United States v. Richard D. Fairbank; Proposed Final Judgment and Competitive Impact Statement, 51918-51923 [2021-20149]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 86, Number 178 (Friday, September 17, 2021)]
[Notices]
[Pages 51918-51923]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-20149]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Richard D. Fairbank; 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. Richard D. Fairbank, Civil Action 1:21-cv-02325. 
On September 2, 2021, the United States filed a Complaint alleging that 
Richard D. Fairbank violated the premerger notification and waiting 
period requirements of the Hart-Scott-Rodino Antitrust Improvements Act 
of 1976, 15 U.S.C. 18a, in connection with the acquisition of voting 
securities of Capital One Financial Corporation. The proposed Final 
Judgment, filed at the same time as the Complaint, requires Richard D. 
Fairbank to pay a civil penalty of $637,950.
    Copies of the Complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection on the Antitrust 
Division's website 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 website, 
filed with the Court, and, under certain circumstances, published in 
the Federal Register. Comments in English should be directed to 
Maribeth Petrizzi, Special Attorney, United States, c/o Federal Trade 
Commission, 600 Pennsylvania Avenue NW, CC-8416, Washington, DC 20580 
or by email to [email protected].

Suzanne Morris,
Chief, Premerger and Division Statistics.

United States District Court for the District of Columbia

    United States of America, c/o Department of Justice, Washington, 
DC 20530, Plaintiff, v. Richard D. Fairbank, c/o Capital One 
Financial Corporation, 1680 Capital One Drive, McLean, VA 22102, 
Defendant.

Civil Action No. 1:21-cv-02325

Judge: Rudolph Contreas

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, acting under the direction of the 
Attorney General of the United States and at the request of the United 
States Federal Trade Commission, brings this civil antitrust action to 
obtain monetary relief in the form of civil penalties against Defendant 
Richard D. Fairbank (``Fairbank''). The United States alleges as 
follows:

I. Nature of the Action

    1. Fairbank violated the notice and waiting period requirements of 
Section 7A of the Clayton Act, (15 U.S.C. 18a, commonly known as the 
Hart-Scott-Rodino Antitrust Improvements Act of 1976 ``HSR Act'' or 
``Act''), with respect to the acquisition of voting securities of 
Capital One Financial Corporation (``COF'') in 2018.

II. 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 28 U.S.C. 1331, 1337(a), 1345, and 1355, and over 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 proper 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.

III. The Defendant

    4. Defendant Fairbank is a natural person with his principal office 
and place of business at 1680 Capital One Drive, McLean, VA 22101. 
Fairbank 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,

[[Page 51919]]

Fairbank had sales or assets in excess of $16.9 million.

IV. Other Entity

    5. COF is a corporation organized under the laws of Delaware with 
its principal place of business at 1680 Capital One Drive, McLean, VA 
22101. COF 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, COF had sales or assets in excess of $168.8 
million.

V. The Hart-Scott-Rodino Act and Rules

    6. The HSR Act requires certain acquiring persons and certain 
persons whose voting securities or assets are acquired to file 
notifications with the United States Department of Justice and the 
Federal Trade Commission (collectively, 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 size of transaction and size of 
person thresholds, which have been adjusted annually since 2004. The 
size of transaction threshold is met for transactions valued over $50 
million, as adjusted ($84.4 million for most of 2018). In addition, 
there is a separate filing requirement for transactions in which the 
acquirer will hold voting securities in excess of $100 million, as 
adjusted ($168.8 million in 2018), and for transactions in which the 
acquirer will hold voting securities in excess of $500 million, as 
adjusted ($843.9 million in 2018). With respect to the size of person 
thresholds, the HSR Act requires one person involved in the transaction 
to have sales or assets in excess of $10 million, as adjusted ($16.9 
million in 2018), and the other person to have sales or assets in 
excess of $100 million, as adjusted ($168.8 million in 2018).
    7. 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 the 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.
    8. 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 
801-03 (``HSR Rules''). The HSR Rules, among other things, define terms 
contained in the HSR Act.
    9. 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.
    10. 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.
    11. Section 802.21 of the HSR Rules, 16 CFR 802.21, provides that, 
once a person has filed under the HSR Act and the waiting period has 
expired, the person can acquire additional voting securities of the 
same issuer without filing a new notification for five years from the 
expiration of the waiting period, so long as the value of the person's 
holdings do not exceed a threshold higher than was indicated in the 
filing (``802.21 exemption'').
    12. 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. Pursuant to the Federal Civil Penalties Inflation 
Adjustment Act Improvements Act of 2015, Public Law 114-74, 701 
(further amending the Federal Civil Penalties Inflation Adjustment Act 
of 1990), the dollar amounts of civil penalties listed in Federal Trade 
Commission Rule 1.98, 16 CFR 1.98, are adjusted annually for inflation; 
the maximum amount of civil penalty in effect at the time of Fairbank's 
corrective filing was $42,530 per day. 84 FR 3980 (February 14, 2019).

