OF THE PROPOSED FINAL JUDGMENT

    The United States and Defendant have stipulated that the proposed 
Final Judgment may be entered by this Court after compliance with the 
provision of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry of the decree upon 
this Court's determination that the proposed Final Judgment is in the 
public interest.
    The APPA provides a period of at least sixty (60) days preceding 
the effective date of the proposed Final Judgment within which any 
person may submit to the United States written comments regarding the 
proposed Final Judgment. Any person who wishes to comment should do so 
within sixty (60) days of the date of publication of this Competitive 
Impact Statement in the Federal Register, or the last date of 
publication in a newspaper of the summary of this Competitive Impact 
Statement, whichever is later. All comments received during this period 
will be considered by the United States, which remains free to withdraw 
its consent to the proposed Final Judgment at any time prior to entry. 
The comments and the response of the United States will be filed with 
the Court. In addition, comments will be posted on the U.S. Department 
of Justice, Antitrust Division's internet Web site and, under certain 
circumstances, published in the Federal Register. Written comments 
should be submitted to: Daniel P. Ducore, Special Attorney, United 
States, c/o Federal Trade Commission, 600 Pennsylvania Avenue NW., CC-
8416, Washington, DC 20580, Email: dducore@ftc.gov.
    The proposed Final Judgment provides that this Court retains 
jurisdiction over this action, and the parties may apply to this Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. ALTERNATIVES TO THE PROPOSED FINAL JUDGMENT

    As an alternative to the proposed Final Judgment, the United States 
considered pursuing a full trial on the merits against the Defendant. 
The United States is satisfied, however, that the proposed relief is an 
appropriate remedy in this matter. Given the facts of this case, 
including the Defendant's self-reporting of the violation and 
willingness to settle quickly, the United States is satisfied that the 
proposed civil penalty is sufficient to address the violation alleged 
in the Complaint and to deter violations by similarly situated entities 
in the future, without the time, expense, and uncertainty of a full 
trial on the merits.

VII. STANDARD OF REVIEW UNDER THE APPA FOR THE PROPOSED FINAL JUDGMENT

    The APPA requires that remedies contained in proposed consent 
judgments in antitrust cases brought by the United States be subject to 
a sixty

[[Page 25424]]

(60) day comment period, after which the court shall determine whether 
entry of the proposed Final Judgment is ``in the public interest.'' 15 
U.S.C. 16(e)(1). In making that determination, the court, in accordance 
with the statute as amended in 2004, is required to consider:

    (A) the competitive impact of such judgment, including 
termination of alleged violations, provisions for enforcement and 
modification, duration of relief sought, anticipated effects of 
alternative remedies actually considered, whether its terms are 
ambiguous, and any other competitive considerations bearing upon the 
adequacy of such judgment that the court deems necessary to a 
determination of whether the consent judgment is in the public 
interest; and
    (B) the impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and 
individuals alleging specific injury from the violations set forth 
in the complaint including consideration of the public benefit, if 
any, to be derived from a determination of the issues at trial.

15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory factors, 
the court's inquiry is necessarily a limited one, as the government is 
entitled to ``broad discretion to settle with the defendant within the 
reaches of the public interest.'' United States v. Microsoft Corp., 56 
F.3d 1448, 1461 (D.C. Cir. 1995); see generally United States v. SBC 
Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public 
interest standard under the Tunney Act); United States v, U.S. Airways 
Group, Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) (noting the court has 
broad discretion of the adequacy of the relief at issue); United States 
v. InBev N.V./S.A., No. 08-1965 (JR), 2009-2 Trade Cas. (CCH) ] 76,736, 
2009 U.S. Dist. LEXIS 84787, at *3, (D.D.C. Aug. 11, 2009) (noting that 
the court's review of a consent judgment is limited and only inquires 
``into whether the government's determination that the proposed 
remedies will cure the antitrust violations alleged in the complaint 
was reasonable, and whether the mechanism to enforce the final judgment 
are clear and manageable.'').\3\
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    \3\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for court to consider and amended the 
list of factors to focus on competitive considerations and to 
address potentially ambiguous judgment terms. Compare 15 U.S.C. 
Sec.  16(e) (2004), with 15 U.S.C. Sec.  16(e)(1) (2006); see also 
SBC Commc'ns, 489 F. Supp. 2d at 11 (concluding that the 2004 
amendments ``effected minimal changes'' to Tunney Act review).
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    As the United States Court of Appeals for the District of Columbia 
Circuit has held, under the APPA a court considers, among other things, 
the relationship between the remedy secured and the specific 
allegations set forth in the government's complaint, whether the decree 
is sufficiently clear, whether enforcement mechanisms are sufficient, 
and whether the decree may positively harm third parties. See 
Microsoft, 56 F.3d at 1458-62. With respect to the adequacy of the 
relief secured by the decree, a court may not ``engage in an 
unrestricted evaluation of what relief would best serve the public.'' 
United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (quoting 
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see 
also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 
F. Supp. 2d 37, 40 (D.D.C. 2001); InBev, 2009 U.S. Dist. LEXIS 84787, 
at *3. Courts have held that:

    [t]he balancing of competing social and political interests 
affected by a proposed antitrust consent decree must be left, in the 
first instance, to the discretion of the Attorney General. The 
court's role in protecting the public interest is one of insuring 
that the government has not breached its duty to the public in 
consenting to the decree. The court is required to determine not 
whether a particular decree is the one that will best serve society, 
but whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.

Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\4\ In 
determining whether a proposed settlement is in the public interest, a 
district court ``must accord deference to the government's predictions 
about the efficacy of its remedies, and may not require that the 
remedies perfectly match the alleged violations.'' SBC Commc'ns, 489 F. 
Supp. 2d at 17; see also U.S. Airways, 38 F. Supp. 3d at 75 (noting 
that a court should not reject the proposed remedies because it 
believes others are preferable); Microsoft, 56 F.3d at 1461 (noting the 
need for courts to be ``deferential to the government's predictions as 
to the effect of the proposed remedies''); United States v. Archer-
Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (noting that 
the court should grant due respect to the United States' prediction as 
to the effect of proposed remedies, its perception of the market 
structure, and its views of the nature of the case).
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    \4\ Cf. BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); United States v. Gillette Co., 
406 F. Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the 
court is constrained to ``look at the overall picture not 
hypercritically, nor with a microscope, but with an artist's 
reducing glass''). See generally Microsoft, 56 F.3d at 1461 
(discussing whether ``the remedies [obtained in the decree are] so 
inconsonant with the allegations charged as to fall outside of the 
`reaches of the public interest''').
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    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[A] proposed decree must be approved 
even if it falls short of the remedy the court would impose on its own, 
as long as it falls within the range of acceptability or is `within the 
reaches of public interest.''' United States v. Am. Tel. & Tel. Co., 
552 F. Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United 
States v. Gillette Co., 406 F. Supp. 713, 716 (D. Mass. 1975)), aff'd 
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also U.S. 
Airways, 38 F. Supp. 3d at 76 (noting that room must be made for the 
government to grant concessions in the negotiation process for 
settlements (citing Microsoft, 56 F.3d at 1461)); United States v. 
Alcan Aluminum Ltd., 605 F. Supp. 619, 622 (W.D. Ky. 1985) (approving 
the consent decree even though the court would have imposed a greater 
remedy). To meet this standard, the United States ``need only provide a 
factual basis for concluding that the settlements are reasonably 
adequate remedies for the alleged harms.'' SBC Commc'ns, 489 F. Supp. 
2d at 17.
    Moreover, the court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in its Complaint, and does not authorize the court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459; see also U.S. Airways, 
38 F. Supp. 3d at 75 (noting that the court must simply determine 
whether there is a factual foundation for the government's decisions 
such that its conclusions regarding the proposed settlements are 
reasonable); InBev, 2009 U.S. Dist. LEXIS 84787, at *20 (``the `public 
interest' is not to be measured by comparing the violations alleged in 
the complaint against those the court believes could have, or even 
should have, been alleged''). Because the ``court's authority to review 
the decree depends entirely on the government's exercising its 
prosecutorial discretion by bringing a case in the first place,'' it 
follows that ``the court is only authorized to review the decree 
itself,'' and not to ``effectively redraft the complaint'' to inquire 
into other matters that the United States did not pursue. Microsoft, 56 
F.3d at 1459-60. As this Court recently confirmed in SBC 
Communications, courts ``cannot look beyond the complaint in making the 
public interest determination unless the complaint is drafted so 
narrowly as to

[[Page 25425]]

