United States v. Mitchell P. Rales; Proposed Final Judgment and Competitive Impact Statement, 8852-8857 [2017-02025]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 82, Number 19 (Tuesday, January 31, 2017)]
[Notices]
[Pages 8852-8857]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-02025]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Mitchell P. Rales; 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. Mitchell P. Rales, Civil Action No. 1:17-cv-00103. 
On January 17, 2017, the United States filed a Complaint alleging that 
Mitchell P. Rales violated the notice and waiting period requirements 
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, 15 U.S.C. 
18a, with respect to his acquisitions of voting securities of Colfax 
Corporation and Danaher Corporation. The proposed Final Judgment, filed 
at the same time as the Complaint, requires Mitchell P. Rales to pay a 
civil penalty of $720,000.
    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, United States, 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.

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA, c/o Department of Justice, Washington, 
D.C. 20530, Plaintiff, v. Mitchell P. Rales, 2200 Pennsylvania Ave., 
N.W., Suite 800W, Washington, D.C. 20037, Defendant.

Case No.: 1:17-cv-00103, Judge: Christopher R. Cooper, Filed: 01/17/
2017

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 Mitchell P. Rales (``Rales''). Plaintiff 
alleges as follows:

NATURE OF THE ACTION

    1. Rales 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 acquisitions of voting 
securities of Colfax Corporation (``Colfax'') and Danaher Corporation 
(``Danaher'').

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 and entry of the Final 
Judgment in this District.
    3. Venue is properly based in this District by virtue of 
Defendant's principal office and place of business and 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 Rales is a natural person with his principal office 
and place of business at 2200 Pennsylvania Avenue, N.W., Suite 800W, 
Washington, D.C. 20037. Rales 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, Rales had sales or 
assets in excess of $15.6 million.

OTHER ENTITIES

    5. Colfax is a corporation organized under the laws of Delaware 
with its principal place of business at 420 National Business Parkway, 
5th Floor, Annapolis Junction, MD 20701. Colfax 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, Colfax 
had sales or assets in excess of $156.3 million.
    6. Danaher is a corporation organized under the laws of Delaware 
with its principal place of business at 2200 Pennsylvania Avenue, N.W., 
Suite 800W, Washington, D.C. 20037. Danaher 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, Danaher 
had sales or assets in excess of $156.3 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. As of February 1, 2001, the size of transaction 
threshold was $50 million. In addition, there is a separate filing 
requirement for transactions in which the acquirer will hold voting 
securities in excess of $100 million, and for transactions in which the 
acquirer will hold voting securities in excess of $500 million. One 
person involved in the transaction had to have sales or assets in 
excess of $10 million, and the other person had to have sales or assets 
in excess of $100 million. Since 2004, the size of transaction and size 
of person thresholds have been adjusted annually.
    8. The HSR Act's notification and waiting period requirements 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 successfully 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 (the 
``HSR Rules''). See 16 CFR 801-03. The HSR Rules, among

[[Page 8853]]

other things, define terms contained in the HSR Act.
    10. Pursuant to section 801.1(c)(2) of the HSR Rules, 16 CFR 
801.1(c)(2), the holdings of spouses and their minor children are 
considered holdings of each of them.
    11. 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.
    12. 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 voting 
securities already held is the market price, defined to be the lowest 
closing price within 45 days prior to the subsequent acquisition.
    13. 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. From November 20, 1996, through February 9, 2009, the 
maximum amount of civil penalty was $11,000 per day, pursuant to 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 note), and Federal Trade Commission Rule 1.98, 16 CFR 
1.98, 61 FR 54548 (Oct. 21, 1996). As of February 10, 2009, the maximum 
amount of civil penalty was increased to $16,000 per day, pursuant to 
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 note), and Federal Trade Commission Rule 1.98, 16 CFR 
1.98, 74 FR 857 (Jan. 9, 2009). Pursuant to the Federal Civil Penalties 
Inflation Adjustment Act Improvements Act of 2015, Pub. L. 114-74, 701 
(further amending the Federal Civil Penalties Inflation Adjustment Act 
of 1990), and Federal Trade Commission Rule 1.98, 16 CFR 1.98, 81 FR 
42,476 (June 30, 2016), the maximum amount of civil penalty was 
increased to $40,000 per day.