VI. Defendant's Prior Violation of the HSR Act

    13. In 1999 and 2004, Fairbank acquired voting securities of COF 
that resulted in holdings exceeding the then applicable HSR 
notification thresholds. Although he was required to do so, Fairbank 
did not file under the HSR Act prior to acquiring COF voting securities 
in 1999 and 2004.
    14. On February 12, 2008, Fairbank made a corrective filing under 
the HSR Act for the acquisitions of COF voting securities he had made 
in 1999 and 2004. In a letter accompanying the corrective filing, 
Fairbank acknowledged that the transactions were reportable under the 
HSR Act but asserted that the failure to file and observe the waiting 
period was inadvertent.
    15. Fairbank outlined in his letter a system he would implement to 
ensure that future reportable acquisitions would be identified and the 
required HSR notifications filed. The Commission did not seek civil 
penalties against Fairbank for the 1999 and 2004 COF acquisitions.

VII. Defendant's Violation of the HSR Act

    16. Fairbank is the Chief Executive Officer of COF and, as a result 
of holding this position, receives stock options as well as performance 
stock units (``PSUs'') as a part of his compensation package. On 
February 5, 2013, due to vesting PSUs, Fairbank filed an HSR 
Notification for an acquisition of COF voting securities that would 
result in holdings exceeding the $100 million threshold as adjusted. 
The HSR Act's waiting period on this filing expired on March 7, 2013. 
Fairbank was permitted under the HSR Act to acquire additional voting 
securities of COF until five years after the 2013 filing waiting period 
expired (i.e., March 6, 2018) without making another HSR Act filing so 
long as he did not exceed the next highest threshold, $500 million, as 
adjusted.
    17. On March 8, 2018, over five years after expiration of the 
waiting period for the February 5, 2013 filing, Fairbank acquired 
101,148 shares of COF due to vesting PSUs. Even though this acquisition 
did not bring Fairbank's holdings over the next highest threshold ($500 
million, as adjusted), he was required to make an HSR Act filing 
because the five-year exemption period of his 2013 filing had ended. As 
a result of this acquisition, Fairbank held voting securities of COF 
valued in excess of the $100 million threshold, as adjusted, which in 
2018 was $168.8 million.
    18. Although required to do so, Fairbank did not file under the HSR 
Act or observe the HSR Act's waiting period prior to completing the 
March 8, 2018, transaction.
    19. On December 18, 2019, Fairbank made a corrective filing and the 
waiting period expired on January 17, 2020. Fairbank was in continuous 
violation of the HSR Act from March 8, 2018, when he acquired the COF 
voting securities valued in excess of the HSR Act's then applicable 
$100 million filing threshold, as adjusted ($168.8 million), through 
January 17, 2020, when the waiting period expired on his corrective 
filing.

[[Page 51920]]

VIII. Requested Relief

    Wherefore, the United States requests:
    a. That the Court adjudge and decree that Defendant's acquisition 
of COF voting securities on March 8, 2018, was a violation of the HSR 
Act, 15 U.S.C. 18a; and that Defendant was in violation of the HSR Act 
each day from March 8, 2018, through January 17, 2020;
    b. that the Court order Defendant to pay to the United States an 
appropriate civil penalty as provided by the Section 7A(g)(1) of the 
Clayton Act, 15 U.S.C. 18a(g)(1), the Debt Collection Improvement Act 
of 1996, Public Law 104 134 Sec.  31001(s) (amending the Federal Civil 
Penalties Inflation Adjustment Act of 1990, 28 U.S.C. 2461), and the 
Federal Civil Penalties Inflation Adjustment Act Improvements Act of 
2015, Public Law 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, 84 FR 3980 (February 14, 2019);
    c. that the Court order such other and further relief as the Court 
may deem just and proper; and
    d. that the Court award the United States its costs of this suit.