make a mockery of judicial power.'' SBC Commc'ns, 489 F. Supp. 2d at 
15.
    In its 2004 amendments, Congress made clear its intent to preserve 
the practical benefits of utilizing consent decrees in antitrust 
enforcement, adding the unambiguous instruction that ``[n]othing in 
this section shall be construed to require the court to conduct an 
evidentiary hearing or to require the court to permit anyone to 
intervene.'' 15 U.S.C. Sec.  16(e)(2); see also U.S. Airways, 38 F. 
Supp. 3d at 76 (indicating that a court is not required to hold an 
evidentiary hearing or to permit intervenors as part of its review 
under the Tunney Act). The language wrote into the statute what 
Congress intended when it enacted the Tunney Act in 1974, as Senator 
Tunney explained: ``[t]he court is nowhere compelled to go to trial or 
to engage in extended proceedings which might have the effect of 
vitiating the benefits of prompt and less costly settlement through the 
consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement of 
Sen. Tunney). Rather, the procedure for the public interest 
determination is left to the discretion of the court, with the 
recognition that the court's ``scope of review remains sharply 
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC 
Commc'ns, 489 F. Supp. 2d at 11.\5\ A court can make its public 
interest determination based on the competitive impact statement and 
response to public comments alone. U.S. Airways, 38 F. Supp. 3d at 76.
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    \5\ See United States v. Enova Corp., 107 F. Supp. 2d 10, 17 
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the 
court to make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); 
United States v. Mid-Am. Dairymen, Inc., No. 73-CV-681-W-1, 1977-1 
Trade Cas. (CCH) ] 61,508, at 71,980, *22 (W.D. Mo. 1977) (``Absent 
a showing of corrupt failure of the government to discharge its 
duty, the Court, in making its public interest finding, should . . . 
carefully consider the explanations of the government in the 
competitive impact statement and its responses to comments in order 
to determine whether those explanations are reasonable under the 
circumstances.''); S. Rep. No. 93-298, at 6 (1973) (``Where the 
public interest can be meaningfully evaluated simply on the basis of 
briefs and oral arguments, that is the approach that should be 
utilized.'').
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VIII. DETERMINATIVE DOCUMENTS

    There are no determinative materials or documents within the 
meaning of the APPA that were considered by the United States in 
formulating the proposed Final Judgment.

Date: April 20, 2016
Respectfully Submitted,

__/s/ Kenneth A. Libby
Kenneth A. Libby
Special Attorney

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

    UNITED STATES OF AMERICA, c/o Department of Justice, Washington, 
D.C. 20530, Plaintiff, v. LEUCADIA NATIONAL CORPORATION, 520 Madison 
Avenue, New York, NY 10022, Defendant.
CASE NO.: 1:15-cv-01547
JUDGE: Randolph D. Moss
FILED: 09/22/2015

FINAL JUDGMENT

    Plaintiff, the United States of America, having commenced this 
action by filing its Complaint herein for violation of Section 7A of 
the Clayton Act, 15 U.S.C. 18a, commonly known as the Hart-Scott-Rodino 
Antitrust Improvements Act of 1976, and Plaintiff and Defendant 
Leucadia National Corporation, by their respective attorneys, having 
consented to the entry of this Final Judgment without trial or 
adjudication of any issue of fact or law herein, and without this Final 
Judgment constituting any evidence against or an admission by the 
Defendant with respect to any such issue:
    Now, therefore, before the taking of any testimony and without 
trial or adjudication of any issue of fact or law herein, and upon the 
consent of the parties hereto, it is hereby Ordered, Adjudged, and 
Decreed as follows:
I.
    The Court has jurisdiction of the subject matter of this action and 
of the Plaintiff and the Defendant. The Complaint states a claim upon 
which relief can be granted against the Defendant under Section 7A of 
the Clayton Act, 15 U.S.C. 18a.
II.
    Judgment is hereby entered in this matter in favor of Plaintiff 
United States of America and against Defendant, and, pursuant to 
Section 7A(g)(1) of the Clayton Act, 15 U.S.C. 18a(g)(1), the Debt 
Collection Improvement Act of 1996, Pub. L. 104-134 31001(s) (amending 
the Federal Civil Penalties Inflation Adjustment Act of 1990, 28 U.S.C. 
2461), and Federal Trade Commission Rule 1.98, 16 CFR 1.98, 61 FR 54549 
(Oct. 21, 1996), and 74 FR 857 (Jan. 9, 2009), Defendant Leucadia 
National Corporation is hereby ordered to pay a civil penalty in the 
amount of two hundred forty thousand dollars ($240,000). Payment of the 
civil penalty ordered hereby shall be made by wire transfer of funds or 
cashier's check. If the payment is made by wire transfer, Defendant 
shall contact Janie Ingalls of the Antitrust Division's Antitrust 
Documents Group at (202) 514-2481 for instructions before making the 
transfer. If the payment is made by cashier's check, the check shall be 
made payable to the United States Department of Justice and delivered 
to: Janie Ingalls, United States Department of Justice, Antitrust 
Division, Antitrust Documents Group, 450 5th Street NW., Suite 1024, 
Washington, DC 20530.
    Defendant shall pay the full amount of the civil penalty within 
thirty (30) days of entry of this Final Judgment. In the event of a 
default or delay in payment, interest at the rate of eighteen (18) 
percent per annum shall accrue thereon from the date of the default or 
delay to the date of payment.
III.
    Each party shall bear its own costs of this action.
IV.
    Entry of this Final Judgment is in the public interest.

Dated: _____

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United States District Judge

[FR Doc. 2016-09915 Filed 4-27-16; 8:45 am]
 BILLING CODE 4410-11-P