DEFENDANT'S PRIOR VIOLATION OF THE HSR ACT

    14. On May 18, 1988, Equity Group Holdings (``Equity Group'') 
acquired sufficient voting securities of Interco Incorporated 
(``Interco'') so that its holdings exceeded the $15 million threshold 
then in effect under the HSR Act. Equity Group continued to acquire 
Interco voting securities through July 27, 1988. At that time, Rales 
was an ``ultimate parent entity'' of Equity Group within the meaning of 
the HSR Rules and controlled Equity Group for purposes of the HSR Act. 
See 16 CFR 801.1(a)(3). Accordingly, Equity Group's violations of the 
HSR Act are attributed to Rales.
    15. Although it was required to do so, Equity Group did not file 
under the HSR Act prior to acquiring Interco voting securities on May 
18, 1988.
    16. On January 25, 1991, the United States filed a complaint for 
civil penalties alleging that Equity Group's acquisitions of Interco 
voting securities violated the HSR Act. At the same time, the United 
States filed a Stipulation signed by Equity Group and a proposed Final 
Judgment that would require Equity Group to pay a civil penalty of 
$850,000. The Final Judgment was entered by the court on January 30, 
1991.

DEFENDANT'S VIOLATIONS OF THE HSR ACT

A. Failure to File HSR Act Notifications in Connection with 
Acquisitions of Colfax Voting Securities

    17. Prior to May 7, 2008, Rales held approximately 57.9% of the 
voting securities of Colfax. Under the HSR Rules, because Rales held 
50% or more of the voting securities of Colfax, any acquisitions he 
made of Colfax voting securities were exempt from the requirements of 
the HSR Act. See 16 CFR 802.30.
    18. On May 7, 2008, Colfax made an Initial Public Offering of 
voting securities. As a result of the Initial Public Offering, Rales's 
holdings in Colfax decreased to approximately 20.8%. Because Rales no 
longer held over 50% of the voting securities of Colfax, Rales's 
subsequent acquisitions of Colfax voting securities were not exempt 
from the requirements of the HSR Act.
    19. On October 31, 2011, Rales's wife acquired 25,000 shares of 
voting securities of Colfax on the open market. Pursuant to the HSR 
Rules, this acquisition was attributed to Rales. See 16 CFR 
801.1(c)(2). As a result of this acquisition, Rales held voting 
securities of Colfax valued in excess of the $100 million threshold, as 
adjusted ($131.9 million).
    20. Although he was required to do so, Rales did not file under the 
HSR Act prior to acquiring Colfax voting securities on October 31, 
2011.
    21. Rales continued to acquire voting securities of Colfax through 
August 5, 2015, but did not exceed the next highest HSR filing 
threshold.
    22. On February 25, 2016, Rales made a corrective filing under the 
HSR Act for the 2011 acquisition of Colfax voting securities. The 
waiting period on the corrective filing expired on March 28, 2016.
    28. Rales was in continuous violation of the HSR Act from October 
31, 2011, when he acquired the Colfax voting securities valued in 
excess of the HSR Act's $100 million size-of-transaction threshold, as 
adjusted ($131.9 million), through March 28, 2016, when the waiting 
period expired.

B. Failure to File HSR Act Notifications in Connection with 
Acquisitions of Danaher Voting Securities

    29. On January 31, 2008, Rales acquired 6,000 shares of voting 
securities of Danaher on the open market. As a result of this 
transaction, Rales held voting securities of Danaher valued at 
approximately $2.3 billion, in excess of the HSR Act's $500 million 
size-of-transaction threshold, as adjusted ($597.9 million).
    30. Although he was required to do so, Rales did not file under the 
HSR Act prior to acquiring Danaher voting securities on January 31, 
2008.
    31. On February 25, 2016, Rales made a corrective filing under the 
HSR Act for the acquisition of Danaher voting securities. The waiting 
period on the corrective filing expired on March 28, 2016.
    32. Rales was in continuous violation of the HSR Act from January 
31, 2008, when he acquired the Danaher voting securities valued in 
excess of the HSR Act's $500 million size-of-transaction threshold, as 
adjusted ($597.9 million), through March 28, 2016, when the waiting 
period expired.