Dated:-----------------------------------------------------------------

FOR THE PLAINTIFF UNITED STATES OF AMERICA:
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Richard A. Powers,

Acting Assistant Attorney General, Department of Justice, Antitrust 
Division, Washington, DC 20530.
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Maribeth Petrizzi,

DC Bar No. 435204, Special Attorney.
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Kenneth A. Libby,

Special Attorney.
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Kelly Horne,

Special Attorney.
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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. Richard D. Fairbank, 
Defendant.

Civil Action No. 1:21-cv-02325

[Proposed] Final Judgment

    Whereas, the United States of America filed its Complaint on 
September 2, 2021, alleging that Defendant Richard D. Fairbank 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'')), and the United States and Defendant, by their respective 
attorneys, having consented to the entry of this Final Judgment without 
trial or adjudication of any issue of fact or law, and without this 
Final Judgment constituting any evidence against, or any admission by, 
any party regarding any such issue of fact or law;
    And whereas Defendant agrees to be bound by the provisions of this 
Final Judgment pending its approval by the Court;
    Now, therefore, before the taking of any testimony, and without 
trial or adjudication of any issue of fact or law, and upon the consent 
of the parties, it is hereby ordered, adjudged, and decreed:

I. Jurisdiction

    The Court has jurisdiction of the subject matter of this action and 
Defendant consents solely for the purpose of this action and the entry 
of this Final Judgment that this Court has jurisdiction over each of 
the parties to this action and that the Complaint states a claim upon 
which relief can be granted against Defendant under Section 7A of the 
Clayton Act, 15 U.S.C. 18a.

II. Civil Penalty

    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, 
Public Law 104-134 Sec.  31001(s) (amending the Federal Civil Penalties 
Inflation Adjustment Act of 1990, 28 U.S.C. 2461), the Federal Civil 
Penalties Inflation Adjustment Act Improvements Act of 2015, Public Law 
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, 84 FR 3980 (February 14, 2019), Defendant is hereby 
ordered to pay a civil penalty in the amount of six hundred thirty-
seven thousand nine hundred and fifty dollars ($637,950). Payment of 
the civil penalty ordered hereby must be made by wire transfer of funds 
or cashier's check. If the payment is made by wire transfer, prior to 
making the transfer Defendant will contact the Budget and Fiscal 
Section of the Antitrust Division's Executive Office at [email protected] for instructions. If the payment is made by 
cashier's check, the check must be made payable to the United States 
Department of Justice and delivered to: Chief, Budget & Fiscal Section, 
Executive Office, Antitrust Division, United States Department of 
Justice, Liberty Square Building, 450 5th Street NW, Room 3016, 
Washington, DC 20530.
    Defendant must 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 will accrue thereon from the date of the default or 
delay to the date of payment.

III. Costs

    Each party will bear its own costs of this action, except as 
otherwise provided in Paragraph IV.C.

IV. Enforcement of Final Judgment

    A. The United States retains and reserves all rights to enforce the 
provisions of this Final Judgment, including the right to seek an order 
of contempt from the Court. Defendant agrees that in a civil contempt 
action, a motion to show cause, or a similar action brought by the 
United States regarding an alleged violation of this Final Judgment, 
the United States may establish a violation of this Final Judgment and 
the appropriateness of a remedy therefor by a preponderance of the 
evidence, and Defendant waives any argument that a different standard 
of proof should apply.
    B. This Final Judgment should be interpreted to give full effect to 
the procompetitive purposes of the antitrust laws, including Section 7A 
of the Clayton Act and Regulations promulgated thereunder. Defendant 
agrees that he may be held in contempt of, and that the Court may 
enforce, any provision of this Final Judgment that, as interpreted by 
the Court in light of these procompetitive principles and applying 
ordinary tools of interpretation, is stated specifically and in 
reasonable detail, whether or not it is clear and unambiguous on its 
face. In any such interpretation, the terms of this Final Judgment 
should not be construed against either party as the drafter.
    C. In an enforcement proceeding in which the Court finds that 
Defendant has violated this Final Judgment, the United States may apply 
to the Court for a one-time extension of this Final Judgment, together 
with other relief that may be appropriate. In connection with a 
successful effort by the United States to enforce this Final Judgment 
against Defendant, whether litigated or resolved before litigation, 
Defendant agrees to reimburse the United States for the fees and 
expenses of its attorneys, as well as all other costs including 
experts' fees, incurred in connection with that enforcement effort, 
including in the investigation of the potential violation.

[[Page 51921]]

V. Expiration of Final Judgment

    This Final Judgment will expire upon payment in full by the 
Defendant of the civil penalty required by Section II of this Final 
Judgment.

VI. Public Interest Determination

    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:-----------------------------------------------------------------

[Court approval subject to the procedures of the Antitrust 
Procedures and Penalties Act, 15 U.S.C. 16]
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United States District Judge.

United States District Court for the District of Columbia

    United States of America, Plaintiff, v. Richard D. Fairbank, 
Defendant.

Civil Action No. 1:21-cv-02325

Competitive Impact Statement

    The United States of America (``United States''), under Section 
2(b) of the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)-(h) 
(``APPA'' or ``Tunney Act''), files this Competitive Impact Statement 
relating to the proposed Final Judgment submitted for entry in this 
civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

    On September 2, 2021, the United States filed a Complaint against 
Defendant Richard D. Fairbank (``Fairbank''), related to Fairbank's 
acquisitions of voting securities of Capital One Financial Corporation 
(``COF'') in March 2018. The Complaint alleges that Fairbank 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 requires certain acquiring persons and certain persons 
whose voting securities or assets are acquired to file notifications 
with the United States Department of Justice and the Federal Trade 
Commission (collectively, 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 size of transaction and size of person thresholds, 
which have been adjusted annually since 2004. The size of transaction 
threshold is met for transactions valued over $50 million, as adjusted 
($84.4 million for most of 2018). In addition, there is a separate 
filing requirement for transactions in which the acquirer will hold 
voting securities in excess of $100 million, as adjusted ($168.8 
million in 2018), and for transactions in which the acquirer will hold 
voting securities in excess of $500 million, as adjusted ($843.9 
million in 2018).
    With respect to the size of person thresholds, the HSR Act requires 
one person involved in the transaction to have sales or assets in 
excess of $10 million, as adjusted ($16.9 million in 2018), and the 
other person to have sales or assets in excess of $100 million, as 
adjusted ($168.8 million in 2018). A key purpose of the notification 
and waiting period requirements is to protect consumers and competition 
from potentially anticompetitive transactions by providing the federal 
antitrust agencies an opportunity to conduct an antitrust review of 
proposed transactions before they are consummated.
    Section 802.21 of the HSR Rules, 16 CFR 802.21, provides that, once 
a person has filed under the HSR Act and the waiting period has 
expired, the person can acquire additional voting securities of the 
same issuer without filing a new notification for five years from the 
expiration of the waiting period, so long as the value of the person's 
holdings do not exceed a threshold higher than was indicated in the 
filing (``802.21 exemption'').
    The Complaint alleges that Fairbank acquired voting securities of 
COF without filing the required pre-acquisition HSR Act notifications 
with the federal antitrust agencies and without observing the waiting 
period. Fairbank's acquisition of COF voting securities exceeded the 
$100-million statutory threshold, as adjusted, ($168.8 million at the 
time of the acquisition) and Fairbank and COF met the then-applicable 
statutory size of person thresholds (which were $16.9 and $168.8 
million, respectively). Moreover, although Fairbank was not a new 
investor in COF voting securities at the time of the acquisition, his 
transaction did not satisfy the requirements of the 802.21 exemption.
    At the same time the Complaint was filed in the present action, the 
United States also filed a Stipulation and proposed Final Judgment that 
resolves the allegations stated in the complaint. The proposed Final 
Judgment is designed to address the violation alleged in the Complaint 
and penalize Fairbank's HSR Act violations. Under the proposed Final 
Judgment, Fairbank must pay a civil penalty to the United States in the 
amount of $637,950.
    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 will terminate this action, except that the 
Court will 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 Violation