REQUESTED RELIEF

    WHEREFORE, Plaintiff requests:
    a. That the Court adjudge and decree that Defendant Rales's 
acquisition of Colfax voting securities on October 31, 2011, was a 
violation of the HSR Act, 15 U.S.C. 18a; and that Defendant Rales was 
in violation of the HSR Act each day from October 31, 2011, through 
March 28, 2016;
    b. That the Court adjudge and decree that Defendant Rales's 
acquisition of Danaher voting securities on January 31, 2008, was a 
violation of the HSR Act, 15 U.S.C. 18a; and that Defendant Rales was 
in violation of the HSR Act each day from January 31, 2008, through 
March 28, 2016;
    c. That the Court order Defendant Rales 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

[[Page 8854]]

1996, Pub. L. 104-134, 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, 61 FR 54548 (Oct. 21, 1996), 
74 FR 857 (Jan. 9, 2009), and the Federal Civil Penalties Inflation 
Adjustment Act Improvements Act of 2015, Pub. L. 114-74, 701 (further 
amending the Federal Civil Penalties Inflation Adjustment Act of 1990), 
and Federal Trade Commission Rule 1.98, 16 CFR 1.98, 81 FR 42,476 (June 
30, 2016);
    d. That the Court order such other and further relief as the Court 
may deem just and proper; and
    e. That the Court award Plaintiff its costs of this suit.
FOR THE PLAINTIFF:
/s/--------------------------------------------------------------------

Renata B. Hesse, D.C. Bar No. 466107
Acting Assistant Attorney General, Department of Justice, Antitrust 
Division,
Washington, D.C. 20530

/s/--------------------------------------------------------------------

Daniel P. Ducore, D.C. Bar No. 933721
Special Attorney

/s/--------------------------------------------------------------------

Roberta S. Baruch, D.C. Bar No. 269266
Special Attorney

/s/--------------------------------------------------------------------

Kenneth A. Libby
Special Attorney

/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. Mitchell P. Rales, 
Defendant.

Case No.: 1:17-cv-00103, Judge: Christopher R. Cooper, Filed: 01/17/
2017

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 January 17, 2017, the United States filed a Complaint against 
Defendant Mitchell Rales (``Rales''), related to Rales's acquisitions 
of voting securities of Colfax Corporation (``Colfax'') and Danaher 
Corporation (``Danaher'') between January 2008 and August 2015. The 
Complaint alleges that Rales 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 provides 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. 15 U.S.C. 18a(a). A key purpose of the 
notification and waiting period is to protect consumers and competition 
from potentially anticompetitive transactions by providing the agencies 
an opportunity to conduct an antitrust review of proposed transactions 
before they are consummated.
    The Complaint alleges that Rales acquired voting securities of 
Colfax and Danaher in excess of then-applicable statutory thresholds 
without making the required pre-acquisition HSR filings with the 
agencies and without observing the waiting period, and that Rales and 
each of Colfax and Danaher met the applicable statutory size of person 
thresholds.
    At the same time the Complaint was filed in the present action, 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 Rales' HSR Act violations. Under the 
proposed Final Judgment, Rales must pay a civil penalty to the United 
States in the amount of $720,000.
    The United States and the Defendant have stipulated that the 
proposed Final Judgment may be entered after compliance with the APPA, 
unless the 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.

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

A. Rales's Acquisitions of Colfax Voting Securities

    Rales is an investor. At all times relevant to the Complaint, Rales 
had sales or assets in excess of $15.6 million. At all times relevant 
to the Complaint, Colfax had sales or assets in excess of $156.3 
million.
    Prior to May 7, 2008, Rales held approximately 57.9% of the voting 
securities of Colfax. Because he held 50% or more of the voting 
securities, pursuant to the HSR Rules he was able to acquire additional 
voting securities of Colfax without complying with the notification and 
waiting period requirements of the HSR Act. After Colfax completed its 
Initial Public Offering on May 7, 2008, Rales held approximately 20.8% 
of the voting securities of Colfax. Because he no longer held 50% or 
more of the voting securities of Colfax, subsequent acquisitions of 
Colfax voting securities were subject to the notification and waiting 
period requirements of the HSR Act. Further, under the HSR Rules, 
acquisitions of voting securities by spouses and minor children are 
attributed to each other.
    On October 31, 2011, Rales's wife acquired 25,000 shares of voting 
securities of Colfax. As a result of this acquisition, Rales held 
voting securities of Colfax in excess of the $100 million filing 
threshold, as adjusted. Although Rales was required to file under the 
HSR Act prior to the October 31 transaction, he did not do so. Rales 
continued to acquire Colfax voting securities through August 5, 2015, 
without filing notification under the HSR Act.
    Rales made a corrective HSR Act filing on February 25, 2016, after 
learning that his acquisitions were subject to the HSR Act's 
requirements and that he was obligated to file. The waiting period 
expired on March 28, 2016.