    The crux of Fairbank's violation is that he failed to submit an HSR 
notification even though his acquisition of COF voting securities as 
part of his compensation package satisfied the HSR filing requirements 
and he was not eligible to take advantage of the 802.21 exemption. At 
all times relevant to the Complaint, Fairbank had sales or assets in 
excess of $16.9 million. At all times relevant to the Complaint, COF 
had sales or assets in excess of $168.8 million.
    Fairbank is Chief Executive Officer of COF and in that capacity, he 
frequently receives performance stock units (``PSUs'') as a part of his 
compensation package. On February 5, 2013, due to the imminent vesting 
of PSUs, Fairbank made an HSR filing for an acquisition of COF voting 
securities that would result in holdings exceeding the adjusted $100 
million threshold then in effect of $168.8 million. The waiting period 
for the filing expired on March 7, 2013, and Fairbank commenced the 
acquisition four days later. For a period of five years, until March 6, 
2018, Fairbank was permitted under the 802.21 exemption to acquire 
additional voting securities of COF without making another HSR Act 
filing so long as he did not exceed the $500 million threshold, as 
adjusted.
    On March 8, 2018, more than five years after expiration of the 
waiting period for the February 5, 2013 filing, Fairbank acquired 
101,148 voting securities of COF due to vesting PSUs. Even though this 
acquisition did not bring Fairbank's holdings over the next highest 
threshold ($500 million, as adjusted), he was required to make an HSR 
Act filing because the five-year exemption period of his 2013 filing 
had ended. As a result of the March 2018

[[Page 51922]]

acquisition, Fairbank held voting securities of COF valued in excess of 
the $100 million threshold, as adjusted, which in 2018 was $168.8 
million. Although required to do so, Fairbank did not file under the 
HSR Act or observe the HSR Act's waiting period prior to completing the 
March 8, 2018 transaction.
    Fairbank made a corrective HSR Act filing on December 18, 2019, 
promptly after learning that this acquisition was subject to the HSR 
Act's requirements and that he was obligated to file. The waiting 
period for that corrective filing expired on January 17, 2020.
    The Complaint further alleges that Fairbank's March 2018 HSR Act 
violation was not the first time Fairbank had failed to observe the HSR 
Act's notification and waiting period requirements. In 1999 and 2004, 
Fairbank acquired voting securities of COF that resulted in his 
holdings exceeding the then-applicable HSR notification thresholds. 
Although he was required to do so, Fairbank did not file under the HSR 
Act prior to acquiring COF voting securities in 1999 and 2004. On 
February 12, 2008, Fairbank made a corrective filing under the HSR Act 
for the acquisitions of COF voting securities he had made in 1999 and 
2004. In a letter accompanying the corrective filing, Fairbank 
acknowledged that the transactions were reportable under the HSR Act, 
but asserted that the failure to file and observe the waiting period 
was inadvertent. Fairbank outlined in his letter a system he would 
implement to ensure that all future reportable acquisitions would be 
identified and the required HSR notifications filed. The Federal Trade 
Commission did not seek civil penalties against Fairbank for the 1999 
and 2004 COF acquisitions.

III. Explanation of the Proposed Final Judgment

    The proposed Final Judgment imposes a $637,950 civil penalty 
designed to address the violation alleged in the Complaint, penalize 
the Defendant, and deter others from violating the HSR Act. The United 
States adjusted the penalty downward from the maximum permitted under 
the HSR Act because the violation was inadvertent, the Defendant 
promptly self-reported the violation after discovery, and the Defendant 
is willing to resolve the matter by consent decree and thereby avoid 
prolonged investigation and litigation. The penalty will not have any 
adverse effect on competition; instead, the relief will have a 
beneficial effect on competition because the federal antitrust agencies 
will be properly notified of future acquisitions, in accordance with 
the law.