B. Rales's Acquisition of Danaher Voting Securities

    Rales is a long-time investor in Danaher. Danaher is a manufacturer 
of tools and equipment. At all times relevant to the Complaint, Danaher 
had sales or assets in excess of $156.3 million.
    On January 31, 2008, Rales acquired 6,000 shares of Danaher voting 
securities. As a result of the acquisition, Rales held Danaher voting 
securities valued over the $500 million threshold, as adjusted.
    Rales made a corrective HSR Act filing on February 25, 2016, after 
learning that he was obligated to file. The waiting period expired on 
March 28, 2016.
    The Complaint further alleges that Rales previously violated the 
HSR Act's notification requirements. In 1988, Equity Group Holdings 
(``Equity Group'') acquired voting securities of Interco Incorporated 
(``Interco'') without

[[Page 8855]]

filing under HSR and observing the waiting period. On January 25, 1991, 
the Department of Justice filed a complaint for civil penalties 
alleging that Equity Group's acquisitions of Interco voting securities 
violated the HSR Act. At the same time, the Department of Justice filed 
a Stipulation and proposed Final Judgment whereby Equity Group agreed 
to pay $850,000 in civil penalties. The Final Judgment was entered by 
the court on January 30, 1991. At the time of the acquisitions of 
Interco voting securities, Rales controlled Equity Group within the 
meaning of the HSR Rules and was an Ultimate Parent Entity of Equity 
Group. Accordingly, the violations by Equity Group were attributable to 
Rales.

III. EXPLANATION OF THE PROPOSED FINAL JUDGMENT

    The proposed Final Judgment imposes a $720,000 civil penalty 
designed to deter the Defendant and others from violating the HSR Act. 
The United States adjusted the penalty downward from the maximum 
permitted under the HSR Act because the violations were inadvertent, 
the Defendant promptly self-reported the violations after discovery, 
and the Defendant is willing to resolve the matter by consent decree 
and avoid prolonged investigation and litigation. The relief will have 
a beneficial effect on competition because the agencies will be 
properly notified of future 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 the Defendant have stipulated that the 
proposed Final Judgment may be entered by this Court after compliance 
with the provisions 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 
this 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 promptly settle this matter, 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 proposed consent judgments in antitrust cases 
brought by the United States be subject to a sixty (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.

Id. Sec.  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 that the 
court's ``inquiry is limited'' because the government has ``broad 
discretion'' to determine the adequacy of the relief secured through a 
settlement); 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.'').\1\
---------------------------------------------------------------------------

    \1\ 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. 
16(e) (2004), with 15 U.S.C. 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).
---------------------------------------------------------------------------

    As the United States Court of Appeals for the District of Columbia 
Circuit has held, a court conducting an inquiry under the APPA may 
consider, among other things, the relationship between

[[Page 8856]]

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).\2\ 
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 government's 
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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    \2\ 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 (concluding 
that ``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 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 make a mockery of judicial power.'' 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. 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). This language codified what Congress intended when it enacted the 
Tunney Act in 1974, as the author of this legislation, Senator Tunney, 
explained: ``The 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.\3\ 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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    \3\ See also 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: January 17, 2017

Respectfully Submitted,


[[Page 8857]]


/s/--------------------------------------------------------------------

Kenneth A. Libby, Special Attorney, U.S. Department of Justice, 
Antitrust Division, c/o Federal Trade Commission, 600 Pennsylvania 
Avenue NW, Washington, DC 20580, Phone: (202) 326-2694

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA, Plaintiff, v. Mitchell P. Rales, 
Defendant.

Case No.: 1:17-cv-00103, Judge: Christopher R. Cooper, Filed: 01/17/
2017

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 
Mitchell P. Rales, 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:

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 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 Sec.  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), and the Federal Civil Penalties Inflation 
Adjustment Act Improvements Act of 2015, Pub. L. 114-74 Sec.  701 
(further amending the Federal Civil Penalties Inflation Adjustment Act 
of 1990), and Federal Trade Commission Rule 1.98, 16 CFR 1.98, 81 FR 
42,476 (June 30, 2016), Defendant is hereby ordered to pay a civil 
penalty in the amount of seven hundred twenty thousand dollars 
($720,000). 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. The parties 
have complied with the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16, including making copies available to the 
public of this Final Judgment, the Competitive Impact Statement, and 
any comments thereon and the United States' responses to comments. 
Based upon the record before the Court, which includes the Competitive 
Impact Statement and any comments and response to comments filed with 
the Court, entry of this Final Judgment is in the public interest.
Dated:-----------------------------------------------------------------

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United States District Judge

[FR Doc. 2017-02025 Filed 1-30-17; 8:45 am]
 BILLING CODE 4410-11-P