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 the Court after compliance 
with the provisions of the APPA, provided that the United States has 
not withdrawn its consent. The APPA conditions entry upon the 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 before the 
Court's entry of the Final Judgment. 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 website and, under certain circumstances, published in the 
Federal Register. Written comments should be submitted to: Maribeth 
Petrizzi, Special Attorney, United States, c/o Federal Trade 
Commission, 600 Pennsylvania Avenue NW, CC-8416, Washington, DC 20580, 
Email: [email protected].
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    The United States considered, as an alternative to the proposed 
Final Judgment, 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 Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a 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); United States v. U.S. Airways Grp., 
Inc., 38 F. Supp. 3d 69, 75 (D.D.C. 2014) (explaining that the 
``court's inquiry is limited'' in Tunney Act settlements); United 
States v. InBev N.V./S.A., No. 08-1965 (JR), 2009 U.S. Dist. LEXIS 
84787, at *3 (D.D.C. Aug. 11, 2009) (noting that a 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

[[Page 51923]]

complaint was reasonable, and whether the mechanism to enforce the 
final judgment are clear and manageable'').

    As the U.S. 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 in 
the government's complaint, whether the proposed Final Judgment is 
sufficiently clear, whether its enforcement mechanisms are sufficient, 
and whether it may positively harm third parties. See Microsoft, 56 
F.3d at 1458-62. With respect to the adequacy of the relief secured by 
the proposed Final Judgment, a court may not ``make de novo 
determination of facts and issues.'' United States v. W. Elec. Co., 993 
F.2d 1572, 1577 (D.C. Cir. 1993) (quotation marks omitted); see also 
Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 F. 
Supp. 2d 37, 40 (D.D.C. 2001); United States v. Enova Corp., 107 F. 
Supp. 2d 10, 16 (D.D.C. 2000); InBev, 2009 U.S. Dist. LEXIS 84787, at 
*3. Instead, ``[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.'' W. 
Elec. Co., 993 F.2d at 1577 (quotation marks omitted). ``The court 
should bear in mind the flexibility of the public interest inquiry: the 
court's function is not to determine whether the resulting array of 
rights and liabilities is one that will best serve society, but only to 
confirm that the resulting settlement is within the reaches of the 
public interest.'' Microsoft, 56 F.3d at 1460 (quotation marks 
omitted); see also United States v. Deutsche Telekom AG, No. 19-2232 
(TJK), 2020 WL 1873555, at *7 (D.D.C. Apr. 14, 2020). More demanding 
requirements would ``have enormous practical consequences for the 
government's ability to negotiate future settlements,'' contrary to 
congressional intent. Id. at 1456. ``The Tunney Act was not intended to 
create a disincentive to the use of the consent decree.'' Id.
    The United States' predictions about the efficacy of the remedy are 
to be afforded deference by the Court. See, e.g., Microsoft, 56 F.3d at 
1461 (recognizing courts should give ``due respect to the Justice 
Department's . . . view of the nature of its case''); United States v. 
Iron Mountain, Inc., 217 F. Supp. 3d 146, 152-53 (D.D.C. 2016) (``In 
evaluating objections to settlement agreements under the Tunney Act, a 
court must be mindful that [t]he government need not prove that the 
settlements will perfectly remedy the alleged antitrust harms[;] it 
need only provide a factual basis for concluding that the settlements 
are reasonably adequate remedies for the alleged harms.'') (internal 
citations omitted); United States v. Republic Servs., Inc., 723 F. 
Supp. 2d 157, 160 (D.D.C. 2010) (noting ``the deferential review to 
which the government's proposed remedy is accorded''); United States v. 
Archer-Daniels-Midland Co., 272 F. Supp. 2d 1, 6 (D.D.C. 2003) (``A 
district court must accord due respect to the government's prediction 
as to the effect of proposed remedies, its perception of the market 
structure, and its view of the nature of the case.''). The ultimate 
question is whether ``the remedies [obtained by the Final Judgment are] 
so inconsonant with the allegations charged as to fall outside of the 
`reaches of the public interest.''' Microsoft, 56 F.3d at 1461 (quoting 
W. Elec. Co., 900 F.2d at 309).
    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 (``[T]he 
`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.
    In its 2004 amendments to the APPA, Congress made clear its intent 
to preserve the practical benefits of using consent judgments proposed 
by the United States in antitrust enforcement, Public Law 108-237 Sec.  
221, and added 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 explicitly wrote into the statute what Congress 
intended when it first 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). ``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 (citing Enova 
Corp., 107 F. Supp. 2d at 17).

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: September 2, 2021.

Respectfully submitted,
-----------------------------------------------------------------------

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, Email: [email protected].
[FR Doc. 2021-20149 Filed 9-16-21; 8:45 am]
BILLING CODE 4410-11-P